Licensing
LABOUR LICENSE
📘 Labour License – Meaning, Benefits & Process (India)
1️⃣ What is a Labour License?
A Labour License is a statutory registration required for contractors employing contract workers under the
Contract Labour (Regulation and Abolition) Act, 1970.
It is issued by the Labour Department of the respective State Government and regulates employment of contract labour in establishments.
2️⃣ When is Labour License Required?
Labour License is required when:
A contractor employs 20 or more contract workers (limit may vary in some states).
The establishment engages contract labour through a contractor.
Two parties are involved:
Principal Employer – Company/Factory where work is executed
Contractor – Person supplying manpower
Both must obtain registration under the Act.
3️⃣ Types of Registration
1️⃣ Registration of Establishment – Taken by Principal Employer
2️⃣ Labour License – Taken by Contractor
4️⃣ Benefits of Labour License
✔ Legal compliance
✔ Avoid penalties & prosecution
✔ Required for government tenders
✔ Ensures worker welfare compliance
✔ Improves business credibility
✔ Required for large infrastructure & industrial projects
5️⃣ Documents Required
For Contractor:
PAN Card
Aadhaar Card
GST Certificate
Work Order/Agreement
Establishment Registration Certificate
Address proof
Bank details
Security deposit (as per rules)
For Principal Employer:
Factory/Company Registration
PAN & GST
Registration Certificate under Labour Act
6️⃣ Step-by-Step Process
Step 1: Principal Employer Registration
Principal employer registers establishment on labour portal.
Step 2: Apply for Labour License
Contractor applies online through State Labour Department portal.
Step 3: Upload Documents
Submit work order, worker details, and other documents.
Step 4: Fee & Security Deposit
Pay prescribed government fee and security amount.
Step 5: Scrutiny & Approval
Labour Department verifies and issues Labour License.
7️⃣ Validity
Usually valid for the period of contract/work order
Can be renewed based on contract extension
8️⃣ Time & Cost
Processing Time: 7–20 working days
Government fee depends on number of workers
Security deposit per worker (state-wise rules apply)
9️⃣ Penalty for Non-Compliance
❌ Fine up to ₹1,00,000 (varies by amendment)
❌ Imprisonment
❌ Work stoppage
❌ Blacklisting in tenders
🔟 Who Commonly Requires Labour License?
Construction companies
Security agencies
Manpower supply agencies
Infrastructure contractors
Manufacturing units
Service Related FAQ
What is a Labour License?
A Labour License is a statutory permission issued to contractors employing contract workers under the Contract Labour (Regulation and Abolition) Act, 1970.
Who needs a Labour License?
A contractor must obtain a Labour License if employing 20 or more contract workers (threshold may vary by state).
Who is a Principal Employer?
A Principal Employer is the company, factory, or establishment where contract workers are deployed.
Is registration required for Principal Employer?
Yes. The Principal Employer must register the establishment before the contractor applies for Labour License.
Is Labour License mandatory for all businesses?
No. It is mandatory only when engaging contract labour beyond the prescribed limit.
What documents are required?
Common documents include: PAN & Aadhaar GST certificate Work order / Agreement Establishment registration Worker details Address proof Security deposit details
How long does it take to get a Labour License?
Generally 7–20 working days, depending on state procedures.
What is the validity of Labour License?
It is usually valid for the duration of the contract/work order and may be renewed if extended.
Is there any security deposit?
Yes. A security deposit per worker is required, as prescribed by state labour authorities.
What happens if Labour License is not obtained?
Heavy penalties Legal action Project stoppage Disqualification in tenders
