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Worker outsourcing companies not too keen to obtain licence

Labour Act makes it mandatory for worker supplying agencies to acquire licence for operation

Chandan Kumar Mandal 

The government’s call for worker-supplying agencies to get registered with labour authorities seems to have fallen on deaf ears, as such companies have shown little interest in acquiring a licence, a mandatory provision stipulated by the Labour Act, 2017.

The new labour law has made it compulsory for all worker-supplying companies to register themselves with the government’s labour bodies and obtain a licence before they supply workers for any business firms. But despite repeated calls from the government, registration and request for the application by recruiting agencies have remained sluggish even after months. According to Nabin Pokharel, a section officer with the Department of Labour and Occupational Safety, the number of companies that have approached the department to get their licences is not encouraging. “Earlier, they did not have to take a licence for supplying workers. With the new labour law, it has now become mandatory for all the recruitment agencies and labour force suppliers,” said Pokharel. “However, they have not shown much interest in obtaining the licence.” Many private firms have been supplying workers for the internal labour market for sectors like security services, office help, professional works, drivers, gardeners, peons, and domestic help, among other sectors.

According to Pokharel, the number of security services providing companies are nearly 1,500 in the country. Recruitment agencies supplying workers for foreign companies under foreign employment have had to acquire a licence to operate. But, companies supplying labour force for the internal market did not require a permit. Such registration and applications for obtaining licence can be submitted from all the 11 Labour and Employment Offices outside the Valley as well as the Department of Labour and Occupational Safety in Kathmandu.

A total of 220 companies have registered and applied for the licence with the department in Kathmandu whereas over 100 have completed a similar process from labour offices countrywide. Out of total applicants, 162 have got the licence from the department and around 100 have received the permit from outside offices, according to Pokharel. Even those who have applied for licence have not turned up to collect the licence. “After the Act came into force last fiscal year, the registration should have been completed that year. But as there was no licensing arrangement due to lack of regulations, which came into effect a few months later, we had gone soft on them, hoping they would complete the procedures gradually,” Pokharel told the Post.

The Labour Act required worker supplying agencies to get licences within six months from the date of endorsement of the Act—September 4, 2017. Going by that deadline, outsourcing agencies should have obtained the licence by March 3, 2018. But because the system for licensing was not defined in the absence of the Labor Rules, which was published in Nepal Gazette only on June 22, 2018, the labour rules gave another six months of grace period to outsourcing companies to obtain licence within December 22, 2018.

The new Labour Act has also fixed that a worker supplying company can only supply workers for a maximum of two sectors, of a total four sectors—security services, office attache services, business support services and domestic help services. “Delay in registration with the labour offices as prescribed in the labour law will only curtail workers’ safety and rights,” Janak Chaudhary, general secretary with the General Federation of Nepalese Trade Unions told the Post. “The rule was brought in for all the worker suppliers so as to protect the rights of workers, make them regularised and make their business conduct transparent and bring them under the state rule,” said Chaudhary. “However, this has not happened mostly because of suppliers’ reluctance.

They were operating on their own in the past, supplying workers to all the sectors.” Because of this lack of transparency, there have been reports of exploitation of workers in the past. During hiring processes, agencies, particularly online job portals, make workers pay at least a month’s income to them as commission for helping them land the jobs, while also getting a sum from the employers they supply workers to. Acquiring required workers through third party agency relieves employers and suppliers from the welfare responsibility of the workers, but it exposes workers to all kinds exploitation, according to Chaudhary. “There is also no job security, as workers might lose job anytime,” he said. With the new licensing rule, people like Chaudhary are hopeless this sort of exploitation will come to an end. “The provision of licence will provide the numbers of workers they employ, terms and conditions, facilities and payment they will be entitled to at their workplace.

In short, it will ensure safety and facilities for workers,” added Chaudhary. “At the time when there is no research on condition and workers’ exploitation from the government or any agencies, it would produce good details of workers situation at the hand of recruitment agencies.” After the previous deadline for registration on December 23, 2018 expired last year, the department has fixed a new deadline of June 14.

Published on: 3 May 2019 | The Kathmandu Post

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