A contract labour licence is the permission a contractor needs to supply workers to another business, called the principal employer. Since the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) came into force on 21 November 2025, the old Contract Labour (Regulation and Abolition) Act, 1970 has been replaced and the contract labour chapter now applies from 50 contract workers, not 20. This page explains where things stand in October 2026 and how to handle licensing in Delhi NCR, Uttar Pradesh and Haryana.
What is a contract labour licence?
Under the old regime, any contractor employing 20 or more workers for a principal employer needed a licence under the Contract Labour (Regulation and Abolition) Act, 1970, and the principal employer itself had to be registered. Both obligations now sit in Chapter XI of the OSH Code, 2020. The chapter applies where an establishment engages 50 or more contract workers, and a contractor must hold a licence before supplying labour for the work.
The Code also tightens one idea that matters in practice: core activities. A principal employer cannot normally use contract labour for the activity for which the establishment was set up. There are exceptions, such as activities that are normally done through contractors, work that does not need full-time workers, and a sudden time-bound increase in work. Services such as sanitation, security, canteen, housekeeping, loading and unloading, and transport are widely treated as non-core, but you should check the exact list in the rules that apply to you.
The Code promises a single licence valid across States and a single return, and it keeps the principal employer on the hook for health and social security benefits if the contractor fails. The Ministry of Labour has said that, during the transition, relevant provisions of earlier labour Acts and rules continue where new rules are not yet in place. That is why a contractor in one State may file on a central portal while another follows a state procedure.
Who needs a contract labour licence?
Two parties are affected: the contractor who supplies workers and the principal employer who engages the contractor.
- Manpower, housekeeping, security, facility-management and loading contractors engaging 50 or more contract workers for work in an establishment
- Principal employers (factories, hotels, malls, hospitals, IT parks, warehouses) that engage contractors at or above the threshold and must register their own establishment
- Contractors working in more than one State who want a single licence instead of separate state licences
- Construction and civil contractors, who should also read our page on BOCW registration because building work follows its own welfare and cess rules
- Businesses below the threshold, who still owe contract workers minimum wages, social security and safe working conditions even if no licence is needed
Benefits of Contract Labour Licence
Lawful supply of manpower
A licence lets you take work orders without the risk of being treated as an unlicensed contractor, which can expose both you and the principal employer to penalties.
One licence across States
The OSH Code provides for a single licence valid across more than one State or all-India, reducing repeat filings for multi-location contractors.
Tender and vendor eligibility
Large principal employers and public bodies routinely ask for the licence, PF and ESIC registrations before onboarding a manpower vendor.
Clear liability split
Registration documents who is the contractor and who is the principal employer, which matters when wages or PF contributions are disputed.
Smoother inspections
A licence with up-to-date registers and returns makes labour inspections routine rather than adversarial.
Eligibility and applicability
Eligibility depends on headcount, the sphere of government that regulates your establishment and the nature of the work.
- The contract labour chapter applies to establishments and contractors engaging 50 or more contract workers; below that, no contractor licence is required under the Code
- An establishment under the OSH Code means a place employing 10 or more workers, and it must register electronically within 60 days of the Code becoming applicable to it
- Central sphere means establishments where the Centre is the appropriate government, such as railways, banks, central public sector units, ports and mines; the Central Rules notified on 8 May 2026 apply to them
- State sphere establishments follow state OSH rules once final; until then, existing state contract labour rules and portals generally continue
- The contractor must not be engaged for core activities except under the permitted exceptions, and must not be a sham arrangement to avoid direct employment
Documents required
Contractor documents
- PAN of the contractor and proof of constitution (incorporation certificate, partnership deed or proprietor ID)
- Address proof of the contractor's registered or principal office
- GST registration, where applicable
- Details of PF and ESIC registrations or the plan to obtain them
- Bank guarantee or proof of security deposit, as required by the applicable rules
- Authorised signatory's ID and board resolution or authority letter for companies
Principal employer documents
- Registration certificate of the principal employer's establishment (Form-I filing and certificate under the Central Rules, or the state registration)
- Principal employer certificate or consent confirming the engagement of the contractor
- Work order or agreement stating the nature of work, location, duration and maximum number of contract workers
- Details of the establishment's own licences where relevant, such as factory licence
Compliance and supporting documents
- Maximum number of contract workers expected on any day, with location of work
- Undertaking to pay at least minimum wages and to maintain registers and returns
- Digital signature or Aadhaar-based e-sign of the authorised person
- Recent photograph and ID of the contractor or partner or director
Step-by-step process
The sequence below reflects the central-sphere flow on Shram Suvidha. State-sphere steps are similar but run on the state portal.
