Labour Licence — Requirement, Process and Documents

When is a labour licence required?

• A contractor engaging contract labour at or above the threshold number of workmen must hold a licence for each establishment where labour is deployed.
• The principal employer must separately hold a registration certificate covering those contractors.
• Thresholds are set by the Central or State government and differ between states — several states apply the requirement from 20 workmen, others from a higher or lower number.

Confirm the threshold notified by the state where the work is performed, not the state where your office is located.

Documents commonly required

• Form V certificate issued by the principal employer
• Principal employer's registration certificate under CLRA
• Work order or contract copy
• PAN, incorporation or partnership documents of the contractor
• PF and ESI registration details of the contractor
• Details of the number of workmen and nature of work
• Licence fee and security deposit challans

Validity and renewal

A licence is granted for a defined period and must be renewed before expiry. Working with an expired licence is treated the same as working without one, and renewal after expiry usually attracts a higher fee.

Frequently asked questions

When is a labour licence required?

When a contractor engages contract labour at or above the threshold number of workmen notified for the state where the work is carried out.

What happens if a contractor works without a licence?

It is an offence under the CLRA Act, exposing the contractor to penalty and prosecution, and the principal employer to liability for the workers engaged.

Sources & references

• Shram Suvidha Portal — Government of India
• India Code — Central Acts