Contract labour on site: who answers as principal employer

Engaging workers through a labour contractor moves the payroll. It does not move as much of the liability as most developers assume, and the gap is discovered at the worst possible moment — an accident, an inspection, or a claim years after the project closed.

The two registrations

• The principal employer registers the establishment where contract labour is engaged, above the prescribed threshold.
• The contractor holds a licence for the work. Engaging an unlicensed contractor is the principal employer's problem too.

Where the liability lands

If the contractor fails to pay wages, the principal employer is obliged to pay and may recover from the contractor. Facilities the statute requires — drinking water, canteen, first aid, rest rooms, where applicable — fall back on the principal employer where the contractor does not provide them. Statutory contributions and safety obligations follow a similar logic.

What to hold in the file

1. The contractor's current licence, and evidence you verified it.
2. Wage registers and proof of payment, obtained monthly rather than reconstructed later.
3. Contribution challans for the deployed workforce.
4. An indemnity in the contract — useful, but never a substitute for the statutory position.

A contractor's default becomes your liability at the exact moment the contractor becomes untraceable.

The controls are administrative and unglamorous. They are also the difference between a routine inspection and a proceeding.