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Staffing companies want 50% cut in proposed security deposit of Rs 1,000 per worker

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Staffing firms have asked the government to reduce security deposit, as proposed in the Code on Occupational Safety, Health and Working Condition, per worker by half to Rs 500 while capping it at Rs 1 crore for firms with large numbers of employees, citing blockage of working capital of firms.

The move to impose a security deposit of Rs 1,000 per worker, as proposed in the Code, will cost the staffing firms heavily and will defeat the purpose of a national licence, the staffing firms have said.

For big staffing firms such as

or , this would be a huge hit if they go for a national licence. Quess Corp has over 300,000 employees while TeamLease has over 200,000 employees under its fold.

Currently, staffing firms have to apply for state-wise licences for every operation across India and the security deposit ranges from Rs 90 to Rs 500 per worker depending on the state. However, the Code on Occupational Safety, Health and Working Condition provides for a national licence with security deposit at Rs 1,000 per worker.

This is a one-time deposit and will be refunded when the contractor surrenders the licence or applies for a new one. The idea is to use the deposit amount to compensate for non-payment of wages to workers by the contractor in case the latter is not traceable.

The Indian Staffing Federation has proposed that the government reduce the security deposit to Rs 500 per worker under the national licence while freezing the upper limit for security deposit at Rs 1 crore, irrespective of the staffing company’s headcount, above 20,000 employees, Suchita Dutta, executive director of Indian Staffing Federation, said.

“A prohibitively high amount of security deposit at Rs 1,000 per worker will lead to avoidance of applying for the said national licence and defeat the very objective of formalisation of work force and enhanced ease of doing business for contractors,” Dutta said.

A labour ministry official told ET that the government is deliberating upon some of the concerns raised by the staffing industry. “However, no decision has been taken yet,” the official said on the condition of anonymity.

Staffing companies are simultaneously in talks with state governments as well, persuading them to keep their deposit rates lower than the Centre. While the Centre has finalised the rules under the four Codes, states are still in the process of firming up rules in their domain.

“Increase of security deposit by more than 11 times the current is way too much. TeamLease is working very closely with various states and the central government on this,” Prashant Singh, vice president and business head (compliance and payroll outsourcing) at TeamLease Services, said.

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