A contractor who engages 50 or more contract labour needs one licence under Chapter XI of the Occupational Safety, Health and Working Conditions Code 2020: applied for electronically, granted or deemed granted within 45 days, valid for five years across every establishment the contractor serves, and backed by a security deposit of ₹1,000 per worker. A principal employer who engages a contractor without it takes on the contractor's duties itself.
Who needs one, and from what date
The contract-labour chapter, sections 45 to 58, applies to a contractor who engaged 50 or more contract labour on any day of the preceding twelve months, and to an establishment that had that many engaged through contractors [VERIFY: s.45 wording, from secondary summaries]. The Ministry of Labour's FAQ on the Code confirms the threshold rose from 20 under the 1970 Act to 50, and describes the change as administrative: below 50 the licensing chapter does not apply, but the Code's health, safety and welfare duties apply to any establishment with 10 or more employees regardless (Q2, Q6).
Two features of the count catch contractors out. It is a look-back, so a contractor who peaked at 50 for a festive season in November needs a licence for the twelve months that follow, not only for November. And it is counted across the contractor's whole business, not per client, so a contractor supplying 20 workers to each of three sites is at 60 and inside the chapter. The licence itself is the mirror image: one licence, issued centrally, covering every establishment the contractor supplies.
| Contract Labour (R&A) Act 1970 | OSH Code 2020 | |
|---|---|---|
| Threshold | 20 contract labour | 50 contract labour (s.45) [VERIFY] |
| Scope of licence | Per establishment, issued by the state or central licensing officer | One national licence across establishments (s.47) [VERIFY] |
| Validity | Renewed annually or for the period fixed by the state | Five years [VERIFY: OSH (Central) Rules 2026, r.88] |
| Application | Paper or state portal, per licence | Electronic, Form XXI, Shram Suvidha portal [VERIFY: rule and form] |
| Deemed grant | None; discretionary timelines | 45 days if no objection is raised [VERIFY: r.88] |
| Security deposit | Per licence, state-set | ₹1,000 per contract labour [VERIFY: r.90] |
| Fallback | None | Work-specific licence for a single work order where full-licence conditions are not met (s.48) [VERIFY] |
The application
The application goes in electronically on the Shram Suvidha portal in Form XXI, and if the licensing authority raises no objection within 45 days the licence is treated as granted [VERIFY: r.88 of the OSH (Central) Rules 2026, from a law-firm summary; the Rules themselves could not be opened]. The eligibility test is narrow: an applicant is disqualified only if they are an undischarged insolvent or have been convicted, within the preceding two years, of an offence carrying three months' imprisonment or more [VERIFY: r.85]. The particulars asked for are the ones a principal employer will later want to see: the establishments to be served, the nature of the work, and the maximum number of contract labour the licence will cover.
The security deposit is ₹1,000 per contract labour, so a licence for 200 workers carries a deposit of ₹2,00,000 [VERIFY: r.90]. It is not a fee. The Rules let the Chief Labour Commissioner draw on it directly where minimum wages have gone unpaid, which turns the deposit into the first source of recovery for a wage default before anyone reaches the principal employer [VERIFY: r.86, mechanism from a secondary summary]. A contractor whose deposit has been drawn on has had a wage failure adjudicated against them, and that is a fact a site should ask about.
Where a contractor does not meet the conditions for a full licence, section 48 provides for a work-specific licence, tied to a particular work order and valid for its duration [VERIFY: section and scope]. It is the route for a specialist contractor brought in for one job, not a substitute for the full licence for a contractor who supplies labour as a business.
Living with the licence
The licence sets the terms the contractor must supply on, and the Code makes supplying outside them a contravention. A contractor may supply or engage contract labour only in accordance with the licence, which means within the headcount it names, at the establishments it names, and on the conditions attached to it: working hours as the Code prescribes, wages paid in line with the Code on Wages 2019, and the welfare provisions of the Code [VERIFY: conditions under r.86]. Wages go by bank transfer or electronic mode, with an electronic intimation to the principal employer each wage period, under section 55 [VERIFY: section number].
