Partner - Risk Management
Korgaonkar K A
+1 Other

Can my contractor who is engaging 150 contract labours in non-core activity has to apply to the State Government for permission under Sec. 25-N of I.D. Act for termination of a few unscrupulous contract labours as Sec.2(j) of ID Act covers contract establishment also? Pl. advise.
8th August 2015 From India, Chennai
Is it so tricky that none has offered his or her opinion on this subject?
23rd August 2015 From India, Chennai
Dear Kesavapanda,
I failed to understand why you want to retrench the unscrupulous contract labours, first of all.
Unscrupulous labours can be subjected to disciplinary action and terminating their services by way of retrenchment will not be fitted in to retrenchment as defined under the section 2(oo) if ID Act.
However, your query whether the contract labour can be retrenched or not, my answer is YES. Supreme Court has confirmed in SAIL v National Union Waterfront Workers and Ors., that contract labour can be retrenched by contractor in conformity with the provisions of the I.D. Act.
23rd August 2015 From India, Mumbai
Thanks at least one opinion is received. It is I should advise my contractor to follow the procedure so that none could take advantage out of his wrong doing.

I should be a little clear once again.

According to proviso to Sec. 2(a) (ii) of ID Act dispute between a contractor and his contract workmen also considered as Industrial dispute. It was added in 2010 as an amendment. Thus a contract estt. was also covered under ID Act. My desire from the academicians or IR/HR practitioners is whether he also required to apply for permission to the State Government for retrenchment of some of his contract workers as he got more than 100 contract workmen engaged in my unit{ as it is required under Sec. 25-N(b) and the procedure laid down in Sec. 25-N(2) of ID Act}? Of course he follows sec. 25G also and as advised by you he follows disciplinary action against some of the unscrupulous workmen. Because our unit intends to reduce the non-core activity work given to him which requires to reduce manpower engaged on contract basis. Thus, the reason I needed some advice.

Similarly, does he go for certification of standing orders as Sec. 2(e)(iv) of the Industrial Employment Standing orders Act, 1946 is applicable to him? If the answer is in affirmative is there anybody helps him in drafting Standing orders for a contract establishment on receipt of some fees? Or are there any model standing orders available to suit a contract establishment? Pl. clarify now.

Thank you once again Sri Koragaonkar Saab.
28th August 2015 From India, Chennai
Dear Kesavapanda,
Your post dated 28.08.2015 had not attracted my attention, since I found it to be lengthy and not specific.
In your post you only answered yourself correctly.
Since establishment of contractor is an industrial establishment as defined under Section 2(e)(iv) of IE(SO) Act, your contractor can go for certified SO. But right now your contractor has to follow the procedure under 25G of ID Act.
29th August 2015 From India, Mumbai
Interesting that you put an unclear post and then complain that no one has responded.

First you talk of retrenching unscrupulous employees.

Then you talk of retrenching / reducing manpower because you are reducing the amount of work for contract labour.

Both of the above are not the same, and therefore the answers would be different.

Let us also understand what retrenchment is. It is removal of workers on account of downsizing. You have to do it on last in first out basis. There is no provision of pick and chose. So if you need to remove specific individuals, it has to be in for cause and after disciplinary action.

About drafting standing orders, if you want them made, send me a message offline.

