What changed: CLRA to the OSH Code
The Contract Labour (Regulation and Abolition) Act 1970 (CLRA) was one of 13 laws consolidated into the Occupational Safety, Health and Working Conditions Code 2020 (OSH Code). The Code came into force on 21 November 2025. The Central Government's rules under it, the OSH (Central) Rules 2026, were notified on 8 May 2026 (G.S.R. 345(E)); each state makes its own rules for establishments where it is the appropriate government, and those are at different stages.
The contract labour provisions sit in Chapter XI of the Code. Three things changed for a principal employer and its contractors:
- Higher thresholds. Contract labour provisions now apply at 50 contract workers, not 20.
- One registration. The principal employer no longer takes a separate contract labour registration; the single establishment registration under section 3 covers it.
- Licence for five years, and all-India. A contractor's licence is valid for five years, and a contractor working in several states can take one licence from the authority notified by the Central Government.
Thresholds: then and now
| Requirement | CLRA Act 1970 | OSH Code 2020 |
|---|---|---|
| Contract labour provisions apply to the establishment | 20 or more contract workers on any day in the preceding 12 months (raised to 50 in some states) | 50 or more contract workers on any day of the preceding 12 months (s.45) |
| Principal employer registration | Separate CLRA registration for covered establishments | Single registration for every establishment with 10 or more employees, within 60 days, applied for electronically (s.3) |
| Contractor licence | Contractor with 20 or more workers, per establishment | Contractor employing 50 or more contract workers (s.47) |
| Licence validity | Fixed period, renewed (commonly one year) | Five years (s.48); single licence for multi-state work from the Central authority (s.47) |
| Common licence | Separate licences under separate Acts | One common licence for factory, beedi and cigar premises and contract labour, applied electronically (s.119) |
| Inter-state migrant workers | Separate Act (1979) | Special provisions at 10 or more inter-state migrant workers, including an annual journey allowance (ss.59, 61) |
Establishments that were registered under a central Act before the Code do not register again; they intimate the registration details to the Registering Officer. Any change in particulars is intimated electronically within 30 days. For Central sphere establishments the Shram Suvidha portal is the route; states use their own portals.
The principal employer's duties
- Registration of the establishment (s.3) and electronic notice of commencement and cessation of a contract labour establishment or construction work (s.5).
- Welfare facilities for contract workers as prescribed under sections 23 and 24 (drinking water, toilets, first aid, rest rooms, canteen where 100 or more workers are employed), which section 53 makes the principal's responsibility.
- Wages backstop. Section 55: if the contractor fails to pay wages within the prescribed period, or pays short, the principal employer is liable to pay the contract labour. The principal then recovers the amount from the contractor; write the right to deduct it from the contractor's bills into the work order.
- Core activities. Section 57 prohibits contract labour in the core activities of the establishment, subject to exceptions for activities normally done through contractors, work that does not need full-time workers for most of the day, and sudden surges to be completed in a set time. For a dispute about what is core, rule 101 of the Central Rules lets the aggrieved party apply to the Central Government, which can refer it to the authority designated under s.57(2)(a) (S.O. 2483(E) of 13 May 2026).
- Construction sites. For building and other construction work done through a contractor, the principal pays the cost of the temporary accommodation the contractor provides to building workers (s.24).
The contractor's duties
- Licence where it employs 50 or more contract workers, before starting work.
- Pay wages on time: by the seventh day of the following month for a monthly wage period under the Code on Wages, and within two working days to a worker who leaves.
- Issue appointment letters and wage slips, and maintain the registers.
- Register workers for PF and ESIC and give the principal the monthly contribution details; see PF and ESIC for contract workers.
Registers and returns
Under section 33 the employer maintains, electronically or as prescribed, a register of employees, an attendance-cum-muster roll, and a register of wages, overtime, deductions and dangerous occurrences, issues wage slips, and files an annual return electronically. The Ministry of Labour's handbook counts eight registers across all four Codes, down from 84, and a single electronic return in place of 31. The exact formats are in the Central and state rules; take them from the rules that apply to your establishment.
