Rules 89 and 90 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 89 says every contractor licence is in Form XXII and carries four standing conditions: non-transferable, a cap on the number of contract labour, non-refundable fees, and wages not below the rates under the Code on Wages, 2019. Rule 90 fixes the security (a bank guarantee at Rs 1,000 per worker, with higher fixed sums for very large contractors) and the licence fee table.
Rule 89: the licence is in FORM-XXII, non-transferable, the number of contract labour on any day must not exceed the maximum in the licence, fees are non-refundable, and wages must be not less than the rates under the Code on Wages, 2019 or any higher agreed rate. Rule 90: before issue, a bank guarantee at Rs 1,000 for each contract labour is deposited; Rs 10 crore, Rs 15 crore or Rs 20 crore for contractors engaging one lakh or more, 1.5 lakh or more, or two lakh or more; fees run from Nil up to 49 to Rs 40,000.
The Code provisions behind the rules
Section 47(1) of the Occupational Safety, Health and Working Conditions Code, 2020 (the OSH Code) says the licence specifies the number of contract labour who can be supplied or engaged and "the amount of security to be deposited by the contractor". Section 47(3)(a) allows conditions on hours of work, wages and amenities. Section 48(3) makes the licence valid for five years for the number of contract labour specified, with amendment and additional security deposit for an increase. See our sections 46 and 47 explainer.
The Central Rules apply where the Central Government is the appropriate Government. Where the State is the appropriate Government, State rules fix their own security and fees. Our labour law compliance team can confirm which amounts apply to you.
Rule 89: the licence and its conditions
Rule 89(1): every licence granted shall be in FORM-XXII. The proforma of licence names the licence number, registration number and date, the holder, the premises and nature of work, and a table recording each period of issue, validity, maximum number of contract labour on any one day, fee, date of payment, excess fee for late payment and signature of the issuing authority, with a separate table for amendments. It is e-signed or digitally signed by the designated authority.
Rule 89(2): every licence granted or renewed is subject to the following.
| Clause | Condition |
|---|---|
| (i) | The licence is non-transferable |
| (ii) | The number of contract labour employed on any day shall not exceed the maximum number specified in the licence |
| (iii) | Fees paid for grant or renewal are non-refundable |
| (iv) | Wage rates payable to contract labour not less than the rates fixed under the Code on Wages, 2019, and where rates are fixed by agreement, settlement or award, not less than those rates |
Practical meaning. A contractor cannot sell or hand over its licence in an acquisition or restructure; the new entity needs its own. The headcount cap is a daily test: a peak day above the licence number is a breach even if the average is lower. For headcount growth, see the amendment route in rule 96 and our rules 95 and 96 article.
Rule 90: security and fees
Security (rule 90(1) to (3))
| Sub-rule | What it says |
|---|---|
| 90(1) | Before a licence is issued, a bank guarantee for security calculated at Rs 1,000 for each of the contract labour to be employed, in respect of which the application is made, is deposited with the authority, for performance of the licence conditions and compliance with the Code |
| 90(2) | For contractors proposing to engage one lakh or more but less than one lakh fifty thousand: Rs 10 crore; one lakh fifty thousand but less than two lakhs: Rs 15 crore; two lakh or more: Rs 20 crore |
| 90(3) | Where an issued licence has expired, on the applicant's request in FORM-XXII, the authority may adjust the security deposit in respect of the application for a new licence |
Example of the arithmetic from the text: a contractor applying for 500 contract labour would give a bank guarantee of Rs 500,000 at Rs 1,000 per worker. The rule's fixed sums apply to the large bands in sub-rule (2). Between the per-worker band and the one lakh threshold, sub-rule (1) is the only formula stated in the text. The text is silent on how sub-rule (1) and sub-rule (2) interact for contractors close to one lakh workers.
This security can be drawn on if wages are unpaid. See rule 86(2) and our rules 98 and 99 article.
Fee table (rule 90(4))
| Contract labour | Fee |
|---|---|
| Up to 49 | No licence required; Nil |
| 50 to 100 | Rs 1,000 |
| 101 to 300 | Rs 2,000 |
| 301 to 500 | Rs 3,000 |
| 501 to 1,000 | Rs 5,000 |
| 1,001 to 5,000 | Rs 10,000 |
| 5,001 to 10,000 | Rs 20,000 |
| 10,001 to 20,000 | Rs 30,000 |
| Exceeding 20,001 | Rs 40,000 |
The table is as printed in the Gazette. Its last band is worded "exceeding 20001"; read it as the top band for numbers above 20,000. The same table governs renewal (rule 91(3)) and amendment fees (rule 96(4)). Fees paid are non-refundable (rule 89(2)(iii)).
Steps for the contractor
- Decide the maximum number of contract labour per day, including peaks.
- Arrange a bank guarantee at Rs 1,000 per worker (or the rule 90(2) amount for large contractors).
- File Form XXI on the Shram Suvidha Portal and pay the fee from the table; see our rules 87 and 88 article.
- Receive the licence in Form XXII, valid as stated (five years under section 48(3)).
- Stay within the cap and notify changes.
Practical examples
Example 1. A contractor expects up to 350 workers. The fee falls in the "301 to 500" band: Rs 3,000. The bank guarantee at Rs 1,000 per worker is Rs 3,50,000.
Example 2. A contractor's licence has expired and it applies for a new one in Form XXII with a request to adjust the earlier security. Under rule 90(3), the authority may adjust it against the new application.
Example 3. A contractor sells its business to another firm and wants to hand over the licence. Rule 89(2)(i) says the licence is non-transferable; the buyer must apply on its own.
Compliance checklist
- Licence in Form XXII on file with current fee and period details.
- Daily headcount tracking against the licence maximum.
- Bank guarantee valid and sized to the number of workers.
- Wage rates cross-checked to the Code on Wages, 2019 and any agreement, settlement or award.
Need help with licence fees, guarantees and conditions?
Sizing a bank guarantee and the right fee band is easy to get wrong when headcount fluctuates. Our team can help you plan these numbers and keep the licence file in order. Start with our labour law compliance service.
Key takeaways
- Rule 89: licence in Form XXII, non-transferable, headcount cap, non-refundable fees, wages not below Code on Wages rates.
- Rule 90(1): bank guarantee at Rs 1,000 per contract labour.
- Rule 90(2): Rs 10 crore, Rs 15 crore, Rs 20 crore for the largest contractors.
- Rule 90(4): fees from Rs 1,000 (50 to 100) up to Rs 40,000.
- State rules apply where the State is the appropriate Government.
Read next
- Sections 46 and 47 of the OSH Code: designated authority and licensing of contractors
- Rules 87 and 88: contractor licence application and single licence
- Rules 91 and 92: renewal of licence and refund of security deposit
- License for contractor: Form IV and process
Disclaimer: Based on the Occupational Safety, Health and Working Conditions Code, 2020 (as enacted) and, where noted, the Occupational Safety, Health and Working Conditions (Central) Rules, 2026 (G.S.R. 345(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.