Dear All,
I would like to inform that one employee filed a termination case against the principal employer stating that he was the employee of ABC company(Principal employer) and not AZ company(Contractor) and his termination was illegal. Workmen also raised the contract is sham or bogus. But the Conciliation officer issued Failure Certificate instead of reference.
Please let me know in this situation can CGIT power to decide the contract is sham or bogus and workmen is employees of ABC (Principal employer) or not? If yes then what is the basis means any reference or high court or Supreme Court decision reference? Please help.
Regards
Shyam Singh
I would like to inform that one employee filed a termination case against the principal employer stating that he was the employee of ABC company(Principal employer) and not AZ company(Contractor) and his termination was illegal. Workmen also raised the contract is sham or bogus. But the Conciliation officer issued Failure Certificate instead of reference.
Please let me know in this situation can CGIT power to decide the contract is sham or bogus and workmen is employees of ABC (Principal employer) or not? If yes then what is the basis means any reference or high court or Supreme Court decision reference? Please help.
Regards
Shyam Singh
It depends on the following points:
1) Nature of agreement between contractor & principal employer.
2) How the principal employer treats employee.
3) Very Imp - Who has power of supervision. This is determining factor.
See Things To Remember While Drafting A Valid Employment Contract
From India, Kolkata
1801) Nature of agreement between contractor & principal employer.
2) How the principal employer treats employee.
3) Very Imp - Who has power of supervision. This is determining factor.
See Things To Remember While Drafting A Valid Employment Contract
From India, Kolkata
Dear Shyam, Please clarify your Statement "But the Conciliation officer issued Failure Certificate instead of reference.
It appears that Conciliation Proceedings failed.Conciliation Officer will submit failure report to Government.Government will decide to refer the dispute or not.
From India, New Delhi
It appears that Conciliation Proceedings failed.Conciliation Officer will submit failure report to Government.Government will decide to refer the dispute or not.
From India, New Delhi
Dear Shyam: CGIT has the power to declare a contract arrangement to be sham. I am adding some case law
A contract of employment with any contractor is sham and nominal when over all day-to-day administrative control and supervision upon those workers is exercised by the principal employer through its officials in addition to payment of wages, allowances and other benefits are borne by the principal employer and the work is of regular nature. When it is proved that the employment contract with the contractor is sham and nominal, the employees of the contractor will be having their right to be absorbed as regular employees of the principal employer
General Manager, Bharat Heavy Electricals Limited Ranipet vs. Canteen workers of BHEL
2015 LLR 580 (Mad HC)
When the principal employer is registered under the Act, wages of the contract labour were paid by the contractor, the contractor was license holder under the Act, principal employer was making payment to the contractor, same contractor was supplying contract labour to other companies also, workman had never worked under the control and supervision of the principal employer, the contractor's workmen would not have relationship of employer-employee with the principal employer. When workmen failed, by any evidence on record, to prove their direct engagement by the principal employer, they are not entitled to seek any relief from the principal employer by raising an industrial dispute. If a workman fails to prove that in the preceding 12 month she had worked in 240working days, the dispute raised by him in respect of his termination of services or for any other relief under the ID Act is not sustainable being not covered under the ‘industrial dispute' as defined under the ID Act 1947.
Management of Turbo Energy Ltd rep. By its Executive Director vs. Presiding Officer, Additional Labour Court, Vellore & Others
2015 LLR 145 (Mad)
Bhavnagar Municipal Corporation etc vs. Jadeja Govubha Chhanubha & Anr
2015 LLR 160 (SC)
16. Contract between principal employer and contractor is sham, nominal, and camouflage if attendance of such workman is recorded in a register, separately kept with the principal employer, such workmen are to perform duty, as per direction, supervision and control of principal employer, material record to prove or disprove the relationship of employer-employee and is not produced by the principal employer.
If the contract between the principal employer and the contractor is proved to be sham, nominal or camouflage,the employees of the contractor would be treated as employees of principal employer, entitled to all benefits of regular employees of the principal employer.
A contract is neither sham nor camouflage if the wages are paid to the workman by the contractor, right to regulate employment i.e., appointment, placement, disciplinary action, termination, contractor, ultimate control and supervision lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. An employee of the contractor cannot claim to be employee of the principal employer only by alleging that he has been working under the control, supervision and direction of the principal employer in relation to assignment of quantum of work, procedure to complete the work, etc. If the wages are paid to him by the contractor, right to regulate employment i.e., appointment, placement, disciplinary action, termination, etc is with the contractor, ultimate control and supervision lies with the contractor.
Management of Ramjas Public School (Day boarding) Rep. by its Chairman vs. Dharmender & Ors.
2015 LLR 1126 (Del)
International Airports Authority of India vs. International Air Cargo Workers Union & Anr.
