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We are planning to appoint Casual employee for short period in our company can you all guide us on following:
1.) What all formalities We have to adopt while appointing Casuals
2.) What all are Legal obligation
3.) Weather we have to issue appointment letter for Casual
4.) If the company doesn't cover for PF & ESI what will be implication
I hope members will help and give me guidance

From India, Delhi
Dear Nikhil
You have raised a thought provoking question which every organisation wants to know what is the Government policy, what are the legal issues in appointing casual labours.
I expect some of the members with legal back ground can add to my reply.
Casual labourers can be appointed for the work of intermittant nature for not more than 240 days in year. As per Industrial dispute act any person works more than 240 days in a year deemed to construe that he is permanent and termination of such employee would amounts to unfair labour practice.
There is no need to give appointment letter which itself be a reason for treating them as a regular employee.
PF and ESI has to recover from the salary of casual labourers but deducting itself would not amounts to regard casual as permanent employee as like contract labourers.
HR Professional

From India, New Delhi
Hi Nikhil

Every company these days is now interested in reducing dependence on head count and in the process end up hiring casual vacancies or contract labour. The difference in these two is that casual employee is under the supervision of the employer while under contract labour act, the employee is in the rolls of the contractor and is governed by the terms & conditions of employment of the contractor. However, in both the cases, there are certain precautions to be taken. There should not be two sets of employees doing the same job - one as casual and another as permanent. Otherwise, this would to Unfair Labour Practice. Similarly, casual employee as the name suggests is only "casual" and as such, requisite precautions need to be taken to issue him any letter of appointment/authorisation. Many employers send these casual employees for specialised training and there also it becomes difficult to disprove that the appointment is casual. Many benevolent employers grant rise in pay/compensation to these casual employees along with the permanent employees and that also is disastrous.

In short, it is for the employer to decide what type of work can be got done through such casuals, their other terms, etc.,etc.

From India, Mumbai
Dear Nikhil,

Casual Labours are appointed to do work which is not of perennial nature. So, first make sure that you want to appoint casual worker for a non-perennial work.

You will have to get their ESI, PF forms filled up, even if you dont submit ESI form to ESIC.

Appointment letter is not a necessity. If as a matter of practice appointment letter is being issued then pl do that else it is not really required. If you plan to issue the same pl get in touch with a lawyer to draft it.

My suggession will be that dont appoint casual labour, if possible outsource it to third party so that no legal hassel comes.

There are many cases when casual/temporary/badli workers claim for permanency and then you will have to run to court to attend cases. There are host of cases for the same.

If you want to appoint casual workers then make sure that they dont complete 240 working days in a year, else they will demand for permanency. Also, if possible pl rotate them every month so that they dont work on same activity for a long time.

For any further clarification, pl ask specific question.



Nilandras post appears a perfect solution for you. For casuals since you are going to appoint them for Temp work ESI coverage is a must.Better to style it as a Fixed term Contract and issue an appoinment letter with termination notice period as you will have the benefit of ID Act for retrechment notice. The previous regime of the fear of an Employee claiming permanency as indicated by Trisha is now gone with advent of Globalization and Apex Court Judgment in the Steel Authority case.The risks involved now are few.
With Regards
V.Sounder Rajan

From India, Bangalore
Dear Rajan
Thank you for throwing light of this vibrant subject. Can you kindly help me with the details of steel Authority case so that our cite HR members be aware of this permanency of Casual labourers in any industry
HR Professional

From India, New Delhi
Friends Thanks for huge response...... Kindly tell me as my organization have only 3 employee on regular roll so still we have deduct PF & ESI for them. Nikhil
From India, Delhi

No harm to appoint the casual labour if the nature of work is not of regular / perennial nature, it should be of intermittant nature and not lasting for more than 240 days in a year. As per ID Act an employee become workman if he puts his services more than 240 days in a year and deemed as permanent, the termination of such workmen would attracts Section 25F, where an employer has to pay retrenchment compensation and other formalities of retrenchment. So ensure that a casual worker should not work for more than 240 days in a year.

No harm to give appointment letter (letter of contract) which should be for a specific period and job nature should not be same as other regular worker engaged for.

There should be a specific clause that this letter of contract shall automatically come to an end after a particular time (Period should be less than 240 days).

If the nature of work is casual then there is no need to enroll them as a subscriber of P.F. but E.S.I. will be applicable on casual labour.

As for as my opinion is concerned it is better to pay E.S.I. and E.P.F. both of the casual employee otherwise will create a new problem during the inspecton.

On having the membership of P.F. and insurance of E.S.I. , a casual labour can not claim permanancy in the employment.

For claiming the permanacny in employment there should be regular nature of job, more than 240 days work, other permanent employees are also doing the same work, are the basic facts on normally Apex court decide the cases.


Mohd. Arif Khan


Hi, Can any body reply me pls. We are taking fixed term appointees for 3 years , is it permanent appointment ?
From India, Kochi
Instead of appointing causal labours under Contract Labour Act, The best solution as per my knowledge is,one should think of appointing ITI Trainees(Trainee Scheme/Trade wise) for a fix term period of one year.The matter of PF and ESI will not be their. and the issue of offer letter, mention the term of one year and all the obligations pertaining to End of period(One year term). After the completion of trainee period company is not held responsble for any obligation pertaining to permanancy.
hope this will be very helpful to all.
Management Trainee-HR/IR

From India, Mumbai

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