Are you running a business in Karnataka? Or are you involved in the HR compliance of a business in Karnataka? If your business hires contractors, you will have to know about the HR compliances that come with this - specifically the Register of Contractors. These compliances are also important for you if you are a contractor in Karnataka who employs workers to carry out the work.
Contract work in India is regulated by the Contract Labour (Regulation and Abolition) Act ("CLRA Act"). This Central Act and its rules apply in addition to the state rules specifically laid down by the state of Karnataka.
If your business hires contractors or if you are a contractor who hires workers contractually, you will have to meet the compliances for contract labor in India. One of these compliances is the Register of Contractors Form XII.
This article will help you understand:
- What Is the Karnataka Register of Contractors Form XII?
- Does the Karnataka Register of Contractors Apply to Your Business?
- Is Your Business Exempted from Keeping a Register of Contractors?
- Why Do You Have to Maintain the Register of Contractors?
- What are the Details Needed for the Register of Contractors?
- Register of Contractors: What are the Related Registers to be Maintained?
- Register of Workmen
- Muster Roll, Register of Wages, Deduction, and Overtime Registers
- Register of Contractors: Related Compliances
- Employment Card
- Service Certificate
- Register of Contractors: Additional Compliances for the Contractor and Employer
- Returns to be Filed by the Contractor
- Returns to be Filed by the Employer
- Register of Contractors: Things to Keep in Mind
- Register of Contractors: Best Practices
- Wrapping Up
- How Deskera Can Assist You?
- Key Takeaways
What Is the Karnataka Register of Contractors Form XII?
The Register of Contractors Form XII is a record that you have to keep about the contractors that you are in business with. In other words, you have to record the details about any contractor that you have entered into a contract with for the services provided by the contractor and his workers. This register has to be maintained by the principal employer, i.e., the person or business who is employing the contractor.
Does the Karnataka Register of Contractors Apply to Your Business?
The Karnataka Register of Contractors Form XII applies to your business or establishment if it comes under the CLRA Act.
A business comes under the CLRA Act if:
- It employs 20 or more workmen as contract laborers OR
- It employed 20 or more workmen on any day of the last 12 months as contract laborers
CLRA compliances also apply to you if:
- You are a contractor who employs 20 or more workmen OR
- You employed 20 or more workmen on any day of the last 12 months
This is made clear in Section 1 of the CLRA Act.
So the compliances under the CLRA Act do not just apply to an employer who is hiring a contractor in Karnataka but also a contractor in Karnataka. As a contractor, you will have to know about these compliances when you offer your services to clients and businesses and when your workmen carry out work under the contracts you enter with your clients.
Is Your Business Exempted from Keeping a Register of Contractors?
Your business is exempted from keeping a register of contractors if it does not come under the CLRA Act.
How do you know if your business does not come under the CLRA Act?
A business or establishment is exempted from the CLRA Act compliances if the work performed is intermittent in nature (it keeps starting and stopping) or casual nature. Section 1 of the CLRA Act states this. It also clarifies that work performed in an establishment is not intermittent in nature if:
- It was performed for more than 120 days in the last 12 months OR
- It is of seasonal nature and is performed for more than 60 days in a year
In other words, there is a clear condition that tells you if you are not exempt from CLRA Act compliance. This condition is the number of days that the workmen performed the work. Also, if the work itself is of a seasonal nature (such as agricultural and farming work, fisheries-related work, harvesting fruits, etc.), then even 60 days of work by contract workmen in a year means your business has to meet the CLRA Act compliances.
Why Do You Have to Maintain the Register of Contractors?
Rule 74 of the CLRA Central Rules requires every principal employer to maintain a register of contractors in Form XII for their registered establishment.
Who is the principal employer? The principal employer is:
- In a factory - the owner or occupier of the factory or the manager
- In a mine - the owner or agent of the mine or the manager
- In any other establishment - any person who is responsible for supervising and controlling the establishment
This is important because it is the principal employer who enters into a contract with the contractor on behalf of the business.
What are the Details Needed for the Register of Contractors?
The Karnataka Register of Contractors requires you to enter the following details:
- Name and address of the principal employer
- Name and address of the establishment
- Name and address of the contractor
- Nature of the contract work carried out
- The location where the contract work is or was carried out
- Period of the contract
- The maximum number of workers employed by the contractor
Register of Contractors: What are the Related Registers to be Maintained?
In addition to the register of contractors, various related CLRA compliances need to be met by the employer and the contractor.
Register of Workmen
The contractor has to keep a register of workers employed by the contractor in Form XII. This is stated in Rule 75 of the CLRA Rules.
