Madhu.T.K
Industrial Relations And Labour Laws
Tushar.swar
Manager - Human Resource
Grpadmasekhar
Sr. Project Manager
+2 Others

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Dear All,
Can anybody guide that, if any principle employer having any employee (s) who have complete around 8 to 10 yrs continues under the varies contractor.
1) Does he eligible to claim for permanent employment to principle employer...?
2) Any employee working for such long time, is it not prove that, nature of work is not contractual, in fact, business requirement is permanent nature of job not as contract, so, is it not abolition under act,..? or any provision on the same..?
waiting for your advice.
Regards,
Tushar Swar.

From India, Mumbai
If the contract is genuine there is no risk as far as the principal employer is concerned because an employee who has been engaged or even employed without following the recruitment processes of applying for the job, attending written test/ interview, undergoing induction as are applicable to regular employees of the company can not claim regularisation as is decided by various courts including the Supreme Court of India. However, if the contract has been sham then employees engaged through the contractor who has been working for the principal employer but carrying out the same work of the regular employees can claim regularisation.

The CLRA Act has made it very clear that no employee shall be engaged through a contractor in any work of perennial nature which can be performed by a full time permanent employee. Keeping the employees under different contractors for years is a clear evidence of sham contract. Therefore, considering prima faicie facts I believe that the employees can claim regularisation.

Madhu.T.K

From India, Kannur
Dear Madhu

Can you pl throw some light on this?

In absence of Labour License if any person is engaged by the Contractor in the establishment of the principal employer where the contractual work is being carried on, the said employee may be regarded as an employee of the Principal Employer. In the event of any inspection by the concerned authority may endanger the state of principal employer, as the identity of the said employee would be challenged by the visiting Inspector and in absence of any valid license in possession of the Contractor, in spite of the presence of agreement between the Contractor and the Principal Employer, the authority may not agree to accept that person as an employee of the Contractor because as per the provisions of the CLAR Act & Rules, no principal employer without having Registration Certificate cannot engage any Contractor and no Contractor without obtaining the CL License from the Licensing Authority is permitted to engage contract labour in the establishment of the principal employer

Also in the event of Contractor, who do not qualifies for licensing his/her establishment owing to lesser number of manpower being engaged by him, still the open ended contract poses threats on the principal employer, as Contract Labour as discussed above can be engaged in nature of job which would not be of sufficient duration where an open ended contract means the duration of the job is indefinite, being the core activity of the principal employer where only the regular employees can be engaged. So the entire arrangement between the contractor and the principal employer shall be regarded as a “camouflage” under a contract or agreement which is sham and illegal.

From India, Chennai
Absence of Registration and or Licence under the CLRA Act alone will not make the contract sham. But interference of the principal employer on service matters of contractor's employees, like negotiating the wages of contract labour, direct payment of salaries to the contractor's workmen, sanctioning any other benefits, leave, advances to workers, taking disciplinary action against them whenever the principal employer finds any fault with them etc would make the arrangement camouflage. The Supreme Court in General Manager (OSD) Vs Bharat Lal (2011(128) FLR 560 SC) supports the above view about sham contract. Mere non compliance with regard to registration and or licence by the principal employer and or contractor as the case may be will not qualify for regularisation [Municipal Corporation of Greater Mumbai Vs K V Shramik Sangh & others (2002(93)FLR 838(SC)] Non registration and or not getting licence are violative of the relevant provisions of the CLRA Act for which the prosecution provisions will apply, but the workers can not get the status of permanent workers.

If the nature of work is that the work continues without interruption, but still not directly related to the core activities of the company, then we can not say that it is perennial in nature. A similar stand was observed in a very recent case Bharat Coking Coal Ltd Vs Their Workmen, Bihar Colliery Kamgar Union and another (2014 LLR 64) in which the Jharkhand High Court has ruled that working for 240 days in a year will not qualify for regularisation even in the light of factis that the principal employer and the contractor did not have the required registration and licence respectively under the CLRA Act.

Madhu.T.K

From India, Kannur
Dear Tushar,
I partially agree with learned follower Mr. Madhu in his explanation given in his first part of reply. Mr. Madhu Pl correct me, if I am wrong.
As far as I remember, there is one verdict given by Special Bench of Hon'ble Supreme Court of India in the matter of Reeta Devi in recent past (I do not have full details right now) that merely being employed with any Contractor for a long period and having completed 240 days attendance in a calender year will not make a contractor employee eligible for regularization as their employee by the Principal employer. Details will be provided if you so desire, shortly.
AK Jain

From India, Jabalpur
That is what I have also said! Please read what I have written, that having been employed with a principal employer for years will not give the employee right of regularisation provided the contract is not sham. But at the same time risk is there if the contract is sham.
Madhu.T.K

From India, Kannur
Dear Sir,
How the contract can be declared sham.
Suppose we have a RC for engaging the worker in housekeeping, Security, Loading & Unloading. Now if we are using them in the core activities not using them in housekeeping and security. When nobody come to know where the contract workers are engaged then how the contract can be declared a sham.
Regards
Dinesh

From India, New Delhi
A sham contract is one which is a wind screen arrangement, not a genuine one. If you are utilising the housekeeping or security persons in core activities the arrangement is not with a genuine view. How can you say that no body comes to know that they are being utilised for perennial activities? At least those who are engaged should be knowing that they are being utilised for perennial work. Can you guarantee that they will not raise a dispute in future?
Madhu.T.K

From India, Kannur
Madhu Sir,
Thanks a lot for your valuable feedback and help me understanding the sham contract.
But as I have not much experience in labour dispute, I have a doubt.
I agree that they can raise the dispute as they know that they are engaged in core activities. But how anybody can prove that he is been utilised in core activities. What will the proof in this case to prove that he is being utilized in the core activities. How the conciliation officer will believe that the worker is right. I am asking this as a worker point of view not a employer point of view.
Thanks & Regards
Dinesh

From India, New Delhi
It depends upon how the other employees cooperate with them. If the issue is taken up by a Union, the employer may find it difficult to prove otherwise because the Union can produce witnesses in support of their views. Moreover, your production logs should have details about such engagement, Ipresume.
Madhu.T.K

From India, Kannur
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