Is a sub-contractor treated as a contractor under the Labour Codes?

Yes. The OSH Code 2020 (s.2(1)(n)), the Code on Wages 2019 (s.2(f)) and the Code on Social Security 2020 (s.2(20)) each define a contractor as a person who produces a result through contract labour or supplies contract labour, and each adds that the term includes a sub-contractor. Licensing, wage and contribution duties apply to it directly.

Is the principal employer liable for a sub-contractor's workers?

Yes. Section 2(1)(m) of the OSH Code 2020 counts a worker hired through a contractor as contract labour of the establishment with or without the principal employer's knowledge. Section 55(3) then makes the principal employer liable for wages a contractor fails to pay, and section 31(1) of the Code on Social Security 2020 makes it pay ESI contributions for employees engaged through a contractor.

Does a sub-contractor need its own contract labour licence?

Where the contract-labour part of the OSH Code 2020 applies, section 47(1) bars any contractor, which includes a sub-contractor, from supplying or engaging contract labour except under a licence that specifies how many workers it covers. The part applies from fifty contract labour on any day of the preceding twelve months under section 45.

How can a site control sub-contracting by its contractor?

Through the contract and the floor. Require written consent before any sub-contracting, check the sub-contractor's licence, Labour Identification Number and work-order intimation before its first shift, record each worker in the gate register against the company that pays them, and write the main contractor's wage, PF, ESI and record-keeping obligations into its contract with the sub-contractor.

Can a contractor sub-contract your work?

Yes. Nothing in the Labour Codes prohibits it; whether a contractor may sub-contract is a term of the contract with the site. What the Codes settle is the consequence. The OSH Code, the Code on Wages and the Code on Social Security all define a contractor to include a sub-contractor, and contract labour covers workers hired through a contractor "with or without the knowledge of the principal employer". The sub-contractor's crew is the site's contract labour, approved or not.

What the Codes say

Each Code uses the same definition: a contractor is a person who produces a given result for the establishment through contract labour, or supplies contract labour as mere human resource, "and includes a sub-contractor".

Code	Definition of contractor	Includes a sub-contractor
OSH Code 2020	s.2(1)(n)	Yes
Code on Wages 2019	s.2(f)	Yes
Code on Social Security 2020	s.2(20)	Yes

The OSH Code's definition of contract labour in section 2(1)(m) closes the other end: a worker hired in or in connection with the work of an establishment "by or through a contractor, with or without the knowledge of the principal employer" is contract labour of that establishment. A site cannot keep a second layer off its books by not knowing about it.

What the sub-contractor has to do

Everything a contractor does, because in law it is one. The obligations in the contract-labour part of the OSH Code attach to it directly, not through the main contractor.

Hold its own licence where the part applies. Section 47(1) bars a contractor to whom the part applies from supplying or engaging contract labour except under a licence, and the licence specifies how many workers it covers. Section 45 sets the fifty-worker threshold; how the count works is covered in our licence article.
Report the work order. Section 50(1) and rule 94 of the OSH (Central) Rules 2026 require the contractor to report each work order on Shram Suvidha within fifteen days, naming the principal employer, the premises, the start date, the headcount and the duration.
Pay its own crew, on time, and tell the site. Section 55(1) makes each contractor responsible for paying the contract labour it employs, rule 98(2) sets the deadline at seven days after the wage period, and section 55(2) requires the contractor to inform the principal employer electronically of the amount paid. The intimation goes to the site, not to the main contractor.
Charge the workers nothing. Section 49 bars any contractor from charging contract labour a fee or commission, directly or indirectly. A worker placed through two layers is owed the same.

What the site answers for

The same as for any contractor's crew, whether or not it approved the sub-contract. Section 55(3) of the OSH Code makes the principal employer pay wages a contractor fails to pay, and section 53 makes it provide the welfare facilities of sections 23 and 24 to contract labour employed in the establishment. Section 31(1) of the Code on Social Security makes the employer pay ESI contributions for every employee engaged by or through a contractor, and section 17(1) lets it recover provident fund contributions it pays on a contractor's behalf. Section 54 treats engaging contract labour through a contractor that needs a licence and lacks one as a contravention.

The site's own filings carry the second layer too. The registration certificate under section 3 records the site's contractors, and Form XVII Part III under rule 98(9) lists each contractor with its Labour Identification Number, month by month. A sub-contractor the site did not know about is one it cannot list. How liability is split between the site, the main contractor and the sub-contractor on a given engagement is for the contract and the site's counsel.

Why a second layer adds risk

Because the site's checks are built around one employer per crew. Every record the site asks for each month, the wage intimation, the challans, the register of employees that section 31(7) of the Social Security Code requires before settlement, comes from the employer of the worker. With two layers, half the crew's records sit with a company the site has no contract with. The wage the site pays for passes through two margins before it reaches the worker, and rule 93(2) of the Central rules still requires conditions of service equal to direct employees doing the same or similar work.

3Codes that define a contractor to include a sub-contractor (OSH s.2(1)(n); CoW s.2(f); SS Code s.2(20))

15 daysfor any contractor, sub-contractors included, to report a work order (OSH s.50; Central r.94)

7 daysafter the wage period for each contractor to pay its own crew (OSH s.55(1); Central r.98(2))

What to put in the contract and check on the floor

No sub-contracting without written consent. A clause requiring the site's prior approval, naming the sub-contractor and the work, turns an unknown layer into a breach the site can act on.
The sub-contractor's licence and LIN before its first shift. The same check the site runs on the main contractor, with the licensed headcount compared against the crew it actually sends.
Its own work-order intimation. A copy of the Shram Suvidha report naming the site as principal employer.
Gate register by employer. Each worker recorded against the company that pays them, so the monthly wage intimations can be matched worker by worker.
Flow-down terms. The main contractor's obligations on wages, deductions, PF, ESI and records written into its contract with the sub-contractor, with the site's right to see the evidence.

How Velura Services helps

Velura deploys its own screened workforce on its own licence and does not pass your work to unnamed sub-contractors. Every worker on your site appears on our registers, PF and ESI challans and wage records, which we share with you each month so the gate register and the paperwork match.

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Sources

Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI — s.2(1)(m) (contract labour, "with or without the knowledge of the principal employer"), s.2(1)(n) (contractor includes a sub-contractor), s.2(1)(zz) (principal employer), s.3 (registration), s.45 (threshold), s.47 (licensing), s.49 (no fee or commission), s.50 (work-order intimation), s.53 (welfare facilities), s.54 (unlicensed contractor), s.55 (wages). Opened and read.
The Code on Wages, 2019 (Act 29 of 2019), Gazette text hosted by the Ministry of Labour and Employment — s.2(f) (contractor includes a sub-contractor). Opened and read.
The Code on Social Security, 2020 (Act 36 of 2020), Gazette text hosted by the Ministry of Labour and Employment — s.2(20) (contractor includes a sub-contractor), s.17(1) (PF recoverable from the contractor), s.31(1) and (7) (ESI for contractor employees; register before settlement). Opened and read.
Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026 — r.93(2) (same conditions as direct employees), r.94 (work-order intimation within fifteen days), r.98(2) and (9) (seven-day deadline; Form XVII Part III). Opened and read from a mirrored copy of the Gazette [VERIFY: against the e-Gazette original].