Contract labour 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.
Chapter IX, Parts I and II of the Uttar Pradesh Occupational Safety, Health and Working Conditions Rules, 2026 (rules 78 to 100) govern contractors and the principal employers who use them: the licence application in Form-25, the fee table, the security deposit, licence conditions, renewal, how contract labour is paid, and the journey allowance of inter-State migrant workers.
A contractor applies electronically in Form-25 with a principal employer's certificate in Form-26. Up to 49 contract workers: no licence is required; from fifty workers the fee runs from 2500 to 25000 rupees, with security at rupees one thousand for each workman. Renewal is applied for at least thirty days before expiry but not before ninety days; late renewal carries an additional fee of twenty five per cent. Wages are paid by bank transfer or electronic mode only.
The rule set
This article covers the Uttar Pradesh Occupational Safety, Health and Working Conditions Rules, 2026, as notified by notification no. 962/XXXVI-03-2026-1903305 dated 27 August 2026. Later amendments and State notifications under these rules should be checked in the State Gazette. Rule 1(4) says the rules "shall come into force from the date of their publication in the Official Gazette". The registers and returns that apply to these establishments are in our article on registers, records, returns and the Inspector-cum-Facilitator.
The Central companions are explained in rules 85 and 86 on qualification and conditions of licence, rules 87 and 88 on application and single licence, rules 91 and 92 on renewal and refund of security and rule 102 on journey allowance. The Uttar Pradesh numbers differ. A principal employer that engages many contractors should have a labour law compliance review of its contractor files.
Rule 78: application, fee and security
Every contractor application for a licence, or its modification or amendment, is made electronically in Form-25 on the official portal. It is accompanied by a certificate from the principal employer in Form-26, giving information on the employment of inter-State migrant workers and confirming that the applicant is employed as contractor and the principal employer will be bound as principal employer by the Code and rules; and a declaration of the applicant that the information is correct and the requirements of rule 79 are met.
Fees for a contract labour licence (rule 78(4)).
| Number of workers employed by the contractor in the establishment | Fee in rupees |
|---|---|
| Up to 49 contract workers | No licence is required |
| Fifty or more but less than hundred | 2500.00 |
| Hundred or more but less than two hundred fifty | 5000.00 |
| Two hundred fifty or more but less than five hundred | 12500.00 |
| More than five hundred | 25000.00 |
The State Government may amend the table by general or special order. The contractor deposits security at the rate of rupees one thousand for each workman to be employed as contract labour for which the licence is sought (rule 78(5)).
Rule 79: licence terms and conditions
The licence is in Form-27 and subject to these conditions, among others: it is non-transferable; the number of workmen employed on any day does not exceed the maximum in the licence; fees paid are non-refundable except as the rules provide; wages are not less than the rates under the Minimum Wages Act, 1948 or the Code on Wages, 2019, where applicable, and not less than any agreed, settled, awarded or State-fixed rates; where thirty or more women are ordinarily employed, two rooms of reasonable dimension are provided for children under the age of six years (one play room with toys and games and one sleeping room with cots and bedding); changes in the number of workmen or conditions of work are notified to the Authority; a copy of the licence is displayed at the work premises; and within fifteen days of the commencement and completion of each contract work the licensee submits a return in Form-28. Contract workers are not appointed in core activities except in the cases in the proviso to section 57(1) of the Code.
Rules 80 to 86: grant, refusal, security refund and amendment
The designated Authority keeps electronic registers of principal employers in Form-4 and of contractors in Form-29. In granting a licence the licensing officer considers whether the contractor is an undischarged insolvent or was convicted in the last two years of an offence punishable with more than three months' imprisonment; whether an abolition order, award or settlement covers the work; whether an earlier order under section 14(1) of the Contract Labour (Regulation and Abolition) Act, 1970 or section 51 of the Code has been in force for less than three years; and whether the fee and security were deposited (rule 82). A refusal follows a hearing and records reasons (rule 83). A complete application is granted in Form-27 electronically within the period in the Uttar Pradesh Janhit Guarantee Adhiniyam, 2011, failing which the licence is deemed granted and auto-generated by the portal (rule 84). On expiry or completion, a contractor who does not want renewal applies electronically for refund of the security with the principal employer's no-objection certificate, the licence copy, notice of completion and bank details; refund is as far as possible disposed of within thirty days, less any forfeiture, and the record is kept in Form-30 (rule 85). An amendment that increases contract labour needs the additional fee and security (rule 86).
Rule 87: renewal
An application for renewal is made on the portal at least thirty days before the licence expires but not before ninety days of expiry. The fee and security are the same as for grant, with an additional fee of twenty five per cent if the application is late. If the Authority does not renew within the Janhit Guarantee Adhiniyam period, the licence is deemed renewed and the certificate is auto-generated (rule 87).
