Compliance & labour law · Updated October 2026
Contract labour registration and licence are the two permissions that let a business use workers supplied through a contractor: the principal employer registers the establishment, and the contractor holds a licence. Under the CLRA Act, 1970 both kicked in at 20 contract workers; the OSH Code, in force since 21 November 2025, raised the bar to 50 and reshaped both steps.
| Point | CLRA Act, 1970 | OSH Code, 2020 |
|---|---|---|
| Threshold | 20 or more contract workers on any day of the preceding 12 months | 50 or more (section 45), for the establishment or the contractor |
| Principal employer | Separate registration of the establishment | No separate step; contract labour details go into the single section 3 establishment registration |
| Contractor | Licence tied to the specific work, issued by the government for that establishment | Licence under section 47, valid five years, with an option of one licence from a central authority for several states or all of India |
| Contractors below the criteria | No separate category | “Work-specific licence” limited to a named work order |
The contract labour Part does not apply where work is only intermittent or casual. The Code treats work as not intermittent if it ran more than 120 days in the preceding 12 months, or more than 60 days in a year for seasonal work. Licence applications are filed electronically, and if the authority does not decide within 45 days the licence is deemed issued (section 119). A contractor must also report each new work order to the licensing authority.
The 50-worker test applies to the contractor as well as to you. A housekeeping agency with 30 people at your office may still need a licence because it employs 200 across clients. Ask for the licence number, the worker count it allows and its expiry, and check that the count covers what is deployed at your site. Using an unlicensed contractor is a contravention by the principal employer, on top of the wage and welfare exposure described under principal employer liability.
Yes, for now. Section 119(5) treats a contract labour licence obtained under a central labour law before the Code as valid for the period it was issued, after which it has to be obtained afresh under the Code.
The Code says 50, but state rules are uneven and a few states had their own figures under the old Act. Confirm with your state’s labour department and the implementation status before treating a 30-person contract team as outside the rules.
Yes, if you have 10 or more workers, under section 3 of the Code. It works alongside any state shops and establishment registration your state still requires.
Before choosing between a contractor and direct hiring, compare the full cost in the contractor vs employee cost calculator.