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What is Contract Labour – CLRA

What is CLRA?

The expansion of CLRA is Contract Labour Regulation and Abolition Act, 1970. The government of India drafted the CLRA to avert the exploitation of subcontracting work and establish better working conditions. According to the CLRA Act, contract labor is employed as an entrepreneur when they are hired as part of the work for an organization through a contractor. The contract laborers are considered to be indirect employees.

Contract work, in general, is not admitted to the payroll and is not paid directly. The contracts are contracted, supervised and remunerated by the contractor.

Applicability of CLRA

  • Applies to all firms registered in India
  • Applicable to all firms employing more than 20 employees, employed presently or in the past, on any day in the last year (12 months).
  • Also applicable to a contractor employing more than 20 employees, employed presently or in the past, on any day in the last year (12 months).
  • The Act does not apply if an establishment carries out work that is casual or intermittent in nature, not exceeding 120 days in the preceding 12 months.
  • The establishment cannot be considered intermittent if work is (seasonal) and performed for more than sixty days in a year.

Features of ACT

The main features of the Act are the central government and state governments should establish central advisory committees and state advisory committees. The functions of the councils are advisory in matters arising from the administration of the Act presented to them. The boards perform the tasks assigned to them by Act.

CLRA to Prinicipal Employer

The CLRA license applicability is to the contractor, and the CLRA registration applicability is for the principal employer. The CLRA act implies that it is unlawful to employ any contract labor in your organization in the absence of the above two mandatory requirements. Hence it is essential for the principal employer to ensure that the contractor that they employ has fulfilled all the obligations under the CLRA license.

Violations of CLRA and penalties

Under the CLRA laws in India, a principal employer cannot legally employ a contract employee unless they have obtained a CLRA registration from the competent authority, i.e., the Government. The primary employer can be punished with imprisonment of up to 3 months. He can also be charged with a fine of Rs.1000/- or be punished with both, in case of a violation, under Section 23 of the Act.


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