Labour Laws and Practice · Law of Welfare and Working Condition

Contract Labour and Inter-State Migrant Workers under the OSH Code

Updated 11 October 2026 · Fact-checked

Under the OSH Code, 2020, a contractor needs a licence to supply or engage contract labour (section 47). Contract labour in core activities is prohibited, except in three listed cases (section 57). Employers and contractors owe inter-State migrant workers specific facilities, and the employer pays an annual journey allowance (sections 60 and 61).

Understand Contract Labour and Inter-State Migrant Workers

A contractor supplies workers to another business or executes work through them. The business that uses them is the principal employer. The workers are on the contractor's roll, but they work at the principal employer's establishment. The Code regulates this triangle so that workers are not exploited and responsibility is clear.

The first control is licensing. Under section 47, no contractor to whom this Part applies may supply or engage contract labour, or execute work through it, without a licence. The licence states the number of contract labour allowed and the security deposit. A contractor who does not meet the prescribed qualifications or criteria may get a work specific licence, valid only for the concerned work order. If the contractor works in more than one State or across India, the licence can come from the authority designated by the Central Government, after consulting the State authorities concerned.

The second control is the core activity prohibition in section 57. Employing contract labour in core activities of any establishment is prohibited. The principal employer may still use a contractor for a core activity in three cases: the normal functioning of the establishment is such that the activity is ordinarily done through a contractor; the activity does not need full time workers for the major portion of the working hours in a day or for longer periods; or there is a sudden increase of volume of work in the core activity that must be done in a specified time. If there is doubt whether an activity is core, the aggrieved party applies to the appropriate Government, which may take advice from a designated authority.

The third part protects inter-State migrant workers. The contractor or employer must ensure suitable conditions of work, report a fatal accident or serious bodily injury to the specified authorities of both States and to the next of kin, and extend all benefits available to the establishment's workers, including ESI and provident fund benefits and the medical check-up facility. The employer also pays a lump sum fare for a to-and-fro journey to the native place once a year (section 61). Workers can register on a portal by self-declaration and Aadhaar (section 21).

Key rules to remember

Licence requirement (s. 47): No licence = no supply, engagement or execution of work through contract labour; Licence specifies number of contract labour and security deposit. Work specific licence is for a contractor not meeting the criteria, limited to the concerned work order.
Licence validity (s. 48(3)): Validity = 5 years for the number of contract labour specified; To increase numbers, apply for amendment and deposit the security specified in the amended licence for the balance period.
Deemed issue (s. 119(4)): Licence issued electronically within 45 days, failing which it is deemed issued; No further inquiry once deemed issued. A rejection must state reasons.
Appeal (s. 119(6)): Appeal within 30 days of order; disposed of electronically within 30 days; Made to the appellate authority prescribed by the appropriate Government.
Core activity exceptions (s. 57(1)): Ordinarily done through contractor OR no full time need OR sudden increase in work; Any one of the three allows contract labour in a core activity.
Non-licensed contractor (s. 54): Principal employer using unlicensed contractor = deemed contravention of the Code; Applies where the contractor was required to obtain a licence but did not.
Migrant worker duties (s. 60): Suitable work conditions + report to both States and next of kin + all establishment benefits; Duty lies on the contractor or the employer of the establishment.
Journey allowance (s. 61): One lump sum fare for to-and-fro journey to native place, in a year; Minimum service, periodicity and class of travel are as prescribed by the appropriate Government.

How to solve Contract Labour and Inter-State Migrant Workers questions

Case questions on this topic follow a provision, analysis, conclusion pattern. Use this order.

1Identify the parties: principal employer, contractor and workers. Note whether any worker is an inter-State migrant.
2Identify the issue: licensing, core activity, migrant worker facilities, or journey allowance.
3State the rule in plain words with the section number you are certain of (47, 48, 54, 57, 60, 61, 119).
4Apply the rule to the facts. For core activity, test each of the three exceptions against the facts one by one.
5Check licence details: right authority, validity of five years, number of workers, work specific licence or not.
6Give a clear conclusion on who is in contravention and what remedy exists, such as an application, amendment or appeal.
7Add a practical compliance point, for example verifying the contractor's licence before engagement.

Quickest way: Four-question check

When to use it: Use when time is short and the case facts are long.

Does the contractor hold a valid licence for this work and this headcount? If not, think sections 47 and 54.
Is the activity core? If yes, does one of the three exceptions apply?
Are any workers from another State? If yes, think sections 60 and 61.
Is any order against the applicant? If yes, think appeal within 30 days under section 119(6).

