What to Do Before Deploying a Worker to Another State

The rule: which law governs a cross-State deployment

Since 21 November 2025 contract labour is governed by the Occupational Safety, Health and Working Conditions Code, 2020, with the CLRA 1970 and BOCW 1996 subsumed into it. Chapter XI has two relevant parts. Part I (sections 45 to 58) covers contract labour and contractor licensing. Part II (sections 59 to 65) covers inter-State migrant workers, that is, workers working in a State different from their own State. When you deploy a worker across a State line through a contractor or employer, both parts can apply at once: the licence side under Part I and the migrant-worker duties under Part II. The OSH Code Central Rules were notified on 8 May 2026 and State rules sit under them, so exact numbers, forms and fees must be read from the destination State's own notified rule.

The exception that usually applies: the headcount thresholds

A single deployed worker does not, by itself, trigger the Part II regime. Under section 59, Part II applies to an establishment only when ten or more inter-State migrant workers are employed, or were employed on any day in the preceding twelve months. Below that count the specific Part II duties may not attach at establishment level. Part I licensing has its own threshold set by the Code and rules: under the earlier CLRA it was twenty or more contract workmen, and under the OSH Code it is widely reported as raised to fifty workers, but this varies and must be checked against the destination State's notified rule. Being under a threshold does not switch off your wage obligations, benefit contributions, licence validity or GST and TDS: those apply regardless of headcount.

Action step 1: confirm your licence covers the destination State

A contractor to whom Part I applies cannot supply or engage contract labour except under a licence (section 47). If your existing licence does not cover the destination State, you need coverage before you deploy. The proviso to section 47 gives the route: a contractor who wants to supply or engage contract labour in more than one State, or for the whole of India, may obtain a single licence from the Central Government authority under section 119, and that authority consults the concerned State authorities before issuing it; otherwise you take a State licence for the destination State. The licence application must include information relating to the employment of inter-State migrant workers (section 48). A separate licence is required for each principal employer. The legacy forms carried into the rules are Form I (principal employer registration), Form IV (contractor licence application), Form V (principal employer certificate) and Form VI (the licence); confirm the exact form numbers, fees and validity against the destination State's notified rules. Engaging contract labour through a contractor who should hold a licence but does not is a contravention (section 54).

Action step 2: honour what you owe an inter-State migrant worker

Section 60 places duties on the contractor or employer: ensure suitable conditions of work given that the worker is required to work in a State different from his own; in case of a fatal accident or serious bodily injury, report to the specified authorities of both States and to the worker's next of kin; and extend all benefits available to a worker of that establishment, including benefits under ESI and EPF and the facility of a medical check-up. Section 61 requires the employer to pay each inter-State migrant worker a lump sum fare for the to and fro journey to his native place once a year, on terms prescribed by the appropriate Government. Section 62 requires schemes giving the worker the option to draw public distribution system benefits either in his native State or the destination State, plus portability of building and other construction cess benefits. A toll free helpline may also be provided under section 63.

Action step 3: reset payroll and tax for a cross-State supply

Crossing a State line changes the tax picture. Manpower supply is taxed at 18 percent GST under SAC 9985, charged on the full billed value and not only on your margin. A supply from your State to a recipient in another State is an inter-State supply, so IGST at 18 percent applies on the invoice instead of CGST plus SGST. TDS under section 194C of the Income-tax Act continues (1 percent if the payee is an individual or HUF, 2 percent otherwise, subject to thresholds). On payroll, the EPF Universal Account Number is portable across employers, so contributions continue on the worker's UAN through the monthly Electronic Challan cum Return; ESI is administered through regional offices and the wage ceiling is Rs 21,000 per month (Rs 25,000 for persons with disability). Professional Tax and Shops and Establishment obligations differ by State, so check the destination State's slabs and requirements.

Last verified and disclaimer

Last verified: 20 September 2026, against the Occupational Safety, Health and Working Conditions Code, 2020, the Code on Social Security, 2020, the Code on Wages, 2019, and the GST and Income-tax provisions cited below. This page is general information for staffing and manpower firm owners, not legal or tax advice. Thresholds, forms and fees vary by State and change by notification, so confirm the position for your destination State before you deploy a worker. Reviewed by the ZeniaHR content team; pending named legal review.

Key points

• First establish whether the worker will work in a State that is not his own, which is what makes him an inter-State migrant worker.
• Count inter-State migrant workers at the establishment: Part II duties attach at 10 or more, including any day in the preceding 12 months (section 59).
• Check that your contractor licence covers the destination State; use the section 47 multi-State or all-India licence from the Central authority, or take a State licence.
• One licence is needed per principal employer; verify form numbers, fees and validity against the destination State's notified rule (legacy Forms I, IV, V and VI).
• Extend ESI, EPF and medical check-up benefits and ensure suitable working conditions (section 60).
• Budget the once-a-year to and fro journey allowance to the worker's native place (section 61).
• Set up dual-State accident reporting and a next-of-kin contact before day one (section 60).
• Switch billing to IGST at 18 percent (SAC 9985) on the full value for the inter-State supply.
• Keep the EPF UAN and monthly ECR running, and check destination-State Professional Tax and Shops and Establishment rules.

Related questions

Check for your state

• Contract-labour licence threshold varies by State (CLRA was 20 or more; OSH Code reported as raised to 50); verify the destination State's notified figure.
• Exact licence form numbers (Form I, IV, V and VI carried from CLRA) must be confirmed against the destination State's notified rules.
• Licence fees and validity period for the destination State are not fixed here and vary by State.
• Journey allowance quantum, minimum service for entitlement, periodicity and class of travel are as prescribed by the appropriate Government; verify the applicable rule.
• PDS portability and construction-cess portability scheme mechanics are as per notified scheme; verify.
• Professional Tax and Shops and Establishment obligations at the destination differ by State; confirm slabs, thresholds and forms.
• If you deploy private security guards, a PSARA licence is issued per State under the Private Security Agencies (Regulation) Act, 2005, so a separate destination-State licence is likely required; verify with that State's Controlling Authority.