Connect@ADP

Partnering with a more human resource

The Coffee Break Guide to Compliance – Vol. 10

Posted by: on 10 August 2018 in Compliance, Human Capital Management

This post is part of the Coffee Break Guide to Compliance by Anandan Subramaniam. Please subscribe to the blog updates if you’d like to be notified of these posts. Please comment below with your doubts and queries.

The Coffee Break Guide to Compliance – Vol. 10 {Is the Engagement of Contract Labour in your Establishment Genuine?}

A simple catalog for the Principal Employer’s reference is stated below, which would ensure compliance under the CLRA Act.

Processes where Contract Labour Engagement is Allowed

This is a simple list of services where contract labour can be engaged, provided it is not the core-activity of such establishment:

  1. Watch and ward services, including security service
  2. Services like sanitation, cleaning, including collection and disposal of wastes
  3. Housekeeping and laundry services
  4. Catering and pantry services
  5. Loading and un-loading services
  6. Courier services in support of the establishment
  7. Maintenance, civil and engineering services
  8. Transport services, including ambulance service
  9. Gardening and lawn maintenance service
  10. Any activity which is intermittent, though it constitutes a core activity
  11. Any activity which is incidental to core activity

Guidelines to Ensure Engagement of the Right Contract Labour

Engaging a Contractor
The contractor shall not be an employee of the establishment engaging contract labour. Prefer a contractor who is providing similar types of services with other companies, whereby the contract labour can be swapped/transferrable periodically.

Appointment of Workman with Contractor
An application from an individual Applicant for employment shall be made to the Contractor. A Letter of Appointment is issued to the Applicant upon the application form. Such a letter of appointment is issued on the letterhead of the Contractor, with the terms and conditions.

The Contractor shall complete the recruitment process and select the candidate without the interference of the Principal Employer. Such a Workman, who would be a contract labour in the premises of the Principal Employer, must be supervised and controlled only by the Contractor.

Determination of method of executing the job in the premises of Principal Employer shall be designed by the Contractor and it should not be interfered with.

Licensing and Engaging
The Contractor shall obtain the appropriate license from the authority, shall employ the workforce not exceeding the licensed strength, and perform only the prescribed services. The Principal Employer shall ensure that the license is amended in case of changes in the engaged strength and that it is periodically renewed.

Payment of Wages, Social Security Remittance
The Contractor shall pay the wages before the 7th of the following month and remit the social security contributions within due dates. The Principal Employer shall ensure the wages paid are equal or more than the prescribed minimum wages. Besides, there should not be any discrimination in the payment of wages to women employees, for similar nature of work performed.

The Contractor is liable for deduction and remittance towards the Labour Welfare Fund, Profession Tax and Income tax, if any. Furthermore, any increase in wages or consideration of any other benefits for the contract labour shall be made only by the Contractor.

Any loans and advances for such contract labour are to be paid only by the Contractor.

Invoicing and Payments
The Principal Employer shall ensure invoice as agreed upon, and timely payment to the Contractor for him to comply with wages and statutory remittances by due dates.

Compliance under Labour Laws
The Principal Employer shall also ensure that the Contractor complies with the allied Acts, such as the Maternity Benefit Act, Payment of Gratuity Act, Payment of Bonus Act, etc. The duty of the Contractor includes maintenance of statutory registers and filing periodical returns with the appropriate authority, under various Labour laws.

Such Contractor compliances are mandatory under applicable Statutory Legislations and for external audits of the establishment, as well.


Please subscribe to the blog updates if you’d like to be notified of these posts. As always, your questions are welcome: please comment below with your doubts and queries.

(Visited 249 times, 1 visits today)

TAGS: Anandan Subramaniam The Coffee Break Guide to Compliance

Post a response

Leave a Reply

Your email address will not be published. Required fields are marked *