Rules 88 to 96: wages, intimation and other duties
- Wages (rule 88). The contractor's responsibility for wages is that of an employer under the Code on Wages, 2019. The contractor gives the principal employer the details of wages and a copy of the wage register within seven days of payment. Contract labour is made members of the Employees' Provident Fund Organisation and the Employees' State Insurance Corporation subject to applicability. If the contractor breaches the Code or rules, the Authority may cancel the licence, forfeit the security and direct the Inspector-cum-Facilitator to act.
- Intimation of work order (rule 89). Within fifteen days of receiving a work order, the contractor intimates the Authority in Form-28, and the Inspector-cum-Facilitator, electronically.
- Suspension or cancellation (rule 90). For failure to intimate, the Authority may, after a show-cause notice of at least fifteen days and a hearing, suspend or cancel the licence.
- Appeal (rule 91). The appellate authority is the Labour Commissioner, Uttar Pradesh.
- Wage period and mode (rule 92). The wage period does not exceed one month, and wages are disbursed through bank transfer or electronic mode only. Where that is not practicable, payment is made in the presence of the principal employer's authorised representative, with prior intimation to the Inspector-cum-Facilitator, for a maximum of two months or till opening of the bank account, whichever is earlier (rule 93).
- Security deposit used for unpaid wages (rule 94). If wages are not paid, the designated authority inquires and orders payment from the contractor's security deposit; the contractor refurnishes it within fifteen days or the licence is liable to suspension or cancellation.
- Experience certificate (rule 95). On demand, in Form-31.
- Core activity (rule 96). An aggrieved party applies in Form-32; the designated Authority reports to the State Government within two months and the State decides within two months of the report.
Part II: inter-State migrant workers (rules 97 to 100)
An employer pays a lump-sum reasonable fare for the to-and-fro journey (by train not below second class sleeper, bus or other passenger transport) to a migrant worker who has worked not less than 180 days in the establishment in the preceding twelve months, on termination before the period ends, incapacity through injury or ill-health certified by a registered medical practitioner, cessation of work not due to the worker's fault, or resignation due to non-fulfilment of the terms by the contractor (rule 97(1)). A migrant worker employed for more than six months receives journey allowance after every six months, paid electronically as far as practicable by the principal employer. Rule 98 provides for access to the Public Distribution System, rule 99 requires the Labour Commissioner to set up a helpline number without call charges, and rule 100 permits a State study of migrant workers.
A worked example
A power equipment plant in Meerut engages a maintenance contractor for 120 workers. The principal employer signs the Form-26 certificate, the contractor applies in Form-25, pays the fee for the hundred-to-two-hundred-fifty band and security of rupees one thousand for each of the 120 workmen, displays the Form-27 licence at the plant, pays wages by bank transfer, and sends the plant the wage register within seven days of each payment. In the tenth month it applies for renewal, not earlier than ninety days nor later than thirty days before expiry.
Common lapses
- Using contract workers beyond the number allowed in the licence.
- Paying wages in cash without the principal employer's representative present, or beyond the two-month limit.
- Applying for renewal with fewer than thirty days left, which adds twenty five per cent.
- Not intimating the work order within fifteen days.
- Not refurnishing the security within fifteen days after it is used for unpaid wages.
Need help with contractor licences?
If you are a principal employer or contractor in Uttar Pradesh, our labour law compliance service can check licence limits, security amounts and renewal dates against these rules. The fee table and deposit are fixed by the rules, so errors are easy to catch early.
Key takeaways
- Form-25 application with Form-26 principal employer certificate; no licence for up to 49 contract workers.
- Fees 2500 to 25000 rupees by worker band; security rupees one thousand per workman.
- Renewal window: not before ninety days, not later than thirty days; twenty five per cent additional fee if late.
- Wages by bank transfer or electronic mode; wage details to the principal employer within seven days.
- Migrant workers: journey fare and allowance on the conditions of rule 97.
Read next
- Uttar Pradesh OSH Rules, 2026: registers, records, returns and Inspector-cum-Facilitator
- Uttar Pradesh OSH Rules, 2026: beedi and cigar, audio-visual and plantation workers
- Central OSH rules 87 and 88: contractor licence application and single licence
- Central OSH rule 102: journey allowance to inter-State migrant worker
Disclaimer: Based on the State or Union territory rules named above, as notified under the Labour Codes and consulted on 4 October 2026. Later amendments, State notifications, fees and forms should be checked in the State Gazette and on the State labour department website. This article is general information, not legal advice; check the official text before acting.