Worked example
Round illustrative numbers. ABC Infra Private Limited runs a building project with 45 of its own employees and three contractors on site in the last 12 months: Contractor A with up to 30 workers, Contractor B with up to 25, and Contractor C with up to 60.
| Party | Under CLRA (20-worker test) | Under the OSH Code |
|---|---|---|
| ABC Infra (principal) | CLRA registration as principal employer | Single registration under s.3 (it has 10 or more employees); contract labour provisions apply because 50 or more contract workers were engaged on at least one day; Contractor C alone had 60 (s.45) |
| Contractor A (30) | Licence needed | No licence (below 50) |
| Contractor B (25) | Licence needed | No licence (below 50) |
| Contractor C (60) | Licence needed | Licence needed, valid five years |
Contractors A and B need no licence, but ABC Infra's duties under sections 53 and 55 still cover their workers. If Contractor B pays its 25 workers ₹5,00,000 short for a month, ABC Infra is liable for that ₹5,00,000 and recovers it from B's next running bill. The RA bill deductions calculator shows the bill after statutory recoveries; the BOCW cess calculator covers the separate construction cess.
Checklist for the principal employer
- Establishment registration under the OSH Code, or intimation of the earlier registration.
- Contractor list with peak headcount for the last 12 months, and each contractor's licence number and validity where it has 50 or more workers.
- Work orders that oblige the contractor to pay wages by the due date, give wage and PF/ESIC proof each month, and allow the principal to deduct and pay shortfalls.
- Monthly proof of wage payment (bank transfer file) before releasing the contractor's bill.
- Welfare facilities at site checked against sections 23 and 24.
- Core activity review for any contract engaged for work the establishment exists to do.
K-HR keeps the attendance-cum-muster roll, leave register and overtime hours for your own employees, with a compliance calendar for statutory due dates; contractor workers' wage records are the contractor's to maintain. The OSH Code thresholds above are the central provisions; state rules decide forms, fees and portals, so confirm with your adviser and the state labour department.
Common questions
Is the CLRA Act 1970 still in force?
No. The Contract Labour (Regulation and Abolition) Act 1970 is one of the 13 laws subsumed into the Occupational Safety, Health and Working Conditions Code 2020, which came into force on 21 November 2025. Licences and registrations granted earlier are carried into the new framework; check your state's transition rules.
How many contract workers before a contractor needs a licence?
Under section 47 of the OSH Code a contractor employing 50 or more contract workers needs a licence. Under the CLRA Act the threshold was 20 in most states. The licence is valid for five years (section 48), and a contractor working in several states can take a single licence from the authority notified by the Central Government.
Does a principal employer still need a separate CLRA registration?
No separate contract labour registration is needed. Every establishment with 10 or more employees takes one registration under section 3 of the OSH Code, applied for electronically within 60 days. Establishments already registered under a central Act intimate their details instead of registering again.
Who pays if the contractor does not pay wages?
The principal employer. Under section 55 of the OSH Code, if the contractor fails to pay wages within the prescribed period or makes a short payment, the principal employer is liable to pay the contract labour. The principal then recovers it from the contractor, usually by deduction from the contractor's bills under the work order.
Can contract labour be used in core activities?
Section 57 of the OSH Code prohibits contract labour in core activities, with exceptions: where the activity is normally done through contractors, where it does not need full-time workers for most of the day, or for a sudden surge of work to be completed in a set time. The Central Rules 2026 set a procedure to decide disputes over what is core.
Sources
- Ministry of Labour and Employment, Compliance Handbook for Employers under the Four Labour Codes (OSH Code ss.3, 33, 45, 47, 48, 53, 55, 59, 119)
- Ministry of Labour and Employment: Labour Codes
- OSH (Central) Rules 2026, G.S.R. 345(E) dated 8 May 2026 (rule 101: core activities)
- S.O. 2483(E) dated 13 May 2026: designated authority under s.57(2)(a) of the OSH Code
- Shram Suvidha portal (registration and licence for the Central sphere)
- Code on Social Security, 2020 (BOCW cess, ss.100 and 103)