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:
| Ground | Where | Examples |
|---|---|---|
| Licence obtained by misrepresentation or suppression of a material fact | OSH Code s.51(1)(a) | A false headcount, address or record in the application |
| Failure to comply with a licence condition | s.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 rules | s.51(1)(b) | Charging workers a fee or commission (s.49); late wages (s.55) |
| No intimation of a work order | s.50(2) | A new contract started without reporting it to the authority |
| Security deposit drawn and not restored | Central 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:
- Show cause. The authority issues a fifteen-day show-cause notice electronically (r.95(1)).
- Reply and examination. The contractor replies within fifteen days of receiving it, and the authority examines the reply (r.95(2)).
- 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)).
- 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.
| Suspension | Revocation | |
|---|---|---|
| What it does | Stops the licence for a period, pending compliance | Ends the licence |
| The way back | Comply within the time allowed and the authority lifts it by speaking order (r.95(4)) | Appeal, or a fresh licence application |
| Appeal | Within 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.
Sources
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI. Sections cited: s.49 (no fee from contract labour), s.50(2) (suspension or cancellation for failing to intimate a work order), s.51 (revocation, suspension and amendment of licence), s.52 (appeal; thirty days; decided within thirty days), s.54 (employment through an unlicensed contractor), s.55 (contractor responsible for wages). Opened and read.
- Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026, mirrored copy of the Gazette. Rules cited: r.89(2)(ii) (number not to exceed the licence), r.94 (work-order intimation), r.95 (show cause, speaking order, lifting or revocation), r.97 (appellate authority), r.98(8) (principal employer pays unpaid wages), r.99(2) (security to be restored). Opened and read [VERIFY: against the e-Gazette original].
- Occupational Safety, Health and Working Conditions (Tamil Nadu) Rules, 2022 (draft), G.O. Ms. No. 38, 11 April 2022, Tamil Nadu Government Gazette Extraordinary No. 216. Rule 46(2)(iv) (wages not below prescribed rates as a licence condition), r.52 (suspension or cancellation for failing to intimate a work order), r.150 (appellate authorities). Opened and read.