Model standing orders are there in every state, we don't know what state you operate in. Some states have automatic application of standing orders and there is no need to get certified standing orders. In other states standing orders need to be certified for each unit. However, there too, it is unlikely that the labour authorities would allow significant deviation from the model.
30th August 2015 From India, Mumbai
Yes..yes..Mr. SASWATHA BENARJEE...You are absolutely right. My earlier question was about termination what my contractor's intention was to remove the two unscrupulous contract labours. Some advised that my contractor has to approach the State Govt. for the same. Therefore, I needed clarification in the first instance. But as per the reduction of orders it was my turn I wanted to downsize the contract labours. Therefore, it is now my turn to advise him appropriately to follow the procedure while downsizing his numbers in congruence or consistency with 25-G and 25-N of ID Act. On enquiry some said that for downsizing the contract labours 25-N is not attracted to the contractor and therefore, need not approach the government for permission even though ID act was applicable to contractor's estt. When I was put in quandary as to what advise I should give to my contractor in order not to be caught by any Govt. machinery of Andhra Pradesh for having not followed the procedure, I have opted to ascertain the opinion from the eminent people through this forum. As per shree Korgaonkar's remarks I advise my contractor to approach the Govt. of Andhra Pradesh for obtaining the permission along with the reasons for the downsizing. In this connection, is there any liability of mine stands to furnish information to my contractor relating to the reasons for downsizing in the non-core activity along with the evidences? If the authorities desire the evidences how can my contractor replies without my information? Can you pl. advise me?
1st September 2015 From India, Chennai
We don't know how large your unit is or where it is located.
However, in most cases though ID act applies, no one takes permission under that for downsizing. If the contract labour is used for core manufacturing activity or for perineal work then things are different ofcourse.
The purpose for which companies take contract labour is that they can be removed at any time. The company just has to inform the contract he now needs lesser people. Many of the times the contractor will redeploy the people elsewhere. In other cases, they will ask them to go. Only in few cases where the contract employees go to the labour commissioner or complain in the labour court for unfair retrenchment, then you have a problem.
So I would say, don't invite trouble where none exists, unless you have militant labour or union that is active in contract labour. Cross the bridge when you come to it.
2nd September 2015 From India, Mumbai
Dear Saswata ji,

I agree with you on your practical approach cent percent and that is being practiced everywhere.

Nevertheless, we can not ignore the legal aspects which I discussed in response to the query. We must know the Law first and accordingly we should take necessary precautions while appointing Labour Contract and engaging labours through him.

By virtue of amendment in Section 2(a) (ii) in 2010 of the ID Act 1947, dispute between a contractor and his contract workmen also considered as Industrial dispute and accordingly contract labour can raise industrial dispute.

Secondly, Supreme Court in SAIL v National Union Waterfront Workers and Ors., has confirmed that contract labour can be retrenched by contractor in conformity with the provisions of the I.D. Act, as I stated in my earlier post.

Under the above circumstances, HR Fraternity should take some precautions keeping in mind the provision under Section 2(oo)(bb) of ID Act and ask the Labour Contractor to have appropriate contract document with his labours.
2nd September 2015 From India, Mumbai
I heartily welcome all who have contributed to my query and I thank you all once again. Of late, on HR executive responded to me stating that Chapter V-B is applicable to only Factories, mines and Plantations as per Sec. 25-L, which is not applicable to any contract establishment. When I went through it it indeed lessened my pain. Now, I intended to take steps to reduce the contract labours. In such situation to retrench some contract labours what procedure my contractor has to follow may kindly be advised. Because according to the advice of the HR executive neither Ch.V-A nor Ch. V-B applicable to my contractor. What procedures has he to follow in cases of lay off, retrenchment under ID Act?
13th September 2015 From India, Chennai
Absolutely not. Mine is a factory manufacturing different engg. parts. I was clarified that Sec. 25-N is applicable to my own factory employees not to the contract undertaking which I employed in my factory. My manpower contractor's establishment does not fall within the three classifications Factory, Mine or Plantation.Therefore, I put forward my query once again if it is not applicable what's the procedure for retrenchment he has to follow statutorily under ID Act as ID act covered contract establishment also? Or if the advise given to me was wrong and the contractor has to go for prior permission from the Government? Pl.advise.
15th September 2015 From India, Chennai
I think there is a disconnect right there.
If a contract worker is working in your factory, then he is a part of your establishment both for factories act and ID Act. It does not matter that the contractor has a different office. Since sec 25N applies to your factory it applies to all those who work there irrespective of who pays their salary.
If the contract workers are working in the contractors factory, then this matter does not apply to you at all. Why should you worry about someone else's factory.

16th September 2015 From India, Mumbai
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