Licensing

How a contractor licence is suspended or revoked

On a fifteen-day show-cause notice, for misrepresentation or a breached condition, with an appeal within thirty days. And what the site does next.

A round red push-button marked STOP set into a black marbled control panel, lit from above.

Under section 51 of the OSH Code 2020, the licensing authority can suspend or revoke a contractor's licence if it was obtained by misrepresentation, or if the contractor breaches a licence condition or the contract labour Part of the Code. It must first give the contractor a chance to show cause, fifteen days under the Central Rules. The contractor can appeal within thirty days. Meanwhile the site has to decide what happens to the crew.

The grounds

Five routes lead to a suspension, most of them for things the contractor did or failed to do after the licence issued:

GroundWhereExamples
Licence obtained by misrepresentation or suppression of a material factOSH Code s.51(1)(a)A false headcount, address or record in the application
Failure to comply with a licence conditions.51(1)(b)Deploying more contract labour than the licence allows on any day (Central Rules r.89(2)(ii)); wages below the prescribed rates (TN draft r.46(2)(iv))
Contravention of the contract labour Part or its ruless.51(1)(b)Charging workers a fee or commission (s.49); late wages (s.55)
No intimation of a work orders.50(2)A new contract started without reporting it to the authority
Security deposit drawn and not restoredCentral Rules r.99(2)Security used to pay unpaid wages and not re-furnished within fifteen days

Section 51 acts "without prejudice to any other penalty to which the contractor may be liable under this Code", so suspension sits alongside any penalty, not in place of it.

The procedure

A show-cause notice, a reply, and a reasoned order. Rule 95 of the OSH (Central) Rules 2026 sets the steps where the Central Government is the appropriate Government:

  1. Show cause. The authority issues a fifteen-day show-cause notice electronically (r.95(1)).
  2. Reply and examination. The contractor replies within fifteen days of receiving it, and the authority examines the reply (r.95(2)).
  3. A speaking order. Where the authority considers that the contractor continuing in business "is going to lead to grave harm to the contract labours", it may pass a speaking order, recording its reasons, for revocation, suspension or otherwise. The order goes to the contractor electronically or by speed post, with copies to the Chief Labour Commissioner (Central), the Labour Enforcement Officer and the State authorities (r.95(2)–(3)).
  4. Lifting or hardening. If the contractor complies within the time allowed, the authority lifts the suspension by another speaking order; otherwise the suspension can continue, or the licence can be revoked outright (r.95(4)–(5)).

Tamil Nadu's draft OSH rules of 11 April 2022 set a similar sequence for a contractor that has not intimated a work order: a show-cause notice, a reply within the time it specifies, and a speaking order (r.52) [VERIFY: whether Tamil Nadu has since notified final rules, and the procedure they set for the other section 51 grounds].

Suspension or revocation

Suspension is a pause the contractor can end by complying; revocation ends the licence.

SuspensionRevocation
What it doesStops the licence for a period, pending complianceEnds the licence
The way backComply within the time allowed and the authority lifts it by speaking order (r.95(4))Appeal, or a fresh licence application
AppealWithin thirty days (s.52)Within thirty days (s.52)

The appeal

Within thirty days of the order being communicated, to the appellate authority the appropriate Government prescribes (s.52(1)). A late appeal can be admitted if the contractor shows sufficient cause. The appellate authority hears the contractor and must decide within thirty days of the appeal being filed (s.52(2)). The Central Government notifies its appellate authority and the form and fee by order (Central Rules r.97). Tamil Nadu's draft names the Director of Industrial Safety and Health for contract workers in factories and construction, and the Commissioner of Labour for other establishments (r.150).

What the site does with the crew

The site's exposure comes from section 54: where a principal employer employs contract labour through a contractor "who is required to obtain a licence under this Part, but he has not obtained such licence", the employment is "deemed to be in contravention" of the Code. Whether a suspended licence counts as one "not obtained" for that purpose is a question the Code does not answer in so many words.

  • The order itself. A copy of the show-cause notice and the order: the ground, the period, and what the contractor must do to have it lifted.
  • Wages and contributions. The contractor still owes the crew's wages (s.55), and if it fails to pay them, the site must, under the fifteen-day rule in r.98(8). Keep the month's ECR and ESIC challan in view.
  • The appeal timetable. Thirty days to appeal and thirty days to decide put a fixed outer limit on the uncertainty, which helps the site plan.
  • A changeover route. If the crew has to move, it can move to another licensed contractor on its existing UAN and ESIC numbers, with the work-order intimation filed by the new contractor.

How Velura Services helps

We keep our licence conditions, our licensed number and our work-order intimations current, and we tell a site straight away if any notice is served on our licence. When another contractor's licence is suspended or revoked, we can take the crew across on their existing UAN and ESIC numbers under our own licence, once the site and its counsel have decided that is the route.

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Sources

Frequently asked questions

On what grounds can a contractor's licence be suspended?

Under section 51 of the OSH Code 2020, if the licence was obtained by misrepresentation or suppression of a material fact, or the contractor fails to comply with a licence condition or contravenes the contract labour Part or its rules. Section 50(2) adds failure to intimate a work order, and the Central Rules make the licence liable to suspension if a drawn security deposit is not restored within fifteen days.

Does a contractor get a hearing before suspension?

Yes. Section 51 requires an opportunity to show cause first. Under rule 95 of the OSH (Central) Rules 2026, the authority issues a fifteen-day show-cause notice electronically, examines the reply, and passes a speaking order recording its reasons. If the contractor complies within the time allowed, the suspension is lifted by another speaking order.

How long does a contractor have to appeal a licence suspension?

Thirty days from the date the order is communicated, under section 52 of the OSH Code 2020, to the appellate authority the appropriate Government prescribes. A late appeal can be admitted for sufficient cause. The appellate authority must hear the contractor and dispose of the appeal within thirty days of it being filed.

Can a site keep using a contractor whose licence is suspended?

That is a question for the site's own counsel. Section 54 of the OSH Code deems employment through a contractor who is required to hold a licence but has not obtained one to be a contravention, and the Code does not say in so many words how a suspended licence is treated. The contractor still owes the crew's wages, and the site must pay them if it does not.