This covers the following details:
- Name and address of the contractor
- Name and address of the establishment in/under which the contract work is performed
- Nature of the work being carried out
- The location where the work is being carried out
- Name and address of the principal employer
Muster Roll, Register of Wages, Deduction, and Overtime Registers
A contractor has to maintain these registers for each work operation that he engages contract labor for. They are:
- A muster roll (Form XVI) - details about the workers employed for the contract work
- A register of wages (Form XVII) - details of the wages paid to the workmen for the contract work
- A register of deductions for damage or loss (Form XX) - details of any deductions made from the workers' pay for damage or loss that was caused by workers
- A register of fines (Form XXI) - details of any fines that were imposed
- A register of advances (Form XXII) - details of any advances that the contractor extended to the workers
- A register of overtime (Form XXIII) - details of any overtime work done by the workers and the overtime pay received for it
Register of Contractors: Related Compliances
Along with the register of contractors, there are compliances that a contractor has to meet concerning the workmen he employs for his contract work.
The contractor has to issue an employment card in Form XIV to every worker within 3 days of employing them. This is required by Rule 75 of the CLRA Rules. This card has to be kept updated and any changes in the details or conditions have to be entered.
This is a certificate that a contractor has to issue to a workman whose services have been terminated. Whatever the reason for termination is, this certificate in Form XV has to be provided to the worker when his employment is terminated.
Register of Contractors: Additional Compliances for the Contractor and Employer
There are certain compliances that you have to file if you are engaged or involved in contract work. These are returns that have to be filed by a contractor and an employer under the Act.
Returns to be Filed by the Contractor
The contractor has to file a half-yearly return (in Form XXIV) to the concerned Licensing Officer within 30 days of the end of the half-yearly period. What is a half-yearly period? It means the 6 months between 1st January and 1st July of each year.
Returns to be Filed by the Employer
If you are an employer registered under the CLRA Act, you have to file an annual return (in Form XXV) to the Registering Officer by February 15th at the end of the year which you are filing for.
However, the Karnataka contract labor rules add an alternative to this CLRA Act requirement. This allowance applies specifically to factories in Karnataka. As per the Karnataka Contract Labour (Regulation and Abolition) Rules, as an employer, you do not have to submit this annual return under the CLRA Act if you submit a common annual return in Form 20 of the Karnataka Factories Rules, 1969.
The Karnataka contract labor rules add one more requirement to the returns you have to file under the CLRA Act. As per Karnataka contract labor regulations, a principal employer has to file a return to the Inspector within 15 days of the start or completion of each contract work under each contractor. This return (in Form XXVI) has to communicate the date that the contract work was begun or completed, depending on when the return is being filed.
Register of Contractors: Things to Keep in Mind
There are certain things you have to keep in mind when you maintain a register of contractors. The register of contractors comes with certain specific compliances. These requirements apply to all registers and records under the CLRA Act.
When maintaining a register of contractors, ensure that:
- The register of contractors is complete and updated
- It is kept with an officer who is present near or within the establishment or workplace
- It is maintained in legible English and Hindi or the language understood by most of the people employed in the establishment
- It is preserved in its original form for a period of 3 calendar years from when the last entry was made
- In case the Inspector or any other authority under the Act requests it, it should be produced on demand
Register of Contractors: Best Practices
Keeping a register of contractors is not just about entering the details in the register. Maintaining HR records and registers is not just a compliance to be ticked off the to-do list. It's also an important part of best practices as a business. For example, keeping records about your employees and wages is a good way to keep track of your personnel expenses and information that is useful for payrolls and taxes.
Keeping a register of contractors ensures that you keep track of important information about the contractors you hire and the work performed. Instead of viewing it as cumbersome compliance, you can see it as a way to stay abreast of the contract work you are paying for.
As a best practice, it's a good idea to keep track of details like:
- What are the various items of work being performed under the contract?
- What are the rates for the different kinds of work?
- How many workmen were employed by the contractor for the job?
- How many days were spent on the job?
- What is the location of the contract work being performed?
- Name, address, and contact of the contractor
In addition to this, it's a good idea to be in communication with the contractor to confirm important details which you may need for your CLRA compliances. This will ensure that you enter the correct details about the contractual work in the forms and registers.
Contract labor compliances such as keeping a register of contractors are an important part of HR records, especially if your business often hires contractors for its work. Keeping a register of contractors is integral to your contractual operations even though contractors are not employees of the business. Both employers and contractors need to know about the specific requirements of Karnataka contract work regulations and the CLRA Act.
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- The Register of Contractors Form XII is a record that you have to keep about the contractors that your business hires
- The Karnataka Register of Contractors Form XII applies to your business if it comes under the CLRA Act
- If you hire contractors or if you are a contractor in Karnataka, you have to meet the contract labor compliances, including Karnataka contract labor rules
- Along with the register of contractors, other registers have to be kept by the contractor and employer
- They also have to file returns under the CLRA Act
- Recording details about contract work done is a good business practice