How Many Workers Trigger a Contract Labour Licence?

The governing provision

Section 45(1) of the OSH Code 2020 sets out when Part I (Contract Labour) applies. It applies to (i) every establishment in which fifty or more contract labour are employed, or were employed on any day of the preceding twelve months through contract; and (ii) every manpower supply contractor who has employed on any day of the preceding twelve months fifty or more contract labour. Once Part I applies to you, section 47 makes the licence compulsory: no contractor to whom this Part applies may supply or engage contract labour, or execute work through contract labour, except under a licence issued by the designated authority.

It is a peak test, not a headcount today

The count is not how many workers you have on your books today. Section 45(1) reads employed or were employed on any day of the preceding twelve months. A single day on which you crossed fifty in the last twelve months brings you within Part I. Track your peak deployment over the year, not your current or average headcount.

Two limbs: your firm is caught as the contractor

There are two doors into Part I. The establishment door, section 45(1)(i), catches the client or principal employer whose site reaches fifty. The contractor door, section 45(1)(ii), catches you, the manpower supply contractor, once you have employed fifty or more contract labour on any day in the last twelve months. A staffing or manpower firm is caught under the contractor limb even where no single client site reaches fifty, if your own deployed total does. Whether the number is aggregated across all your clients or read per principal employer should be confirmed against your state's notified rule.

The intermittent or casual exception, and why it rarely saves a staffing firm

Section 45(2) carves out an establishment in which work only of an intermittent or casual nature is performed. This is the exception owners ask about most, and it rarely helps a staffing firm. The Explanation to section 45(2) says work is not intermittent if it was performed for more than one hundred and twenty days in the preceding twelve months, or, if it is of seasonal character, for more than sixty days in a year. Continuous manpower supply almost always runs past 120 days, so the work is deemed not intermittent and the exception does not apply. Where a genuine question arises, the appropriate Government decides it after consulting the National Board or a State Advisory Board, and that decision is final.

What the licence itself requires

The licence under section 47 specifies the number of contract labour you may supply or engage and the amount of security you must deposit. Under section 48(3) it is valid for five years for the number of contract labour specified, and if you want to increase that number you apply in the prescribed manner to amend the licence and deposit further security for the balance period. A contractor who does not meet the prescribed qualifications or criteria may instead be issued a work specific licence tied to a single work order, under section 47(2). Applications are made electronically under section 48.

What fifty replaced, and why you still must check your state

The Contract Labour (Regulation and Abolition) Act, 1970 is now subsumed into the OSH Code 2020, which came into force on 21 November 2025, with the Central Rules notified on 8 May 2026. Under the old CLRA the applicability threshold was twenty or more contract workmen. The Code states fifty as the central number in section 45(1), but the appropriate Government, which for most establishments is your State Government, fixes the exact threshold, and states can vary it. Do not assume fifty applies uniformly: check the threshold your state has notified before you conclude you are outside the net.

If you supply without a licence

Section 54 provides that where a principal employer engages contract labour through a contractor who is required to hold a licence but has not obtained one, that employment is deemed to be in contravention of the Code. In practice this means your client carries exposure if you supply without a licence, which is why compliant principal employers will not onboard an unlicenced contractor. Section 55 also makes the contractor responsible for paying wages to each contract labour, with the principal employer as a backstop who must pay if you default and can then recover the amount from you, including from your licence security deposit.

Illustrative example

Illustrative example (check against your state rule): A manpower firm places 30 workers at Client A and 25 at Client B, and on one day during a festival peak deployed 60 in total. Even if it deploys only 40 today, section 45(1)(ii) looks at the peak on any day in the preceding twelve months, so the 60-worker peak brings the firm within Part I on the Code's central fifty-worker number, and section 47 makes a licence compulsory. Whether the 60 is read firm-wide or per client, and the exact threshold, must be confirmed against the state's notified rule.

Your action step

For each principal employer you serve, count your highest contract-labour deployment on any single day in the last twelve months, and also your firm-wide peak. Compare both against the threshold your state has notified under the OSH Code 2020. If you reach it, apply for the contractor licence before you supply. The licence application in the CLRA lineage was Form IV, carried into the rules; confirm the exact form and any per-state variation against your state's notified rules. Remember that a separate licence is generally required for each principal employer.

Sources, last verified and disclaimer

Sources: Occupational Safety, Health and Working Conditions Code, 2020, Chapter XI, Part I, sections 45, 47, 48, 54 and 55; and the Contract Labour (Regulation and Abolition) Act, 1970, now subsumed into the Code. Last verified: 20 September 2026. This page is general information on the statutory position and is not legal advice; thresholds, forms, fees and procedures set by the appropriate Government vary by state and change over time, so confirm the current position for your state before acting. Reviewer byline: pending named legal review.

Key points

• Central trigger: fifty or more contract labour, employed or employed on any day in the preceding twelve months (OSH Code 2020, section 45(1)).
• It is a peak test: a single qualifying day in the last twelve months counts, not today's headcount.
• A manpower firm is caught under the contractor limb, section 45(1)(ii), even if no single client site reaches fifty.
• Once Part I applies, section 47 makes the licence compulsory for the contractor.
• The intermittent or casual exception in section 45(2) rarely helps: work over 120 days, or seasonal work over 60 days a year, is deemed not intermittent.
• Fifty is the Code's central number, but the appropriate Government and state fix the actual threshold and it can vary, so verify your state's notified rule (the old CLRA number was twenty).
• Supplying through an unlicenced contractor is a deemed contravention (section 54), and a separate licence is generally needed per principal employer.

Related questions

Check for your state

• State-specific contract-labour licence thresholds vary and a state may notify a number different from the Code's central fifty; verify against the state's notified rule.
• Whether the fifty count is aggregated firm-wide across all clients or read per principal employer needs confirmation against notified rules.
• Exact licensing form numbers in the Form IV lineage, and any per-state renaming, fees or validity periods, to be confirmed against each state's notified OSH rules.
• The central threshold of fifty is widely reported; the precise number as finally notified for the appropriate Government should be verified before relying on it.