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Section 47: Licensing of contractors

The Occupational Safety, Health and Working Conditions Code, 2020 (Act No. 37 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IX: Contract Labour & Inter-State Migrant Workers
Competent Labour Forum
Act No. 37 of 2020
Section 46 All 143 Sections of OSH Code, 2020 Section 48

Legal Commentary & Landmark Judgments: Section 47

Section 47 of the Occupational Safety, Health and Working Conditions Code, 2020 mandates that no contractor shall execute or undertake any contract work employing fifty or more contract workers without possessing a valid statutory license issued by the Designated Authority, introducing an innovative All-India Single License option for multi-state operations.

  • Fifty-Worker Applicability Threshold: Elevates the statutory threshold for contractor licensing from twenty workers under legacy law to fifty or more contract workers, exempting smaller service providers while focusing regulation on major staffing operations.
  • All-India Common License Innovation: Introduces an All-India Common License enabling contractors executing work across multiple states or establishments to operate under a single centralized license rather than obtaining dozens of fragmented state licenses.
  • Strict License Conditions & Worker Welfare: Licenses are issued subject to strict conditions regarding number of workers, nature of work, wage parity, provision of welfare amenities, and payment of mandatory security deposits to secure worker wage claims.
Key Landmark Precedents:
  • Steel Authority of India Ltd. v. National Union Waterfront Workers (2001) 7 SCC 1: Constitution Bench held that employing contract labour without a valid license does not result in automatic absorption of contract workers into the principal employer's service, but exposes both principal employer and contractor to severe statutory penalties.
  • Bhilwara Dugdh Utpadak Sahakari Samiti Ltd. v. Vinod Kumar Sharma (2011) 15 SCC 209: Supreme Court warned that deploying unlicensed contract labour through sham arrangements constitutes an abuse of law, entitling courts to pierce the contractual veil.
  • Gammon India Ltd. v. Union of India (1974) 4 SCC 396: Supreme Court affirmed that requiring contractors to obtain licenses and furnish security deposits represents a reasonable restriction under Article 19(1)(g) to protect vulnerable workers.
Courtroom Practice & Strategic Litigation Guidance:

Principal employers must institute an unbreachable onboarding protocol: no contractor deploying fifty or more workers can be issued a purchase order or enter the premises without furnishing a verified digital Section 47 license. Ensure the scope of work and headcount specified in the contractor's license strictly matches the operational requirements of the vendor agreement.

Section 46 All 143 Sections of OSH Code, 2020 Section 48