3009 (13) LLR 923 (SC)
From India, Mumbai
A contract of employment with any contractor is sham and nominal when over all day-to-day administrative control and supervision upon those workers is exercised by the principal employer through its officials in addition to payment of wages, allowances and other benefits are borne by the principal employer and the work is of regular nature. When it is proved that the employment contract with the contractor is sham and nominal, the employees of the contractor will be having their right to be absorbed as regular employees of the principal employer
General Manager, Bharat Heavy Electricals Limited Ranipet vs. Canteen workers of BHEL
2015 LLR 580 (Mad HC)
When the principal employer is registered under the Act, wages of the contract labour were paid by the contractor, the contractor was license holder under the Act, principal employer was making payment to the contractor, same contractor was supplying contract labour to other companies also, workman had never worked under the control and supervision of the principal employer, the contractor's workmen would not have relationship of employer-employee with the principal employer. When workmen failed, by any evidence on record, to prove their direct engagement by the principal employer, they are not entitled to seek any relief from the principal employer by raising an industrial dispute. If a workman fails to prove that in the preceding 12 month she had worked in 240working days, the dispute raised by him in respect of his termination of services or for any other relief under the ID Act is not sustainable being not covered under the ‘industrial dispute' as defined under the ID Act 1947.
Management of Turbo Energy Ltd rep. By its Executive Director vs. Presiding Officer, Additional Labour Court, Vellore & Others
2015 LLR 145 (Mad)
Bhavnagar Municipal Corporation etc vs. Jadeja Govubha Chhanubha & Anr
2015 LLR 160 (SC)
16. Contract between principal employer and contractor is sham, nominal, and camouflage if attendance of such workman is recorded in a register, separately kept with the principal employer, such workmen are to perform duty, as per direction, supervision and control of principal employer, material record to prove or disprove the relationship of employer-employee and is not produced by the principal employer.
If the contract between the principal employer and the contractor is proved to be sham, nominal or camouflage,the employees of the contractor would be treated as employees of principal employer, entitled to all benefits of regular employees of the principal employer.
A contract is neither sham nor camouflage if the wages are paid to the workman by the contractor, right to regulate employment i.e., appointment, placement, disciplinary action, termination, contractor, ultimate control and supervision lies with the contractor as he decides where the employee will work and how long he will work and subject to what conditions. An employee of the contractor cannot claim to be employee of the principal employer only by alleging that he has been working under the control, supervision and direction of the principal employer in relation to assignment of quantum of work, procedure to complete the work, etc. If the wages are paid to him by the contractor, right to regulate employment i.e., appointment, placement, disciplinary action, termination, etc is with the contractor, ultimate control and supervision lies with the contractor.
Management of Ramjas Public School (Day boarding) Rep. by its Chairman vs. Dharmender & Ors.
2015 LLR 1126 (Del)
International Airports Authority of India vs. International Air Cargo Workers Union & Anr.
3009 (13) LLR 923 (SC)
From India, Mumbai
Dear Shyam,
I would like to draw your attention to the amendment carried out to Sec.2-A of the Industrial Disputes Act,1947 in the year 2010. As per S.3 of the ID(Amendment) Act,2010, a new subsection numbered as (2) has been inserted to S.2-A of the IDAct,1947. This new subsection enables the workman to directly make an application to the Labor Court or Tribunal about the dispute of his non-employment after expiry of 3 months from the date of filing his application in this regard to the Conciliation Officer. And the Labor Court/Tribunal has to adjudicate upon the dispute as if the dispute was one referred to by the Appropriate Govt. u/s 10 of the IDAct,1947. Therefore, the Conciliation Officer will naturally, within 3 months from the date of receipt of the application u/s 2-A(1) of the Act, issue only a certificate to the effect that the process of conciliation was exhausted by the workman in the dispute.
Regarding your second question, the Tribunal has powers to examine whether the contract was sham or bogus as alleged by the workman and if it finds so, it can direct the Principal Employer to absorb the contract labor as his regular workman as per the ratio-decidendi of the hon'ble Supreme Court in Steel Authority of India Ltd., v. National Union Waterfront Workers [ 2001(2) LLJ1087 ].
From India, Salem
I would like to draw your attention to the amendment carried out to Sec.2-A of the Industrial Disputes Act,1947 in the year 2010. As per S.3 of the ID(Amendment) Act,2010, a new subsection numbered as (2) has been inserted to S.2-A of the IDAct,1947. This new subsection enables the workman to directly make an application to the Labor Court or Tribunal about the dispute of his non-employment after expiry of 3 months from the date of filing his application in this regard to the Conciliation Officer. And the Labor Court/Tribunal has to adjudicate upon the dispute as if the dispute was one referred to by the Appropriate Govt. u/s 10 of the IDAct,1947. Therefore, the Conciliation Officer will naturally, within 3 months from the date of receipt of the application u/s 2-A(1) of the Act, issue only a certificate to the effect that the process of conciliation was exhausted by the workman in the dispute.
Regarding your second question, the Tribunal has powers to examine whether the contract was sham or bogus as alleged by the workman and if it finds so, it can direct the Principal Employer to absorb the contract labor as his regular workman as per the ratio-decidendi of the hon'ble Supreme Court in Steel Authority of India Ltd., v. National Union Waterfront Workers [ 2001(2) LLJ1087 ].
From India, Salem
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