Contract labour compliance under the OSH Code: what changed after CLRA

If your plant, warehouse or hospital runs on contractors, the law behind that arrangement changed last November, and many site files have not caught up. Contract labour compliance under the OSH Code is not more paperwork than before. It is different paperwork, with a sharper rule on paying wages and a clearer line on who pays when the contractor does not.

CLRA repealed: what replaced it

The Contract Labour (Regulation and Abolition) Act, 1970 was repealed when the Occupational Safety, Health and Working Conditions Code came into force on 21 November 2025, along with a dozen other laws such as the Factories Act. The Code has savings clauses, so actions already taken under the old law are not undone.

The Central Government notified its OSH Rules on 8 May 2026. These apply to establishments where the Central Government is the "appropriate government". Most states had not finished their own rules by then, so many state-sphere establishments are in a transition: the old rules apply only where they are consistent with the Code, and the new state rules are awaited.

Practical reading: if you are in the central sphere, follow the Central Rules now. If you are in a state's sphere, follow the Code, keep your old practices where they still fit, and watch for your state's notification.

Contractor wage payment due date

This is the change that matters most month to month.

Under the OSH (Central) Rules 2026, as summarised by commentators:

• the wage period for contract workers cannot be longer than one month;
• the contractor must pay before the seventh day after the wage period ends, by bank transfer;
• we found no 10-day extension for large contractors, which the old CLRA rules allowed at 1,000 or more workers.

The Code on Wages separately requires monthly wages before the seventh day of the following month. For a calendar-month wage period, both point to the first week. If your wage period runs, say, from the 26th to the 25th, the two dates can differ. Take the earlier one.

We read these rules from secondary summaries, not the Gazette text itself, so confirm the exact wording with your labour consultant before you rewrite contracts.

Principal employer liability for wages

The Central Rules keep the principal employer on the hook. If the contractor fails to pay wages in time, the principal employer pays within 15 days and then recovers the amount from the contractor, for example from the contractor's bills.

That turns a contractor's cash-flow problem into your compliance problem. Two habits protect you:

1. Ask for proof of payment every month: the bank transfer file or statement for the wage period, before you release the contractor's next bill.
2. Reconcile statutory challans: check that the contractor's PF and ESI challans cover every worker who was on your site that month, with matching wages and days.

A worked example from a Gurugram site

A warehouse in Gurugram uses one contractor for 80 loading and housekeeping workers. The wage period is the calendar month.

• October wages must reach the workers' bank accounts in the first week of November, before the seventh day after 31 October.
• On 8 November the site HR checks the contractor's bank file. Twelve workers are missing: their accounts bounced.
• The contractor pays nine of them by the 10th. Three are still unpaid by 20 November. The principal employer pays those three directly, well within 15 days of the default, and deducts the amount from the contractor's November bill.

Without the monthly check, nobody would have known until a worker walked into the labour office.

Contract labour registers and records

Under CLRA, site files were built around familiar forms: registers of contractors and workmen, employment cards, muster rolls, wage registers, wage slips and registers of deductions, fines, advances and overtime. The OSH Code moves contractor licensing to a single licence and the Central Rules set their own registers and formats.

Where your state's rules are not yet out, the safest course is to keep complete records that would satisfy either format:

• a register of contractors and their licence details, validity and the number of workers covered;
• a register of workers per contractor, with an employment card issued at joining;
• daily attendance and overtime;
• wages, deductions, fines and advances per worker per wage period;
• wage slips, and proof of payment;
• a service certificate when a worker's engagement ends.

Ask your consultant which format the inspector in your area expects, and keep the data in a form that can produce either.

Night work, hours and the rest

Contract workers are workers under the Code, so the rest of it applies to them too: daily and weekly hour limits, overtime at twice the ordinary rate, weekly holidays with compensatory holidays when one is lost (see comp off validity rules), and the rule that women work between 7 p.m. and 6 a.m. only with their consent and the safeguards the rules set. If your site rotates contract staff into night shifts, the consent has to be on file for each woman, not just for the contractor.

PF coverage for contract workers also moved this year with the new ceiling; see the PF wage ceiling post.

Contract labour compliance under the OSH Code: a monthly routine

1. Licences: check each contractor's licence validity and worker count.
2. Headcount: match the contractor's list with gate or biometric attendance.
3. Wages: confirm payment before the seventh day after the wage period, by bank transfer.
4. Challans: reconcile PF and ESI for every worker on site.
5. Defaults: pay within 15 days if the contractor has not, and recover from the bill.
6. Records: update registers and wage slips; issue service certificates on exit.

Choosing software for this? Our HRMS for manufacturing checklist has the contract labour questions to ask any vendor. Vatsin Contract Labour keeps contractors and their licences, workers, attendance, wage sheets and registers in one place, and checks each wage sheet against the muster, minimum wages and the contractor's PF and ESI challans.