What the template contains
- Header block for firm and establishment details: legal name, GSTIN, contract labour licence number and validity, PSARA licence number if a security agency, EPF and ESI codes, state or states of operation, audit date and auditor name
- Section A, Registrations and licences: contract labour licence held per principal employer, principal employer registration and Form V certificate on file, Shops and Establishment registration, Professional Tax registration, GST registration, PSARA licence for security guards where applicable
- Section B, Wages and payment: paid at or above the state minimum wage (not below the Central floor wage), wage period fixed at not more than one month, payment made within the notified time limit, disbursement by bank or electronic mode, no fee or commission deducted from workers
- Section C, Statutory contributions: EPF against each worker's UAN with monthly ECR filed (employee 12% and employer 12%), ESI (employee 0.75% and employer 3.25%) within the wage ceiling, challan proofs kept, remittance dates met
- Section D, Bonus, gratuity and leave: bonus within the 8.33% to 20% band, gratuity computed on the 15/26 basis (pro-rata for fixed-term workers), annual leave with wages accrued at one day for every twenty days worked
- Section E, Registers, records and returns: register of workers, wage register, attendance record, experience certificate issued on demand, statutory returns filed on time
- Section F, Tax and invoicing: GST charged at 18% on the full taxable value (SAC 9985), tax invoice carrying both GSTINs plus the CGST and SGST or IGST split, reverse charge checked for security services, TDS under section 194C, reconciliation via GSTR-2B and Form 26AS
- Section G, Worker welfare and safety: welfare facilities extended by the principal employer, safety provisions, provisions on employment of women
- Section H, Inter-state migrant workers: applicability at ten or more workers, journey allowance, accident reporting to both states, parity of benefits
- Section I, Per-client contract file: a separate licence for each principal employer, the principal employer's certificate, and intimation of the work order to the authority
- Control columns on every line: Required or Optional flag, status marked Compliant, Gap or Not applicable, evidence reference, responsible owner, target date to close
- Risk summary and sign-off block for the auditor and a reviewer
How to use it
- Fill the header with the firm and establishment details, all licence numbers and statutory codes, and the audit date.
- Go state by state: confirm the notified worker-count threshold, the applicable forms and the wage slabs for each state you operate in, because these vary and you should not assume one number nationally.
- Work down each section and mark every line Compliant, Gap or Not applicable, and record where the proof sits (challan number, register page, invoice, licence copy).
- For each Gap, name the responsible owner and a target date to close it.
- Use the Required or Optional flag to prioritise: fix the legally required gaps first, then the good-practice items.
- Keep one completed checklist per client contract, since a contractor needs a separate licence and a separate principal employer certificate for each principal employer.
- Re-run the audit at the start of each financial year, before every inspection, and whenever you enter a new state or take on a new client.
- Before you rely on any rate, threshold or form number, verify it against the current notified state or Central rule, as these change.
