Industrial Relations And Labour Laws
Harsh Kumar Mehta
Consultant In Labour Laws/hr
Sr. Manager-hr &ir
Director Of Human Resources
Korgaonkar K A
Director Of Company
Hr , Personnel & Admin
Vivian Chandrashekar
Aast. Gen. Manager-hr
Manager Hr/ir
Officer Personnel & Admin
+1 Other

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Dear All,
"A contract employee have right or can appeal for permannent job with principal employer after some period of continue service as contract employee under principal employer."
Kindly suggest on above mentioned topic and share if any circular or rule for this.
Pankaj Kr. Das

From India, Gurgaon
Yes............................................... .................................................. .................................................. .................................................. ...........................

From India, Pune
If the contract is genuine, an employee of the contractor cannot claim permanent employment under the Principal employer for whom he has been working for long period. At the same time, if the contract is sham or just for a name sake or a wind screen arrangement, he can claim permanency under the Principal employer.
Please read more
Madhu.T.K: Contract Labour

From India, Kannur
In a private company, there are no such rights. Even the confirmed employees have no right to continue in service, and can be placed on notice to search for an alternative job, if the company can not sustain the existing work force. Therefore, thinking of the rights of contract employees to seek employment with the principal employer is probably a distant dream.
From India, Delhi
I disagree with Bhatia's statement that even confirmed employees can be asked to find another job and that is what the system in private companies. Certainly there are companies like this, especially in the new generation industries, where in a fine morning the HR Manager will call employees one after another and ask them to put the paper and 'advise' them to find another employment. Being ignorant of their rights under the Labour Laws and or being employable due to demand in the market, these employees do what is told to them and leave the establishment without raising any question. In some cases the formalities to be followed under Industrial Disputes Act for carrying out retrenchment are also not followed. That is other side of the industrial picture whereas there are others who follow rules for everything including termination of employment.

The thread is something which requires serious attention in the light of a practice by employers to employ resources or getting things done through manpower engaged through contractors. The thread requires expert advice on the issue of regularisation of employment of contract labour and not regular employees. In the latter case, there is no confusion since there are Labour laws applicable to them, such as, Industrial Disputes Act and Industrial Employment (Standing Orders) Act, and the rules of their confirmation in to service or termination of service are set under these Acts. But it is the case of employees engaged through Contractor and I have already stated my views in this matter that if the contract is genuine, the labours cannot claim permanency of employment with the principal employer whereas if it is sham, obviously, there are a few case laws in support of their absorption into regular service. Please also go through the link given in my previous post for details.



From India, Kannur
there are examples where workmen is directly employed by principle employer on contract for fixed period. Please confirm whether such workmen could challenge us about regularization of their services.
From India, Faridabad
Madhu, I tend to agree with you for the employee categories covered by Industrial dispute Act & Industrial Employment Standing orders, who in general fall under the Labor Act.
From India, Delhi
Madhu has quoted right for teh workmen employed by third party, but what about the workmen directly employed, there are examples where workmen is directly employed by principle employer on contract for fixed period. Please confirm whether such workmen could challenge us about regularization of their services.
From India, Faridabad
Dear All,
I would like to draw your attention to section 9 & 10 (1) of CLRA Act.
Section 9 deals with effect of non-registration. According to it, where workmen are employed by PE thr' contractor and registration by PE and licence by Contractor is not obtained, workmen can claim to be direct employees of PE.
Section 10 (1) deals with absorption of contract labour as regular employees.
On this topic several case laws are there. I invite the members to discuss on this topic and enhance the knowledge of themselves as well of veiwers.
Our forum is becoming popular day by day. Many people view our postings across the world. Therefore I request you to discuss like HR Professionals. It may be a good stuff for us.

From India, Mumbai
An employee directly employed by the principal employer (here the word "principal" is insignificant because in such case he is the employer only) for a fixed period, say, one year, two years and so on, the employee employer relationship is present. Such employment will not come under the purview of Contract Labour (Regulation and Abolition) Act but is purely a Fixed Term Contract (FTC) employment which will be regulated according to the terms of contract.

Unless otherwise specified as relating to managerial employee, all references will be deemed to be relating to workmen. Moreover, the question of engaging managerial person through a contractor is rarely found and that is why I have replied to the thread accordingly.

Fixed Term Contract employment is possible only if it is provided in the standing orders of the company. It is actually an arrangement to hire employees for a work which is expected to be completed within a certain period/ prefixed time. The Labour Acts permit such engagement also. However, it does not mean that they should not be given any social security benefits like, ESI, EPF etc. They are also to be paid wages as per minimum wages notification of the government. If an employee has been under FTC for five years either in one stretch or renewed every year either without any break or with a break of one or two days (called artificial breaks in service), he will become eligible for gratuity also. In the second year of his tenure, he will also be eligible to annual leave/ EL/PL. A woman employee under FTC is eligible to maternity benefits also. Only thing is that on completion of the period for which he is appointed he ceases to be an employee and for that no notice is required to be given. Section 2(oo)(bb) of the ID Act says that termination of a FTC employee on the expiry of the date or due to non renewal of his contract does not amount to retrenchment and as such no retrenchment compensation (as per section 25F) is payable to an FTC employee if his contract is not renewed on completion of the contract period.

The Court rulings also point out that though FTC engagements are valid, it should not be to deter the rights of employees conferred under Labour Laws. It should be opted only if engagement or the work is for a fixed period. It is also viewed as an unfair labour practice.

Coming to engagement of employees through a contractor (which is the subject matter of this discussion), the courts directions favour the employees and not the employer. The employers are not expected to engage contract labour on a work of perennial nature. They are not expected to engage contract labour for a work directly connected with the main business of the establishment. Though workers engaged in a work directly connected with the work of the company which could have been carried out by engaging regular full time workmen directly by the employer, can not claim permanency on the ground that they have been working in work of regular nature, the appropriate authorities (the Labour Department) can abolish such engagement using their powers conferred in section 10 of the CLRA Act.

At the same time, if the principal employer has been supervising the work of the contract labour and just for name sake he has kept a contractor in between, then it will be regarded as a sham contract and the consequences of sham contract will be that the employees so engaged will be treated as employees of the principal employer.

I would also like to add the findings of the Apex Court in a recent judgement, Bhilwara Dugdh Utpadak Sahakari S. Ltd. Vs. Vinod Kumar Sharma Dead by LRS & Ors, that "in order to avoid their liability under various labour statutes employers are resorting to subterfuge by trying to show that their employees are, in fact, the employees of a contractor It is high time that this subterfuge must come to an end. Labour statutes were meant to protect the employees/workmen because it was realised that the employers and the employees are not on an equal bargaining position.” That means if the contract is sham, the employees engaged through the contractor shall be treated as employees of the Principal employer.



From India, Kannur

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