Contract Labour (Regulation and Abolition) Act
A law regulating the employment of contract workers — requiring registration by the principal employer and licensing of labour contractors above a headcount threshold.
What it is
The Contract Labour (Regulation and Abolition) Act, 1970 regulates the engagement of workers supplied by a labour contractor to work at another company's premises, rather than being employed directly by that company. It requires the "principal employer" — the business where the work is actually done — to register under the Act, and requires the contractor supplying the labour to hold a valid licence.
Who it applies to
Under the central Act, registration and licensing obligations apply where an establishment or contractor engages 20 or more contract workmen on any day in the preceding 12 months. Worth flagging clearly: several state governments have amended this threshold upward within their own jurisdictions — in some cases well beyond 20 — so the applicable number can differ depending on where the contract workforce is deployed. Always check the threshold currently notified by the relevant state, not just the original central figure.
Why it matters
The Act exists partly to prevent companies from using "contract" arrangements to sidestep protections that would otherwise apply to direct employees, so it comes with obligations around welfare amenities — canteens, rest rooms, first aid — for contract workers, and it makes the principal employer secondarily liable for wage payment if the contractor defaults. Businesses using staffing agencies or manpower contractors — especially in warehousing, retail, hospitality, and manufacturing — need to track this separately from their direct-employee statutory compliance.