Contract labour in Maharashtra: what the principal employer is responsible for

Most plants in the Pune belt use contract workers somewhere: on the line, in housekeeping, loading, security or the canteen. The contractor employs them, but the law still puts duties on the company where they work, the principal employer. Those duties moved on 21 November 2025, when the four Labour Codes took effect and the Contract Labour (Regulation and Abolition) Act, 1970 became part of the Occupational Safety, Health and Working Conditions Code, 2020 (the OSH Code).

This article sets out what the OSH Code and the Ministry of Labour’s own handbook say. It is a plain summary, not legal advice. Where a state rule applies, the Maharashtra rule is the one to read.

First: the old rules have not all gone yet

The Codes are in force, but the detailed rules under them are still being framed. The Ministry of Labour’s FAQ says old rules remain in force until new rules are notified, to the extent they are in line with the Codes. So in practice you comply with the Codes, and use the existing rules and forms where the new ones are not yet out.

When the contract labour provisions apply

The contract labour chapter of the OSH Code applies to every establishment in which 50 or more contract workers are employed, or were employed on any day of the preceding 12 months (Section 45). A contractor who employs 50 or more contract workers must hold a licence (Section 47). The licence is valid for five years (Section 48), and a contractor who works in several states can take one all-India licence from the authority the Central Government notifies.

Separately, every establishment with 10 or more employees must register electronically within 60 days of coming into existence (Section 3). Establishments already registered under an older Act do not register again, but must tell the registering officer their details.

Where contract labour may be used

The OSH Code separates core and non-core activities (Section 57). The Ministry’s FAQ explains that a principal employer may use contract labour for core activities only where that work is ordinarily done through contractors, is intermittent, or involves a sudden increase in volume that has to be completed on time. For anything else that is core to the plant, the route is direct hiring, including fixed term employment.

What the principal employer must provide

The principal employer is responsible for the welfare facilities in Sections 23 and 24 of the Code (Section 53). In the Ministry’s handbook these include:

• Clean and hygienic workplace, ventilation, lighting and safe drinking water
• Separate toilets for male, female and transgender workers
• Washing and separate bathing facilities, sitting arrangements, locker rooms, first aid and rest or shelter rooms
• A canteen where 100 or more workers are employed
• A crèche where more than 50 workers are employed, on its own or shared with others

The government’s announcement of the Codes adds that the principal employer will provide health benefits and social security benefits to contract workers, and that workers are to get a free annual health check-up.

If the contractor does not pay

This is the point that matters most in practice. If the contractor fails to pay wages within the prescribed period, or pays short, the principal employer is liable to pay the contract workers (Section 55). Under the Code on Wages, monthly wages must be paid before the end of the seventh day of the following month, so the principal employer has an interest in seeing proof of payment every month, not once a year.

Gratuity, PF and ESI for contract workers

For contract labour, the Ministry’s FAQ says the contractor, as the employer, pays gratuity after five years of continuous service, at 15 days’ wages for each completed year based on the last drawn wages. Provident fund and ESI contributions are likewise deposited by the contractor under its own codes. See PF and ESIC for contract workers for the rates.

Migrant workers

Where 10 or more inter-state migrant workers are employed, or were on any day of the past 12 months, the employer must pay each of them a lump sum journey allowance once a year for the trip between the workplace and their native place (Sections 59 and 61).

A monthly checklist for the principal employer

• The contractor’s licence, where it employs 50 or more contract workers, and its validity date
• Proof that wages were paid on time and in full, with wage slips
• PF and ESI challans for the month, matched to the names actually deployed
• Attendance and wage registers, which the Code allows to be electronic and which are kept for five years
• Appointment letters for each worker
• Welfare facilities on site, and the annual health check-up where it applies

A good contractor will hand these over without being chased. If one cannot, that is the signal to look harder. Our compliance page lists what we take on for clients.

This is a plain summary for general information, not legal advice. Laws, rates and limits change; check the official source before acting on a figure.

Sources

1. PIB, 21 November 2025: Government makes the four Labour Codes effective
2. Ministry of Labour and Employment: Compliance Handbook for Employers under the Four Labour Codes (February 2026)
3. Ministry of Labour and Employment: FAQs on Labour Codes (30 December 2025)
4. Ministry of Labour and Employment: Additional FAQs on Labour Codes (16 March 2026)
5. Commissioner of Labour, Government of Maharashtra