Contractors & audits
Contractor & vendor compliance services
When a contractor fails its workers, the law sends the bill to you. We check each contractor's licence, registers, wages, PF and ESI, so their lapse never becomes your liability under the OSH Code.
- Contractor defaults kept off your books
- Licences checked before work starts
- Wages, PF and ESI verified
- Vendor audits with action plans
Who answers for what
Three links, one liability
The contractor employs and pays the workers, but the law does not stop there. If wages are paid late or short, you pay the balance and recover it from the contractor. Welfare facilities for contract workers are yours to provide.
Link 01
You, the principal employer
Registered as principal employer, and answerable for the contract workers on your premises.
What gets checked
- Only licensed contractors engaged, where a licence is required
- Principal employer registration certificate amended as contractors change
- Canteen, washrooms, drinking water and first aid open to contract workers
- Each contractor's wages, PF and ESI checked
Link 02
The contractor
Employs and pays the workers, and needs a licence once it engages 20 or more.
What gets checked
- Licence covers the number of workers engaged
- Wages at least the minimum, paid by the 7th by bank transfer
- EPF, ESI and LWF deducted and remitted
- Registers kept and returns filed
Link 03
The contract workers
Owed wages, welfare and social security by the contractor, with you as the backstop.
What gets checked
- Entry and exit recorded
- Covered under EPF and ESIC, with help to claim ESIC benefits
- Accident-related compliance handled
- Retirement and terminal benefits facilitated
The cost of non-compliance
When a contractor slips, the principal employer pays
The contractor's default becomes your liability under the Codes. These are the provisions that move the cost to you.
Exposure under the law
Source
Full wages
if the contractor pays late or short
01Unpaid wages
The principal employer must pay the wages in full, or the unpaid balance, and then recover the amount from the contractor.
OSH Code, 2020, s.55(3)
Both shares
of ESI, for every contract worker
02PF and ESI contributions
The employer pays ESI contributions for every employee, including those engaged through a contractor, and recovers them from the contractor. PF paid for a contractor's employees is recovered the same way.
Code on Social Security, 2020, s.17(1), s.31(1) and s.31(6)
₹2–3 lakh
plus up to ₹2,000 a day
03An unlicensed contractor
Engaging contract labour through a contractor who needs a licence but has none is a contravention of the Code by the principal employer, and the general penalty applies.
OSH Code, s.54 and s.94
Your duty
not the contractor's
04Welfare for contract workers
The welfare facilities the Code requires, such as canteens, crèches and rest rooms, must be provided to contract labour by the principal employer.
OSH Code, s.53
Directors
deemed guilty with the company
05Liability that reaches the board
When a company commits an offence, every person in charge of its business at the time is deemed guilty with it, unless they show due diligence. So is any director whose neglect the offence is attributable to.
OSH Code, s.109; Code on Social Security, s.135
Why NK One
Every filing, zero penalties.
Each contractor is checked on a fixed schedule and your principal employer records are filed on time, so a contractor's lapse never becomes your penalty.
Zero-penalty guarantee
No late fees, no interest, no surprise demands on anything we file for you. Every due date is tracked by people who have done this for 20 years.
Direct partner access
Since 2007, clients speak to the partners who run NK One, not a new compliance executive learning on your account.
Common mistakes
Where contractor compliance breaks down
The contractor makes each of these mistakes. The principal employer is the one who answers for them.
Mistake 01 of 05
A contractor without a licence
Engaging contract labour through a contractor who needs a licence but does not hold one is a contravention of the Code on your side.
How we prevent it
Our vendor audits verify each contractor's licence, and the number of workers it covers.
Labour Codes
What changed for contract labour
Contract labour registrations now sit under the OSH Code (formerly CLRA), in force since 21 November 2025. Central rules were notified on 8 May 2026 and states are still notifying theirs. Until then, rules made under CLRA continue where they do not conflict with the Code.
Scope of service
Contractor by contractor, site by site
We work at factories, establishments, construction sites, and greenfield and brownfield project sites, with a service model for each type of establishment.
- File01
Contract labour on site
Who is on your premises, and on whose books.
