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V. Balaji
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Hello Friends,
I wanted to have information.
The labours in any factory who are working as third party contract labours can they form a Union?
If they form a Union, and company is against it, what actions can be taken by company in such scenario?
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My dear Mr.Gopinath,
They can. In our erstwhile organization (where close to 1000 contract labor are working) started Union affiliated to CITU. Although we were able to cripple it, CITU started wooing the contract workmen and made it function with minimum stipulated number of office bearers and bringing people from outside for holding demonstrations.
It is very dangerous for the management once they even conceive that idea and start it.
Ganesh Ramachandran
A major Public Sector Undertaking Neyveli Lignite Corporation Limited, in Neyveli in Tamilnadu engages contract labour and the contract workers have formed several unions. Recently they went on strike and the management negotiated with them. The workmen engaged through a contractor can form a union and this union could be registered under the Trade Unions Act if the conditions specified under the Trade Unions Act are fulfilled. Whatever action that the company takes against the formation of the union that action would amount to an unfair labour practice.
With regards
I endorse the views of Mr. Harikrishnan. Forming an union is the right of the workers (whether they are contract workmen or regular employees).
If they are the workmen of your contractor, and if they have not completed 240 days, and you have not exercised your direct supervision and control over them, you can cancel the contract itself with the contractor. Once there is no existence of contractor himself, there is no question of his workmen working in your organization.
You need to handle this meticulously and gather all information w.r.t. to this exercise and launch this.

Dear Balaji,
Could you please clarify this 240 days' stipulation contained in your post. Are you suggesting that the Principal Employer cannot terminate a Contract if the agreement with the Contractor crosses 240 days?
Would you not rather agree that the relationship between the two parties to the agreement will be governed by the terms and conditions of the agreement?
Vasant Nair
Mr. Vasanth Nair,

To address you query, there are a few points that we need to note:

1.Whether the contract is genuine contract or “sham”?

2.If the contract is sham, the next question comes how many days these workmen were employed by the Principle employer in his factory?

3.Once the “supervision and control” aspect is established, you (your organization) will construed to be his employer,

4.Once the Employee – Employer relationship between you the contractor labour is established and you check a person out - who has put in 240 days of work – it will be construed as retrenchment and therefore, [sec 2 (oo)] I.D Act will apply on you.

5.Following are the excerpts from the ID Act,

6.Once they prove themselves that they had worked with the contractor for minimum 240 days, then court may hold and order may be passed for reinstatement (with or without back wages).


Industrial Disputes Act, 1947

25B. Definition of continuous service

For the purposes of this Chapter,-

(1) a workman shall be said to be in continuous service for a period if he is, for that period, in uninterrupted service, including service which may be interrupted on account of sickness or authorized leave or an accident or a strike which is not illegal, or a lock-out or a cessation of work which is not due to any fault on the part of the workman;

(2) where a workman is not in continuous service within the meaning of clause (1) for a period of one year or six months, he shall be deemed to be in continuous service under an employer-

(a) for a period of one year, if the workman, during a period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than-

(i) one hundred and ninety days in the case of a workman employed below ground in a mine; and

(ii) two hundred and forty days, in any other case;

(b) for a period of six months, if the workman, during a period of six calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than-

(i) ninety-five days, in the case of a workman employed below ground in a mine; and

(ii) one hundred and twenty days, in any other case.
while they can always form an union, does the employer have to recognise it ? Does he have to give facilities like space for union office and time off to union officials ? I think that will not apply to contract workers.

About Mr. Balaji's points, i think 2 things got mixed up. Please clarify :

Company can not stop union formation if it is proved that the contract is a sham and that the company had control and supervision of the workers. If both of them is not proved, then they cant be stopped from canceling the contract and removing all the workmen. The can give the contract to a different contractor.

However, reality may be different from legality, if the union is strong and capable of resorting to violance, stoppage of work, preventing others from entering, preventing trucks from moving in or out, then all the legality aspect can take a hike. So dont be blinded by the moral side of whether you are right. As Mr. Ganesh said above, you have to be careful. its a dangerous idea when it starts.
Mr. Vasanth Nair,

Yes, you got the point what I was meaning. This is exactly what I am also saying and always saying. The vital point is that whether the contract is "Sham" or 'Genuine".

In the event of contract being "sham", then court will force you to consider all those employees of contractor as that of employer. Once they are proved to be your (organization) employees, if management wants to get rid of them, they can do so, provided they have not clocked 240 days of work and their "continuous service", If they had already clocked 240 days of work, then the employer is in trouble. This is what I was meaning. And therefore it is critical to see whether these employees worked for 240 days.

When you terminate the contract at this time, and the workers refer this to conciliation machinery then two important points the Labour officer might note in this case is that:

1) whether the contract is sham. In this case let us assume "Yes". He will pass an order to take all these employees in to the rolls of the company. Employer also considers this order - assume.

2) Next, the employer has to find a way out. He can put forth a point to the conciliation machinery, that there is no continuity of service (I mean 240 days of working), then the employer has an opportunity to be heard. Court may even favour his point. Whereas in case of completing 240 days, that door also gets locked for the employer.

Dear Member
Why so much debate on this issue? Look at this from different angle and perspective. Don't you think that contract labour are not human being? Does the principal employer or contractor have moral right to exploit them in all respect. If contract labour form union what is wrong in it? Treat them as human being all problem will be solved.
Avinash Kanoray
Mr. Avinash Kanoray I have no issue in starting their own union in your organization and you consider them your employees. Balaji
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