Key fields and clauses
| Field or clause | What to put |
|---|---|
| Contract labour licence (per principal employer) | OSH Code Chapter XI section 47 requires a contractor to hold a licence to supply or engage contract labour, and a separate licence is needed for each principal employer. |
| Applicability threshold check | This Part applies to firms and contractors at or above the notified worker count; confirm the exact number against your state's rule rather than assuming it. |
| Principal employer certificate on file | Keep the principal employer's certificate confirming the contract on each client's contract file as evidence for the licence. |
| No fee or commission from workers | OSH Code section 49 bars charging any fee or commission, direct or indirect, to contract labour. |
| Minimum and floor wage | Under the Code on Wages, pay not below the state minimum wage, which itself cannot be fixed below the Central floor wage. |
| Wage period and payment timeline | The employer fixes a wage period of not more than one month and pays within the notified time limit; on exit, dues are cleared within two weeks. |
| Wage payment by bank or electronic mode | OSH Code section 55 requires disbursement by bank transfer or electronic mode and intimation of the amount to the principal employer. |
| Principal employer wage backstop | If the contractor fails to pay, the principal employer must pay the wages and recover the amount from the contractor, including from the licence security deposit. |
| EPF contribution and ECR | Employee 12% and employer 12% of wages, deposited monthly through the ECR against each worker's portable UAN; verify current rates. |
| ESI contribution and wage ceiling | Employee 0.75% and employer 3.25% up to the Rs 21,000 monthly wage ceiling (Rs 25,000 for a person with disability); verify current rates. |
| Bonus | Code on Wages Chapter IV sets a minimum of 8.33% and a maximum of 20% of wages, subject to eligibility and ceilings as notified. |
| Gratuity | 15 days wages for every completed year (factor 15/26) after five years of continuous service; fixed-term workers get pro-rata gratuity without the five-year condition. |
| Annual leave with wages | OSH Code Chapter VII allows one day of paid leave for every twenty days worked; treat it as a statutory cost element in your rate card. |
| GST tax invoice (SAC 9985 at 18%) | Charge 18% on the full billed value, not just the margin; a compliant invoice carries both GSTINs, the SAC, the billing period and the CGST plus SGST or IGST split. |
| Reverse charge check for security services | Security services attract 18% and can fall under reverse charge where the supplier is non-body-corporate and the recipient is registered; general manpower supply is not under RCM by default. |
| TDS under section 194C | The client deducts TDS on labour supply payments (1% for individual or HUF, 2% otherwise), subject to thresholds; reconcile through Form 26AS. |
| Experience certificate on demand | OSH Code section 56 requires the contractor to issue an experience certificate to contract labour on demand. |
| Inter-state migrant workers | Where ten or more are employed, extend journey allowance, accident reporting to both states and parity of benefits, per OSH Code Chapter XI Part II. |
| PSARA licence (security agencies) | A private security agency must hold a State Controlling Authority licence, separate for each state, with guard training and verification requirements. |
Why this document matters
This checklist is driven mainly by the Occupational Safety, Health and Working Conditions Code, 2020, whose Chapter XI now governs contract labour and inter-state migrant workers after the Contract Labour Act and the BOCW Act were subsumed into it (licensing under section 47, no worker fees under section 49, principal employer welfare and wage backstop under sections 53 to 55, experience certificate under section 56). It also draws on the Code on Wages, 2019 for minimum and floor wages, wage period, payment timelines and bonus; the Code on Social Security, 2020 for EPF, ESI and gratuity; and, for security agencies, the Private Security Agencies (Regulation) Act, 2005. The tax lines follow GST law (18% on manpower supply, SAC 9985) and section 194C of the Income-tax Act for TDS on labour contracts. The labour codes came into force on 21 November 2025 and the Central Rules were notified on 8 May 2026; worker-count thresholds, forms and wage slabs vary by state, so confirm each item against the state's notified rule before relying on it.
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Get the templateCommon questions
Is a contract labour licence still needed now that the labour codes are in force?
Yes. Contract labour is now governed by Chapter XI of the OSH Code, 2020, which requires a contractor to hold a licence to supply or engage contract labour. The old Contract Labour Act was subsumed into this Code, not removed. The worker-count threshold and the exact forms are set by the Code and its rules and vary by state, so confirm the notified number for each state where you deploy workers.
Which items on the checklist are legally required and which are optional?
Licences, minimum wage, timely and electronic wage payment, EPF and ESI contributions, statutory registers and returns, a compliant GST invoice and correct TDS handling are legally required. Items such as keeping a single consolidated audit file per client, internal risk ratings and early renewal reminders are good practice that make audits easier but are not themselves mandated. The Required or Optional column flags each line so you can prioritise.
We supply workers to clients in more than one state. Do we need one licence or many?
Treat each state and each principal employer separately. A contractor needs a separate licence for each principal employer, and thresholds, forms and wage slabs differ from state to state. Keep one completed checklist per client contract and confirm the notified rule for each state rather than assuming a single national figure.