Audit of Contract Labour

Checklist
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Copy of Contract Bill of Contractor Supporting Documents Applicability of TDS U/s 194C of the Income Tax Act,1961 Verification of Terms of Contract Applicability of Labour Contract Act, 1970

The Contract Labour (Regulation & Abolition) Act, 1970

Applicability of the Act (Sec. 1)

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(a) to every establishment and

(b) to every contractor
in which or who employees or employed 20 or > 20 workmen on any day of the preceding 12 months (as contract labour)

Registration of certain establishments of Principle Employer

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Form No.

Type of Form

Under Section & Rule

7(1) & 17(1)

Applied by or Grant by
Principal Employer (PE)

Remarks

Registration of Establishmen ts employing Contract Labour Certificate of Registration

For registration of the establishment, every PE shall make an application in triplicate.

II

7 (2) & 18(1)

Registering The RO shall register the Officer (RO) establishment in Form II specifying the max. no. of workmen to be employed as contract labour in the establishment

Rule 26.Fees
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The fees to be paid for the grant of a certificate of registration shall be as specified below: If the number of workmen proposed to be employed on contract on any days is -

(a) 20 (b) 20 50 (c) 50 100 (d) 100 200 (e) 200 400 (f) exceeds 400

Rs.60 Rs.150 Rs.300 Rs.600 Rs.1200 Rs.1500

Sec. 9 Effect of non-registration

Principal employer of an establishment shall not employ contract labour in the establishment.

Application for licence by Contractor

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Form No.

Type of Form

Under Section & Rule

12 (1) & 21(1)

Applied by or Grant by
Contractor

Conditions

IV

Application for Licence

It shall be accompanied by a certificate by the PE in Form V to the effect that the contractor has been employed by him as a contractor and that he undertakes to be bound by all the provisions of the Act and the rules made there under.

VI

Grant of Licence

12 (2) & 25(1)

Licencing Officer

1. The no. (workmen) employed as contract labour in the establishment shall not be > the max. no. specified in the licence on any day; 2. The Minimum Wages Act, 1948(11 of 1948) shall be apply for rates of wages payable to workmen by contractor.

Rule 26.Fees
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The fees to be paid for the grant of a licence shall be as specified below: If the number of workmen employed by the contractor on any day-

(a) 20 (b) 20 50

Rs.15.00 Rs.37.50

(c) 50 100
(d) 100 200 (e) 200 400 (f) exceeds 400

Rs.75.00
Rs.150.00 Rs.300.00 Rs.375.00

Validity of the licence

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Rule 27:
Validity for 12 months from the date it is granted or renewed.

Renewal of licence- by Contractor

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Form No.

Type of Form

Under Rule

Grant by

Remarks

VII

Applicati on for Renewal of Licences

29(2)

licensing officer

It shall be made > 30 days before the date on which the licence expires, e.g. if licence gets expired on 25th July 2012, then application for renewal shall be on or before 25th June 2012.

If the application is so made, the licence shall be deemed to have been renewed until such date when the renewed licence is issued.

Responsibility for payment of wages

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Section & Rule

Responsibility of

Regarding what

Where?

Remarks

21(2) & Principal 72 Employer

To ensure the presence of his Authorized Representative (AR)

At the place and time of disbursement of wages by the contractor to workmen At the end of the entries in the Register of Wages or the Register of Wages-cumMuster Roll, as the case may be

Sec. 21(3) Duty of Contractor: To ensure the disbursement of wages in the presence of such AR. For example: Certified that the amount shown in column No. has been paid to the workman concerned in my presence on.at

21(2) & 73

Authorized Representative

To record under his signature a certificate

Sec.21(4)
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Failure of Contractor: To make payment of wages within the prescribed period or makes short payment, Liability of the principal employer: To make payment of wages in full or the unpaid balance due, to the contract labour employed by the contractor and recover the amount so paid. How?: Either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

Records & Other Registers to be Maintained

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Sec. 29 Every PE and contractor shall maintain such registers and records giving particulars of:

contract labour employed,

the nature of work performed by them, the rates of wages paid and such other particulars in such form as may be prescribed.

Registers and Other Records to be maintained

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Form No. XII

Type of Form

Under Rule 74

Maintained by

Registers of Contractors

Principal Employer

XIV

Employment Card

76

Every Contractor shall issue to each worker within 3 days of the employment of the worker
Contractor

XIX

Wage Slip

78(1)(b)

XXIII

Register of Overtime

78(1)(a)

Contractor

Returns to be filed
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Form No.
XXIV

Type of Form
Half Yearly Return*

Under Rule
82(1)

Filed by

Filed to

When to file?
Not later than 30 days from the close of the half year. Not later than the 15th February following the end of the year to which it relates.

Example

Contractor

Licensing Officer

For the half year ended June: on or before 30th July. For the year ended December 2012: on or before 15th February, 2013.

XXV

Annual Return

82(2)

Principal Employer

Registering Officer

*Half Year means a period of 6 months commencing from 1st January and 1st July of every year.

Sec. 23 Contravention of Provisions of the Act

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Whoever contravenes:
o o

any provision of this Act or of any rules made there under , or any condition of a licence granted under this Act,

shall be punishable with o imprisonment for a term which may extend to 3 months, or o fine which may extend to Rs. 1000, or with both,

and in the case of a continuing contravention with an additional fine which may extend to Rs.100 for every day during which such contravention continues after conviction for the first such contravention.

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Thank You

-Nidhi Parekh (njparekh27@gmail.com)