Common mistakes in Contract Labour and Inter-State Migrant Workers

Saying contract labour is banned in all activities.
Students remember only the word 'prohibited'.
Fix: The ban applies to core activities, and even there section 57(1) allows three exceptions.
Treating the three exceptions as cumulative.
The clauses are listed one after another and look like a checklist.
Fix: They are alternatives. Any one satisfied is enough, as the principal employer 'may engage' if (a), (b) or (c) applies.
Putting the journey allowance duty on the contractor alone.
Section 60 speaks of the contractor or employer, so students assume the same for section 61.
Fix: Section 61 says the employer shall pay the fare to every inter-State migrant worker employed in his establishment.
Writing that a licence is valid for one year or for any period.
Confusion with older licence rules.
Fix: Under section 48(3), a licence under section 47(1) is valid for five years for the number of workers specified.
Ignoring the consequence for the principal employer of using an unlicensed contractor.
Students focus on the contractor's duty to obtain the licence.
Fix: Section 54 deems the employment to be in contravention of the Code. Mention the principal employer's exposure.
Missing the deemed licence rule.
Students stop at 'authority issues licence'.
Fix: State that if no licence is issued within 45 days, it is deemed issued and auto generated, and no further inquiry is made.

Worked examples

Example 1

Sundaram Textiles Ltd, Coimbatore, hires Ravi Manpower Services to supply 80 workers for its spinning section, which is a core activity. Ravi has no licence. Advise whether the arrangement is valid.

Show the solution

Rule: under section 47, a contractor cannot supply or engage contract labour without a licence. Under section 57(1), contract labour in core activities is prohibited unless an exception applies.
Licence: Ravi holds no licence, so he is acting in breach of section 47. Under section 54, the company's employment of contract labour through him is deemed to be in contravention of the Code.
Core activity: spinning is core for a textile company. The facts show no sign of the three exceptions (ordinary use of contractors, no full time need, or sudden increase in work).
Conclusion: the arrangement is invalid on both grounds.
Practical advice: stop the arrangement or ensure Ravi obtains a licence, and engage contract labour in the core activity only if an exception in section 57(1) genuinely applies.

Answer: The arrangement is not valid. Ravi needs a licence (section 47), the company is in deemed contravention for using an unlicensed contractor (section 54), and the core activity ban in section 57(1) applies as no exception is shown.

Example 2

Anita Constructions in Pune employs Imran, a worker from Bihar, through a licensed contractor. Imran suffers a serious injury at the site. Anita Constructions asks whether it must pay him a journey allowance and what it must do about the injury.

Show the solution

Status: Imran is an inter-State migrant worker, as he works in a State different from his own.
Injury: under section 60(ii), the contractor or employer must report a fatal accident or serious bodily injury to the specified authorities of both States and to the next of kin.
Benefits: under section 60(iii), Imran must get all benefits available to the establishment's workers, including ESI and provident fund benefits and the medical check-up facility.
Journey allowance: under section 61, the employer must pay him once a year a lump sum fare for to-and-fro travel to his native place. Minimum service, periodicity and class of travel are as prescribed by the appropriate Government.
Registration: Imran may register on the portal by self-declaration and Aadhaar under section 21.

Answer: Yes. The establishment must pay the annual journey allowance, subject to the prescribed conditions, and must report the serious injury to the authorities of Maharashtra and Bihar and to Imran's next of kin, while extending all benefits available to its other workers.

Exam tips

Quote the three core activity exceptions in your own words and say they are alternatives.
Always name who owes the duty: contractor, principal employer or employer. Section 60 and section 61 differ.
For licence questions, mention five-year validity, the work specific licence and the 45-day deemed issue rule.
Close each case answer with a practical step, such as checking the contractor's licence or filing an appeal within 30 days.
Cite a section number only for the ones you know: 47, 48, 54, 57, 60, 61, 119 and 21.

Practice questions from Law of Welfare and Working Condition

Contract Labour and Inter-State Migrant Workers in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

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Contract Labour and Inter-State Migrant Workers: frequently asked questions

What is the difference between a principal employer and a contractor under the OSH Code?

The principal employer owns or runs the establishment where the work is done. The contractor supplies contract labour to it or executes work through such labour. The contractor needs a licence under section 47, and the principal employer is deemed in contravention if it uses an unlicensed contractor (section 54).

Is contract labour allowed in core activities?

Generally no. Section 57(1) prohibits it. The principal employer may use a contractor if the activity is ordinarily done through contractors, does not need full time workers for the major portion of working hours, or faces a sudden increase in work to be done in a specified time.

Who decides whether an activity is core?

If a question arises, the aggrieved party applies to the appropriate Government. The Government may appoint a designated authority to advise it, and may refer the question to that authority. The Government then decides within the prescribed period.

What is the journey allowance for inter-State migrant workers?

It is a lump sum fare for a to-and-fro journey to the worker's native place, paid by the employer once in a year. The minimum service needed, periodicity and class of travel are set by the appropriate Government.

How long is a contractor's licence valid?

A licence under section 47(1) is valid for five years for the number of contract labour specified. To add workers, the contractor applies for an amendment and deposits the security specified in the amended licence for the balance period.