A crew arrives from Bihar to a site in Telangana, the labour licence is already in the file, and the contractor assumes he is covered. He is not. The inter-state migrant workmen act is a separate law with its own licence, and it bites at five migrant workmen on any single day in the past twelve months. It also puts a displacement allowance of half a month’s wages, both journey fares and site accommodation on the contractor’s account, and hands the bill to the principal employer when the contractor does not pay.

When the inter-state migrant workmen act applies to you

The trigger is written into section 1(4) of the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, and it has two limbs. The Act applies to every establishment in which five or more inter-state migrant workmen are employed, or were employed on any day of the preceding twelve months. It applies separately to every contractor who employs, or employed, five or more such workmen on any day of that same period.

Three details in that wording decide most arguments. The count is of migrant workmen specifically, and the Act says “whether or not in addition to other workmen”, so two hundred local labourers do not dilute five men from another state. The look-back is a full year, which means a crew you brought for one month in the last monsoon still brings you inside. And the contractor’s liability stands on its own limb, so you are not covered by the fact that the principal employer’s establishment is small.

A migrant workman for this purpose is one recruited in one state for employment in an establishment in another. A man who travels on his own and finds work at your gate is not recruited by you across a state line. A man your supervisor or a jamadar went and fetched from his village in another state is.

Two registrations, and only one of them is yours

The same split that runs through contract labour law runs through this Act, and it is where most contractors lose their footing.

Document Whose job Source
Registration of the establishment The principal employer Section 4
Licence to recruit and employ The contractor Section 8
Issued by Licensing officer for the area where the recruitment is made Section 8(1)
Validity The period specified in it, renewable on prescribed fees and conditions Section 9(3)

Section 8 is worded around the act of recruiting: no contractor to whom the Act applies may recruit a person in one state for employment in an establishment in another state except under a licence. The licensing officer is the one with jurisdiction over the area where you recruit, not where the site is. That is a practical trap for a contractor sitting in Hyderabad who sends a man to Araria to bring twenty workers, because the licence has to come from the recruiting end.

This licence does not replace the one you already hold. If you are engaging contract labour at an establishment, the separate requirement under the Contract Labour Act still stands, and when a labour licence is actually required sets out that test. The establishment-side registration your client has to hold is explained in what principal employer registration covers.

What you owe the workman beyond his wages

This is the part contractors price wrongly, because it does not look like a wage cost and it is one.

Section 14 requires a displacement allowance at the time of recruitment, equal to fifty per cent of the monthly wages payable to the workman or seventy-five rupees, whichever is higher. The Act adds that it is not refundable and is in addition to wages. The seventy-five rupee figure is from 1979 and has never been revised, so the fifty per cent formula is the one that operates. On a workman at 18,000 rupees a month, that is 9,000 rupees paid up front, per man, before he has worked a day.

Section 15 adds a journey allowance of not less than the fare from the workman’s place of residence in his own state to the place of work, for the outward journey and the return journey both, and requires wages to be paid for the days spent travelling as if the workman were on duty.

Section 16 then lists duties that read as a site-cost checklist: regular payment of wages, equal pay for equal work irrespective of sex, suitable working conditions having regard to the fact that the workman is in a state not his own, suitable residential accommodation for the period of employment, the prescribed medical facilities free of charge, protective clothing as prescribed, and reporting a fatal accident or serious bodily injury.

Add those together on a crew of thirty and the arithmetic is not marginal. It is one reason the true cost of imported labour sits well above the headline daily rate, and why it is worth comparing against what labour actually costs per day across Indian states before you decide to bring a crew rather than hire locally.

The pass book, and the filing nobody does

Section 12 puts two duties on the contractor that are easy to miss and easy for an inspector to check.

The first is a filing in two states. Particulars of every inter-state migrant workman must go to the specified authority in the state from which he was recruited and in the state where he is employed, within fifteen days of recruitment or employment, and any change in those particulars must be notified to both. Contractors who file once, at the employing end, have done half of it.

The second is the pass book. Every such workman gets one, carrying his passport-size photograph and written in Hindi and English, and also in his own language where that is neither. It records the name and place of the establishment, the period of employment, the proposed wage rates and mode of payment, the displacement allowance payable, the return fare payable on expiry of employment, and the deductions made. A pass book issued properly is also the contractor’s own evidence on what was agreed, which is worth more than it costs.

Who pays when the contractor does not

The Act closes the gap the way most Indian labour statutes do, by walking up the chain.

Under section 17 the contractor is responsible for paying wages, and the principal employer must nominate a representative to be present when they are disbursed and to certify the amounts paid. If the contractor fails to pay within the prescribed period or pays short, the principal employer becomes liable for the full amount or the unpaid balance. Under section 18 the same applies to the displacement and journey allowances and the section 16 facilities: if the contractor has not provided them, the principal employer must, and may then recover what he paid by deducting it from sums due to the contractor or as a debt.

Read that from the client’s side and you can see why a serious principal employer asks for the licence before he lets your crew through the gate. His exposure is real, and the cheapest way for him to manage it is to hold your money. The same structure governs provident fund and state insurance on site, set out in when PF and ESI apply to construction workers, and the welfare cess side sits in BOCW registration for construction work.

What it costs to ignore

Section 25 provides imprisonment up to one year, or a fine up to one thousand rupees, or both, for contravening any provision regulating the employment of inter-state migrant workmen or any condition of a licence, with an additional fine up to one hundred rupees for every day a contravention continues after a first conviction. A separate provision carries up to two years or two thousand rupees for obstructing an inspector.

Those are 1979 figures and they have not been revised, which tells you something honest about where the real risk sits. It is not the fine. It is the principal employer’s right to recover allowances from your running bill, the possibility of the licence being revoked under section 10, and the position you are left in if a workman is injured on a site where you were operating without the licence the Act required. None of those has a thousand-rupee ceiling.

The bottom line

If you recruit five or more workmen in one state to work on a site in another, you need a licence under this Act in addition to anything else you hold, taken from the licensing officer where you recruit. Budget the displacement allowance at half a month’s wages per man, both fares, the journey days as paid days, and accommodation. File the particulars in both states inside fifteen days and issue the pass books. The penalties are nominal and the commercial consequences are not, because the money comes off your bill rather than out of a court.

If you are bidding work that will need a crew brought from another state, price the compliance into the rate before you quote. Live requirements are listed under current tenders and work opportunities, and where a job needs machines as well as men, equipment finance options in India are the place to start.

Section references are to the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 as available at the time of writing. State rules, prescribed forms, fees and authorities differ and change. This is general information and not legal advice; confirm your position and current obligations with the labour department concerned or a qualified advisor before relying on it.