Decide which rules apply
Identify whether the establishment where work will be done is in the central or state sphere. This single decision determines the portal, forms and fee schedule you use.
Confirm the principal employer's registration
The principal employer must hold establishment registration under the OSH Code. Ask for the registration certificate first, because many applications stall when it is missing or shows outdated details.
Collect the work order and worker numbers
Prepare the contract with the nature of work, location, duration and the maximum number of contract workers. The licence fee and security deposit usually depend on this number, so do not understate it.
File the licence application online
The contractor files the application with documents on the portal. Under the Central Rules, work orders must also be intimated on the portal within a short prescribed period after they are awarded.
Pay the fee and furnish the deposit
Pay the government fee through the portal's payment gateway and furnish the security deposit in the form allowed. Keep the challan and bank guarantee scans ready for any query.
Respond to queries and inspection
The licensing officer may raise queries or inspect the workplace. Reply within the stated period, because pending queries are the commonest reason for delay.
Download the licence and display it
Once granted, download the licence and keep a copy at the workplace. Contractors must also obtain separate PF and ESIC coverage for their workers where the thresholds apply.
File returns and renew on time
File the annual and any half-yearly returns, and apply for renewal inside the window before expiry. Late renewal attracts an additional charge under the rules.
Government fees
Fees depend on the sphere of government and the number of contract workers. The figures below are the ones we could verify; confirm the current schedule on the relevant portal before paying.
| Item | Amount | Note |
|---|---|---|
| Haryana legacy licence fee (CLRA rules) | ₹20 to ₹500 by slab | Haryana Labour Department contract labour page; Haryana draft OSH Rules 2026 are pending |
| Haryana legacy security deposit | ₹30 per worker | Haryana Labour Department contract labour page |
| Central Rules 2026 licence fee, 50 to 100 workers | ₹1,000 | As reported by secondary commentary; confirm on Shram Suvidha |
| Central Rules 2026 security deposit | ₹1,000 per contract worker | As reported by secondary commentary; confirm on Shram Suvidha |
Professional charges are quoted separately after reviewing your case. Government fees are paid directly to the authority. Uttar Pradesh and Delhi fee schedules should be checked against the final state OSH rules before filing.
How long does it take?
Under the OSH Central Rules 2026, establishment registration certificates are meant to issue within a short statutory period or be deemed granted, and renewals are deemed approved if the authority does not act in time. Contractor licence timelines in the state sphere depend on the labour office and on how complete your file is. Plan for several weeks from a clean application, and do not start supplying labour above the threshold until the licence is in hand.
| Stage | Typical time |
|---|---|
| Document preparation and principal employer certificate | A few days to 2 weeks |
| Online filing and fee payment | 1 to 2 days |
| Scrutiny, query and inspection | Varies by authority |
| Licence issue | Depends on sphere and state; no fixed timeline can be promised |
Validity and renewal
The OSH Code allows a licence valid for up to five years, including a single licence across States. Under the Central Rules, renewal is filed in a window before expiry, with an extra fee if filed late. Older state licences, such as Haryana's, ran to 31 December of the year and had to be renewed 30 days before expiry with a 25% late penalty. Always read the validity printed on your licence, because legacy and new-rule licences differ.
Compliance after approval
- Pay wages at or above the notified minimum wages and ensure payment through bank transfer where required
- Enrol eligible workers with EPFO and ESIC; see PF registration and ESIC registration
- Maintain the prescribed registers of workers, wages and deductions at the workplace
- File the annual return by the due date; principal employers file their own annual return listing contractors
- Intimate changes in contractor, work order or worker numbers within the prescribed period
- Keep PF challans and ESIC payment proofs ready for inspections, since principal employers can be asked to pay if the contractor defaults
Contract labour regime: CLRA 1970 vs OSH Code 2020
| Point | CLRA 1970 (old) | OSH Code 2020 (now) |
|---|---|---|
| Threshold for contractor licence | 20 or more workmen | 50 or more contract workers |
| Principal employer | Registration under the CLRA | Establishment registration under the Code (10 or more workers) |
| Licence geography | Separate state licences | Single licence across States provided |
| Core activity | Prohibition by notification | Core activities restricted, with listed exceptions |
| Filing | State labour portals | Shram Suvidha for central sphere; state portals for state sphere |
Common mistakes and rejection reasons
Principal employer not registered
Contractors file first and discover later that the principal employer's registration is missing or lapsed. Verify this before you submit.
Understating worker numbers
A low headcount reduces fees today but invites penalties after inspection. Use the realistic maximum on any single day.
Using old CLRA forms and thresholds
Many online guides still say 20 workers and Form IV. Check the current threshold and forms for your sphere before filing.
