Dos& Donts by the Principal Employer Engaging CONTRACT LABOUR 1. At the outset, it must be ensured that there is no notification prohibiting contract labour system by the appropriate government for employment of contract labour in any process. Operation or any work of the establishment.2. Before identifying a contract, it is desirable to advertise in classified column (which will be economical) in the local newspaper inviting offers from the contractors and a copy of newspaper along with the invoice be preserved.3. The principal employer is required to obtain registration under section 7 of the contract Labour (R & A) Act in form no.1 (in triplicate) to the Registering officer of the area in which the establishment sough to be registered is located. The said form shall be accompanied by demand draft showing the payment of fees for payment of registration.4. Only those contractors be identified who have their own independent code number under the Employees Provident Fund & MP Act and the ESIC 5. Whenever a contractor will be having 20 or more persons working for him, it is obligatory that licence be taken under the Act. Accordingly the principal employer will issue Form V (Form of certificate by the principal employer) to the contractor for obtaining licence. The principal employer will ensure that the contractor is also renewing his licence every year.6. The principal employer should ensure that if the contract labours are employed for same or similar kind of work as the regular employee of the principal employer does, then the wage rates and other conditions of service should be the same for the contract labour as applicable to the regular employee. For instance if the principal employer has its own security guards and also it is decided to take from the contractor, it would be appropriate the security guards of the principal employer should be promoted/re designated as security officers or surveillance officers/personal.7. The principal employer must ensure that it issues certificate in form V to the contractor for obtaining licence as provided under section 12 of the Act.8. The principal employer should not involve himself in selection process of the contract labour otherwise it may lead to Sham and camouflage.9. Principal employer should not supervise the activity of contract labour because it may amount to sham and camouflage and in turn the contract labour would be declared employees of the principal employer. In such a scenario, the industrial court has the power to direct principal employer to absorb the contract labour.10. That the principal employer gets the registration certificate and the contractor obtains the licence from the competent authority as provided under section 7 of the Act before proceeding to engage the contract labour.

11. The payment of wages to the employee, employed by the contract, is disbursed to his employees by the contractor himself or his nominee and principal employer has to depute his representative to be present and sign the payment register in token of having disbursed the salary in his presence by the contractor.12. Amongst other employees, as provided by the contractor, there must be at least one supervisor through whom the officials of the principal employer could communicate, preference be given to contractor who has such type of work at other location also.13. Discipline of the employees of the contractor in the discharge of duties must be regulated by the contractor and not by the principal employer.14. Leave to the employees of the contractor must be sanctioned by the contractor and not by the principal employer.

15. No advance should be paid by the principal employer to the contractors employees directly. Only contractor must regulate the same.16. Maintenance of all types of record in respect of the employees employed by the contractor should be his own responsibility and principal employer should have regular check it.17. If the principal employer is covered by the EPFO and ESIC, then preference should be given to those contractors who have their own code number under these Acts.18. The principal employer must ensure compliance of the obligation pertaining to the various provisions regarding amenities and benefits as prescribed under the Act.19. The principal employer must ensure the submission of annual return to the prescribed authority in the prescribed form under the Act.20. Experience certificate should not be issued by the principal employer to the employees of the contractor.21. No Performance appraisal of any sort shall be made by the Principal employer to the employees of the contractor.

22. Principal employer should avoid any settlement process, either bi partite or tri-partite.23. Contractor should prepare and hand over the pass book to the inter state migrant employees under the interstate workers migrant Act 1976.24. Avoid engagement of on roll and off roll employees in same or similar job.25. Licence should be displayed at the work place.

26. Principal employer must send annual returns by 15th February every year.

27. Principal employer should see that the contract labour should not work in principal employers establishment after termination of contract.28. The colour of the uniform of the contract labour should be different than that of employees of the principal employer.29. Canteen facilities if being provided by the principal employer to its employees the contract labour should be charged at little higher rate if it is decided they can also avail such facility.30. The principal employer should get an undertaking in the following of each month from the contractor that not only the wages have been paid to its employees but also they have enrolled under ESIC and EPFO and the contractor has paid their contribution (with the proof of deposit) can have one Xerox copy of challan. Should there be any lapse on the part of the contractor and for any reason, the principal employer is held liable to discharge any such monitory obligation, the contractor will be responsible and the amount can be deducted from his dues as payable by the principal employer.