Before you sign, check four things: a valid contractor licence whose headcount cap covers your requirement; the contractor's own PF and ESI registrations, with recent challans; a wage basis at or above the notified minimum; and a clean track record. Under section 54 of the OSH Code 2020, engaging a contractor that needs a licence and lacks one is a contravention by the site, not just the contractor.
1. The licence, and the number on it
Ask for the licence in Form XXII and read three things on it: validity, headcount cap and the work it covers. Part I of Chapter XI of the OSH Code applies to an establishment that employed 50 or more contract labour on any day of the preceding twelve months, and to a manpower supply contractor that did (s.45(1)). Once it applies, no contractor may supply or engage contract labour except under a licence (s.47(1)).
- The cap. The licence states the number of contract labour the contractor may engage, and that number must not be exceeded on any day (s.47(1); OSH Central r.89(2)(ii)). A contractor licensed for 100 cannot lawfully staff your 150-person ramp without amending the licence first.
- Validity. A single licence covering more than one State, or all of India, runs for five years (r.88(6)). Note the expiry date and diary the renewal; a lapsed licence puts you back under s.54.
- The deposit. Before the licence is issued, the contractor lodges a bank guarantee of ₹1,000 for each contract worker it may engage (r.90(1)). Ask for the receipt; it is the fund wages can be paid from if the contractor defaults (r.99).
- Non-transferable. A licence belongs to the entity named on it (r.89(2)(i)). A group company or an associate cannot trade under it.
2. Its own PF and ESI registrations
Rule 93(4) requires all contract labour to be made members of EPFO and ESIC, subject to the Code on Social Security's coverage tests. How that works depends on the contractor's own codes. Under paragraph 20 of the EPF Scheme 2026, a contractor not registered with EPFO in its own right has its workers' PF paid by the site first. One that is registered remits through its own code, jointly and severally with you (para 27(2)). Either way the principal employer stays responsible (para 20(4)).
| Ask for | What it shows | How to check it |
|---|---|---|
| EPF establishment code | The contractor is registered with EPFO in its own right | EPFO's establishment search on its website [VERIFY: current path] |
| Last three ECRs and challans | PF is being filed and paid, and for how many people | Compare the member count with the contractor's claimed workforce |
| ESIC employer code covering your district | Workers can be registered locally and use the nearby dispensary | ESIC challans for the same months |
| GST registration | The contractor can raise a valid tax invoice | GSTIN search on the GST portal |
Once you engage the contractor, declare it on the EPFO portal in Form X (EPF Scheme 2026, para 27(1)). From then on it should send you Form XI by the 10th of each month, and you file Form XII by the 20th. A contractor that hesitates over the ECR at the vetting stage is unlikely to send Form XI on time later.
3. The wage basis
The wage line must be at least the notified minimum, and in some cases match your own staff's conditions. A licence condition, repeated in rule 93(1), sets the floor: wages not less than the rates fixed under the Code on Wages 2019, or any higher rate fixed by agreement, settlement or award (r.89(2)(iv)). Where contract workers do the same or similar work as your direct employees, their holidays, hours and other conditions of service must match (r.93(2)). Wages go by bank transfer or electronically (r.98(4)).
Ask for the rate build-up line by line: Code wages, PF, ESI, bonus, gratuity provision, Labour Welfare Fund, and the service charge as a separate line. Our article on what a contract worker really costs sets out the statutory heads. An all-in rate that will not break down is the one to worry about.
4. The track record
To get a licence, a contractor must not be an undischarged insolvent, nor convicted in the last two years of an offence punishable with more than three months' imprisonment (r.85). That is the legal minimum. The practical checks go further:
- References from current sites of similar size and work, and permission to call them.
- Sub-contracting. The Codes count a sub-contractor as a contractor (OSH Code s.2(n)), so ask in writing whether any of your work will be passed on, and to whom.
- Supervision and replacement. How many supervisors per shift, and how an absent or exiting worker is replaced.
- Exit handling. How it settles leaving workers within two working days, and what it hands over if the contract ends: registers, challans, UAN and ESIC numbers.
None of these checks moves the law's duties off the site. The principal employer still pays wages a contractor leaves unpaid (OSH Code s.55(3)) and contributions it misses. What the checks do is lower the chance of that happening. How the duties apply to a particular contract is a question for the site's own counsel.
How Velura Services helps
Before an engagement starts, we give your site our licence and its headcount cap, the security-deposit receipt, our EPF and ESIC codes with recent challans, our GSTIN and site references. After the work order, we report it on Shram Suvidha and send Form XI each month. If you are reviewing contractors now, we will walk your team through the same checklist with our own documents.
Sources
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI. Sections cited: s.2(n) (contractor includes a sub-contractor), s.45(1) (contract labour Part applies at 50), s.47(1) (licence specifies the number of contract labour and the security), s.54 (engaging an unlicensed contractor is a contravention), s.55(3) (principal employer pays unpaid wages). Opened and read.
- Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026. Rules cited: r.85 (contractor qualification), r.88(6) (single licence valid five years), r.89(2) (licence conditions: non-transferable, headcount cap, wage floor), r.90(1) (₹1,000 per worker bank guarantee), r.93(1), (2), (4) (wage floor, same conditions, EPFO and ESIC membership), r.94 (work order intimation within 15 days), r.98(4) (wages by bank transfer), r.99 (payment from the deposit). Opened and read from a mirrored copy of the Gazette [VERIFY: against the e-Gazette original].
- Employees' Provident Funds Scheme, 2026, G.S.R. 525(E) dated 29 June 2026, mirrored copy of the Gazette. Paras cited: 20 (who remits where the contractor is or is not registered independently; principal employer remains responsible), 27 (Forms X, XI and XII; joint and several liability). Opened and read [VERIFY: against the e-Gazette original].
- EPFO establishment search, the public lookup of an employer's EPF registration and remittance history on the EPFO website [VERIFY: current URL and what it shows after the 2026 portal changes].