Contracting out core activities
Using contract labour for the main activity, without a permitted exception, can lead to prohibition orders or deemed employment claims.
Missing PF and ESIC enrolment
A licence does not replace social security registration. Gaps are the first thing inspectors check.
Late renewal
Letting the licence lapse means work done in the gap is unlicensed. File inside the renewal window.
Penalties for non-compliance
The OSH Code replaces many CLRA penalties with monetary penalties, and it allows compounding of first offences and a notice period before prosecution. We could not verify exact penalty amounts for each offence from the gazette text, so we do not quote them here. In general, engaging an unlicensed contractor, operating without registration, or failing to maintain registers and returns can attract fines that increase for repeat or continuing offences. The principal employer can also be made to pay wages and benefits if a contractor defaults.
Practitioner tips
- Check the principal employer's registration certificate and its listed address before you start; mismatches between the work site and the registered address cause avoidable queries.
- Prepare one clean work order per site showing maximum workers. Revising it mid-application restarts scrutiny.
- If you serve clients in several States, ask whether the single-licence route fits your case before filing separate state applications.
- Align your PF and ESIC code numbers and bank-wise wage payment trail with the licence, because inspectors cross-check them.
- For Haryana and Uttar Pradesh, confirm on the labour portal whether state OSH rules are final for your activity before choosing the legacy CLRA or new route.
How Lawgical Guru helps
Applicability check
We confirm whether your establishment is in the central or state sphere and whether the 50-worker threshold is crossed.
Documentation and filing
We prepare the contractor and principal employer document set and file the application on the correct portal.
Query handling
We draft replies to officer queries and coordinate on inspection requirements.
PF and ESIC alignment
We help you obtain related registrations so your licence and social security records match.
Renewals and returns
We track renewal windows and help prepare annual returns.
Contract Labour Licence: frequently asked questions
Is a contract labour licence still required after the Labour Codes?
Yes, but under the OSH Code, 2020 and only where a contractor engages 50 or more contract workers. The Contract Labour (Regulation and Abolition) Act, 1970 stood replaced from 21 November 2025. Below the threshold no contractor licence is required, but wage and social security duties still apply.
What is the new contract labour threshold?
The contract labour chapter of the OSH Code applies to establishments and contractors engaging 50 or more contract workers. The earlier CLRA threshold was 20. States may notify their own rules, so check the state rules for your location.
Where do I apply for a contract labour licence?
For establishments in the central sphere, you apply on the Shram Suvidha portal under the OSH Central Rules 2026. For state-sphere work, apply on the state labour portal. Where state OSH rules are not final, the earlier state contract labour procedure usually continues.
Does the principal employer also need registration?
Yes. The principal employer's establishment must be registered under the OSH Code, since an establishment means a place employing 10 or more workers. Existing registrations under earlier central laws are treated as deemed registrations, with particulars to be updated within the prescribed period.
How long is a contract labour licence valid?
The Code allows a licence of up to five years, including a single licence across States. Older state licences were often valid till 31 December and needed yearly renewal. Check the validity printed on your own licence and renew inside the permitted window.
What is the fee for a contract labour licence?
It depends on the number of contract workers and the applicable rules. Haryana's legacy schedule ran from ₹20 to ₹500 with a ₹30 per worker deposit. Central fees reported for 2026 begin at ₹1,000 for 50 to 100 workers. Confirm the current schedule on the portal.
Can a contractor be engaged for core activities?
Generally not. The Code restricts contract labour in core activities, with exceptions for work normally done through contractors, work not needing full-time workers, and sudden time-bound increases. Activities such as security, sanitation and canteen are commonly treated as non-core, subject to the applicable rules.
Is PF and ESIC mandatory for contract workers?
Contract workers must be covered under EPF and ESI where the thresholds and wage limits apply. If the contractor is not independently registered or defaults, the principal employer can be liable. See our pages on PF registration and ESIC registration for coverage details.
What happens if I use an unlicensed contractor?
You risk monetary penalties under the OSH Code, enforcement notices and liability to pay wages and benefits yourself. First offences may be compounded and inspectors usually give a notice period, but repeated or continuing violations carry higher penalties.
Do I need a licence if I employ fewer than 50 contract workers?
Not under the Code's contract labour chapter. You may still need establishment registration if the place has 10 or more workers, and you must still pay at least minimum wages, enrol eligible workers in PF and ESIC, and follow safety rules.
Related guides
Reviewed by Satyam Gupta, Company Secretary (CS) & Advocate
8+ years of industry experience. This page was last reviewed on 16 October 2026 against the official sources below. Rules and fees change — confirm on the official portal before you apply.