Labour Law & Hr Consultant
Hr Executive At Plus Star Engineering Pvt.
+2 Others

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Dear HR People,
Due to completion of Contract Work at a Plant we have given 1 month prior notice to the employees, and at the end they are paid their monthly salary along with Full & Final Settlement amounts (including Leave & Bonus). Another Contractor got our contract and continue our work at the same plant and same area with the same employees. But the employees are demanding Retrenchment Benefit from us. Is retrenchment applicable to these people /
Rakesh Kumar Sahoo
HR Exe

Dear Rakesh,
Please go through Section 2(oo)(bb) of the Industrial Disputes Act,1947.
On completion of the contract coupled with its non-renewal, the contract labor cannot stake any claim for retrenchment compensation.

They should have been appointed on a fixed term contract as per Sec 2 (oo).
Dear Rakesh,
As per the case details it gives impression that termination of workmen happened due to non-renewal contract than completion of Work at Plant.
But you engaged another Contractor for the same work in same plant and same area with the same employees.
However, the termination of service of a workman appointed for fixed period for non - renewal of contract will amount to retrenchment and section 2(oo)(bb) of the Act will not be attracted when the letter of appointment was a camouflage to circumvent the benefit of permanency as held by the Kerala High Court (Manager, Jayabharath Printers & Publishers (P) Ltd., Kallai Road, Calcutta-2 vs. Labour Court, Kozhikode, 1993 LLR 413 (Ker. HC)) but at the same time termination of a workman though appointed for a fixed period with notional breaks, will amount to retrenchment.
Your contractor has done the blunder and as principal employer you allowed the employment of same worker to same work. Now you pay the retrenchment compensation @15 days for every completed year of continuous service or any part thereof in excess of 6 months. Better your management pay to subside the claim of permanency that may come.

When PE is engaging the same contract labor through another contractor, it would have been better if PE took initiative to advise all contractual worker to resign from earlier contractor and parallely to issue new appointment letter from new contractor.
Ultimately the problem is for PE. Unnecessary unrest.
S K Bandyopadhyay ( WB, Howrah)
+91 98310 81531

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