Contract labour license renewal fee: What you need to know

If you are an employer who uses contract labour, you are required to obtain a contract labour license and renew it periodically. The license renewal process involves paying a fee, which varies from state to state in India. In this article, we will provide you with information on the contract labour license renewal fee, how to calculate it and the consequences of non-compliance.

What is a contract labour license?

A contract labour license is a permit that allows an establishment to hire workers through a contractor. It is a legal document issued by the government after verification of the employer`s documents. The license is mandatory under the Contract Labour (Regulation and Abolition) Act, 1970, and other relevant laws. Any employer who engages contract labour without a valid license is liable for punishment as per the provisions of the Act.

How to calculate the contract labour license renewal fee?

The contract labour license renewal fee is calculated based on the number of contract workers employed by the establishment during the preceding year. The fee structure varies from state to state and is updated periodically. The fee is usually calculated per worker and ranges from a few hundred to a few thousand rupees per annum.

To calculate the fee, follow these steps:

Step 1: Determine the number of contract workers employed by the establishment in the preceding year.

Step 2: Check the fee structure in the respective state. The fee structure is available on the website of the respective state`s labour department.

Step 3: Multiply the number of workers by the applicable fee per worker. The result is the amount payable for license renewal.

For example, if an establishment in Maharashtra had 50 contract workers last year and the fee per worker is Rs. 500, then the establishment needs to pay Rs. 25,000 as license renewal fee.

What are the consequences of non-compliance?

If an employer fails to obtain or renew the contract labour license, they can face legal action and penalties. The consequences of non-compliance may include:

1. Monetary penalty: The government can impose a monetary penalty for not obtaining or renewing the license. The penalty amount varies from state to state.

2. Imprisonment: The employer can face imprisonment of up to three months or a fine of up to Rs. 10,000 or both.

3. Closure of the establishment: The government can order the closure of the establishment for violating the provisions of the Act.

Conclusion

In conclusion, the contract labour license renewal fee is a mandatory expense that employers need to bear. As an employer, it is important to keep track of the license renewal date and ensure timely payment of the fee. Failure to do so can result in legal action and penalties, which can be a significant cost to the business. If you have any questions regarding the contract labour license renewal fee, it is advisable to consult a legal expert or a chartered accountant for guidance.