Mastering CLRA To OSH Transition – Principal Employer Compliance Roadmap

Step 1 

Assess Applicability and Exposure 

• Conduct a comprehensive audit of all third party contract arrangements to identify the total number of contract labour engaged.

• Map OSH Code against the Contract Labour (Regulation and Abolition) Act, 1970 to identify any gaps including welfare facilities. 

By conducting the audits and getting a gap analysis, principal employers will gain complete visibility as to applicability, which will aid in preparing a compliance plan for immediate execution. 

Step 2 

Core vs Non-Core Activities 

• Principal Employers should methodically classify its functions into core and non-core activities based on the guidance provided in the OSH Code.

• For instance, information technology companies should consider if their internal IT team is “core” or “non-core.” 

Core vs Non-Core classification will help principal employers clearly demarcate the areas of work for which contract labour can be engaged and areas for work for which guidance or exemptions may need to be sought. 

Step 3 

Review agreements and allocate liabilities 

Review agreements with third party contractors to include the following aspects: 

• The unification of definition of “Wages” under the Code on Wages, 2019 may lead to an increase in fees payable by principal employer. Principal employers should evaluate any revised CTC structure proposed by third party contractors. 

• The responsibility to provide welfare facilities has been shifted onto the principal employers. Accordingly, principal employers may consider negotiating the fees and allocating liability in the agreements. 

This allows principal employers to renegotiate agreements with third party contractors and clearly allocate responsibilities while minimizing disputes.

Step 4 

Implement Welfare and Safety Provisions 

Principal employers should identify the number of contract labour engaged and accordingly, provide welfare facilities such as canteens, first-aid stations, washroom facilities, and creche facilities, 

This will ensure that principal employers achieve full compliance with the requirements under the OSH Code. 

Step 5 

Monitor and Track State Rules 

The State Rules will provide for mechanism to obtain registrations or work specific licenses. Principal employers should track the rules and ensure that contractors obtain required registrations and licenses.

Ensure that principal employers do their due diligence before engaging third party contractors to avoid any penalties. 

Step 6 

Train Stakeholders and Build Oversight 

Train relevant teams on the new liability landscape and ensure that third party contractors are audited on a regularly basis (quarterly preferably).

Training internal teams and conducting contractor audits will ensure sustained contractor's compliance with the OSH Code. 

Step 7 

Establish Core Activity Compliance Monitoring 

• Create internal mechanism to track quarterly re-validation of core and non- core classifications.

• Monitor contractor ratios per activity type. 

• Prepare comprehensive documentation for inspection and flag any core activity creep immediately. 

Establishing these internal systems, along with solid documentation will prevent any legal challenges.