- Entry and exit of contract labour regulated
- Contract labour compliance under the OSH Code (formerly CLRA)
- Principal employer registration certificate amended
- Inspections and notices handled
- File02
Registers, returns and payments
Kept separately for each contractor.
- Statutory registers prepared and maintained for each contractor
- Statutory returns submitted for each contractor
- EPF and ESI compliance checked for each contractor
- Minimum wages, and timely EPF, ESIC and LWF remittance
- File03
Workers' records and benefits
Where the contract worker feels it directly.
- Records, registers, forms and notices under the labour laws
- Help for workers to claim ESIC benefits
- Accident-related compliance for contract workers
- Retirement and terminal benefits facilitated
- File04
Construction, migrant workers and audits
Work beyond the monthly routine.
- Building and other construction workers (BOCW) compliance
- Inter-state migrant worker compliance
- Vendor compliance audits: licences, records, wages, EPF and ESI
- Audit report with gaps, risk priority and an action plan
Why NK One
Audits and filings, month after month
Our ISO 9001:2015 certificate (QMS/2834/1026) names Labour Law Compliance and PF & ESI in its certified scope. Every client has a dedicated relationship manager, and we reply within two working hours.
- Audits completed
- 5,000+
- Establishments and factories covered
- 250+
- Challans and returns filed every month
- 300+
- Client retention
- 85%
FAQ
Questions about contractor & vendor compliance
Can't find your answer? Ask us on WhatsApp and we'll reply within 2 working hours.
What is contractor and vendor compliance?
It means making sure your contractors, vendors and service providers, such as 3PL firms, meet the labour laws that apply to them. That covers valid licences, statutory registers, wages paid as the law requires and social security for their workers. When a contractor falls short, the principal employer is exposed to liabilities, audits and notices.
Does CLRA still apply after the Labour Codes?
The Contract Labour (Regulation and Abolition) Act, 1970 was replaced by the OSH Code on 21 November 2025. Contract labour registrations now fall under the OSH Code (formerly CLRA). Central rules were notified on 8 May 2026 and states are still notifying theirs. Until then, rules made under CLRA continue where they do not conflict with the Code.
When does a contractor need a licence?
Under the OSH Code, when it engages 20 or more contract workers on any day in the preceding 12 months. The licence is valid for five years for the number of workers it names. A contractor working in several states can take a single licence from the authority the Central Government designates.
Is the principal employer liable if a contractor defaults?
Yes. If wages are paid late or short, you must pay the balance and recover it from the contractor. You remain liable for EPF and ESIC if the contractor defaults, and you must provide welfare facilities to contract workers. Lapses can lead to arrears with interest, fines, prosecution of the employer or its directors, and absorption of the contract labourers.
Can contract labour be used in core activities?
The OSH Code prohibits it, except where the activity is ordinarily done through contractors or does not need full-time workers for most of the day. A sudden rise in core work that must be finished in a set time is the third exception. If there is a dispute over whether an activity is core, the appropriate Government decides.
What does a vendor compliance audit cover?
We verify each vendor's licences, such as the contract labour licence. We review appointment letters, attendance, wages, EPF and ESI payments and statutory registers. You receive a report of the gaps, ranked by risk, with an action plan to close them.
Do you handle construction workers and inter-state migrant workers?
Yes. Building and other construction workers (BOCW) compliance and inter-state migrant worker compliance are both part of this service. Both laws now sit within the OSH Code.
What does contractor compliance cost?
It depends on the number of contractors, sites and contract workers. Send us an enquiry with those details and we will come back with a quote.
Related
Related services
PF & ESI compliance
EPF and ESI codes, UAN and IP numbers, monthly statutory challans, returns and payments.
Labour law compliance
Shops & Establishments registration, statutory registers and returns, abstracts and notices on display.
Compliance risk audits
Labour law compliance due diligence and gap assessments of your processes and your vendors' processes.
Enquiry
Talk to a compliance expert
Share your states and headcount, and we will get back to you within 2 working hours.
- Call+91 98457 40938
- WhatsApp+91 98457 40938
- Emailinfo@nkonehrsolutions.com
- Head office, Bengaluru1163, 9th Main, 11th A Cross, Nagapura, Mahalakshmipuram, near Rajajinagar Metro Station, Rajajinagar 1st Block, Bengaluru, Karnataka 560086