- Headcount. Deploying more contract labour than the licence covers is a breach on the contractor's side and, because the principal employer must engage only in accordance with a valid licence, an exposure on the site's. A contractor growing past the licensed number applies to amend it before deploying, not after [VERIFY: amendment procedure under the Rules].
- Renewal. Five years is long enough to forget. The application to renew goes in before expiry; a lapsed licence puts every deployment made under it in the same position as an unlicensed one [VERIFY: renewal window and procedure].
- Records. The licence number goes on the registers and returns the contractor maintains, and the licence is produced on demand to an inspector-cum-facilitator [VERIFY: register requirements under the 2026 Rules].
- Suspension and revocation. The licensing authority may suspend or revoke for misrepresentation or breach of conditions, with an appeal to the appellate authority within the period the Rules set [VERIFY: sections 49 and 50, and the appeal window].
What the principal employer must do
Engage only a licensed contractor, and be able to prove it. Where the chapter applies, the Code treats a principal employer who engages contract labour through an unlicensed contractor as having taken on the contractor's duties towards those workers, and the engagement itself as the principal employer's contravention, in the general penalty band of ₹2 lakh to ₹3 lakh [VERIFY: the section that transfers the contractor's duties to the principal employer, and s.94 for the penalty, both from secondary sources]. The establishment also carries its own registration under section 3 of the Code, electronic and single for the Code as a whole, from 10 employees [VERIFY: s.3 threshold and the single-registration mechanism].
| Check | What to see | When |
|---|---|---|
| Licence exists and is current | The licence number, verified on the Shram Suvidha portal; the validity dates | At engagement, then annually and at renewal |
| Establishment named | This site listed on the licence, or covered by its national scope | At engagement |
| Headcount covered | Maximum contract labour on the licence, against the number to be deployed here plus the contractor's other sites | At engagement and before any increase |
| Deposit intact | The deposit receipt, and confirmation that no drawing has been made against it | At engagement; ask again after any wage complaint |
| Conditions met monthly | The electronic wage intimation, the ECR acknowledgement, the ESIC challan | Each wage period, as part of the monthly evidence pack |
| Own registration | The establishment's registration under s.3 [VERIFY] | Once; keep the certificate with the contractor file |
The first four rows take an afternoon at engagement and a diary note at renewal. The fifth is the monthly routine described elsewhere on this site. None of it requires the site to become an expert in the Rules; it requires the site to hold five documents and to know what each proves.
Whether a specific arrangement puts a site inside or outside the licensing chapter, particularly where the count straddles 50 over the year or the work is genuinely a one-off, depends on how the twelve-month count and the core-activity provisions apply to the facts, and that is a question for the reader's own counsel.
Sources
- Ministry of Labour and Employment, FAQs on the OSH Code, 2020 (January 2026) — Q2 (licensing threshold raised from 20 to 50, for administrative ease, without affecting entitlements) and Q6 (welfare duties at 10 or more employees). Opened and read.
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Chapter XI, ss.45 to 58, in particular ss.45, 47, 48, 49, 50, 55 and the penalty provision at s.94 [VERIFY: section numbers and the section that transfers contractor duties to the principal employer, all from secondary summaries; the primary could not be opened]
- Occupational Safety, Health and Working Conditions (Central) Rules, 2026, notified 8 May 2026 — rr.85 (eligibility), 86 (licence conditions and deposit draw-down), 88 (Form XXI, 45-day deemed grant, five-year validity), 90 (security deposit of ₹1,000 per contract labour) [VERIFY: all rule numbers, forms and figures from a law-firm summary (Obhan & Associates); the Gazette notification could not be opened]
- The Code on Wages, 2019 (Act 29 of 2019), Gazette text — wage conditions attached to the licence refer to this Code. Opened and read.
- Contract Labour (Regulation and Abolition) Act, 1970 and Central Rules, 1971 — the repealed regime used for comparison [VERIFY: repeal under the OSH Code and the pre-Code licence terms]