Dear All,
We have frequent threats of labour contractor for stopping the services. He is taking advantage because our warehouse is at remote location. Our labours want to stay with us as they are local. In this situation, we are planning to take all these labours on one of our employee's contract.
Is this breaching of any law? Can a current employee be a Labour Contractor in same organization. Please suggest urgently.
Thanks in Advance.
Devang Pandya

From India, Mumbai
Not encouraged. But in many cases, employees run some sort of contract/services in benami name. The employee can’t act in dual role due to vested interests. Pon
From India, Lucknow
If retaining their services are so essential why don't you take them under the rolls of the company rather than outsourcing it to some one else. By outsourcing, you will only incur additional expenditure by way of service charges to the contractor. I don't think that ( and in practice) whenever there is a dispute the contractor will take initiative to solve it at his end itself but will always drag the principal employer into it. By doing this the very significance of contract is lost. The basic objective of outsourcing is that the principal employer can concentrate in his own core functions and the rest, the man management , their grievance handling, dispute redressal etc will be taken care of by the contractor. But in practice whenever the workers demand a wage hike, the contractor will pass it on to the principal employer and the principal employer will be forced to meet the demand because he needs people. Here the contractor will not take any interest in negotiation because the excess payment by byof increase in wages is not going to be met out of his revenue but it will be borne by the principal employer only. Moreover, when the service charges is calculated on the basis of a percentage (say, 8.33%, 10% or even 12% in many cases) of total payments including payment of statutory dues like PF, ESI etc, or simply CTC, he will be more interested if the wages increase. Therefore, outsourcing is not a remedy but it should be discouraged especially when the contractor has a negative attitude.


From India, Kannur

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