How Can Contract Employees Secure a Long-Overdue Salary Increase Since 2007?

Dear Experts,

One MNC IT company engaged us as direct contract employees from March 2005 with a renewal every six months. In August 2007, they suddenly asked us to sign with a manpower company at the same salary due to internal audit objections. So, we are now working under a new manpower company and are deputed to the same workplace as before, with the same salary. Until now, there has been no salary increase for us.

When we enquired with the manpower company, they mentioned that we are considered flexi staff by the hirers and any salary increase should be provided by the company we are currently working for. They also stated that we are under their payroll and are eligible for salary increments.

What steps should we take to ensure that we receive the pending salary increase from August 2007? Can anyone assist us in receiving our salary increase as is customary for other employees?

Thanks & Regards,
Kaygee
Chennai

Hi Kaygee,

As per your posting, presently you are a contract employee, i.e., you are on contract rolls. The first point is, are you getting the minimum wage as per the Minimum Wages Act? You mentioned that since Aug. 2007, you didn't get any wage hike. Normally, every 6 months, the government revises the wages of contract employees; please check the same.

The second point is that even though you are working under a contract employment, you are not getting wages on par with the employees working on company rolls who are doing a similar job. This is a major issue. If both are doing the same work and not getting a similar salary, it is against the laid-down rules.

Please critically evaluate the above two points and submit a request to the concerned labor department.

Regards,
Kameswarao

Dear Kameswarrao,

Thank you for your useful information and advice. Below are the details of my employment for your reference:

Company: MNC SW IT Company in Chennai, currently developing GDC in Siruseri Sipcot Complex with an investment of around 200 crores.

Job Profile: Working as a Librarian - Single Handed.

I joined as a Company Direct Contract employee from March 2005 to July 2007. The company then required us to sign a contract with another staff payroll company to continue in the same job. I have been in this role from August 2007 to the present day, with no increments or bonuses.

Details of my current CTC:
- Basic: 2300
- HRA: 920
- Conveyance: 500
- Medical Allowance: 400
- Professional Development Reimbursement: 500
- Deputation Allowance: 931
- Bonus / Ex-gratia: 460
- Gross Salary: 6011

Deductions:
- PF/ESI/Prof Tax/Insurance, etc.: 412

Net Take Home: 5599

I am uncertain about the minimum wages for this type of work. Your help in this regard would be greatly appreciated.

Thank you,
Kaygee

Dear,

This type of appointment comes under unfair labor practices. They are making a fool of people by doing so, but this will not stand in a court of law. By seeing your salary breakup, the company has shown a basic salary less than the minimum wages required by the state. Therefore, they are also violating the PF Act.

Regards,
J.S. Malik

Sir,

Thank you for your valuable advice. Since we don't know about the Monthly Minimum Wages for these types of jobs. This month on 16th June, my working company HR asked me to sign for a further three months of an extended contract from 01.06.2009 to 31.08.09 as per the same terms & conditions of the August 2007 offer letter given by the contract payroll company. We signed the letter after three days under protest. HR stated that at present, no increase is possible, hence asked us to decide by ourselves. What should we do? For the sake of our livelihood and to support our family in the current situation, we are forced to sign with the same terms. Who will take all this to Government Department Levels to save our future?

Thanks & Regards,
Kaygee
Chennai

Dear,

I understand your position. The person sitting in HR should think about it. They are not professionals and do not think about employees; then, only this problem arises. This problem creates a blunder at a later stage.

Regards,
JS Malik

Dear all,

Can you please help me with this? A person has to give me an amount of 70,000, and he gave me a cheque for 7 months on a monthly basis of 10,000. I deposited the first-month cheque and it got returned, and the second month also got returned due to insufficient funds. What should I do regarding the legal formalities? Can you please guide me?

Regards,
Pushparaj R.

Dear Pushparaj,

Please go to the local police station with a copy of your bank passbook and cheque return slip to register a complaint under Section 138 of the Negotiable Instruments Act. The return of a cheque due to insufficient funds is a criminal offense, and the penalty may extend up to 2 years of imprisonment or a fine, or both.

Regards

Awvik, thank you for your valuable comments. Can I have a little more idea...

Regards,
Pushparaj

Dear,

Directly go to an advocate and explain all the details about your bounced cheque and the reason for the transaction. Subsequently, the advocate will send a notice to the other party for a compromise. If the other party cannot agree to a compromise, the case will automatically fall under the Negotiable Instruments Act of 1948. Do not worry about this; you will have a fair judgment. Okay :)

Dear Malik Sir,

I would like to request you to brief me about the minimum wages amount for office staff under the Shops & Establishment Act. Our software development offices in Tamil Nadu fall under this category. I look forward to your favorable reply.

Thanks & Regards,
Kaygee

Hi KeyGee,

As per the provisions of the Minimum Wages Act, you would receive a DA hike of at least twice a year (once in six months). According to the act, even if the employer is paying you more than the minimum wages, they are supposed to pay you the difference in the hike in DA every year.

It is also an unfair labor practice for a company to shift or transfer their employees through another vendor, and you can certainly raise this with the Labor Department, as this job is of a permanent nature.

However, there is a risk that you could face issues such as losing the job and fighting it in court as the company might manipulate the situation by removing you from the contractor's role as well.

Therefore, the only suggestion would be to meet with your current employer and inform them about this. If that does not work out, the only alternative is to approach the concerned labor department officials.

The minimum wages payable to you as of now (from April 1, 2009, to March 31, 2010) are Basic - 2269 + DA 839/- per month. You are currently paid more than the minimum wages, and therefore, they would provide you with a justification based on another Supreme Court judgment, which justifies such a stance by stating that even the gross wages paid should be considered as minimum wages.

However, as the company has not increased the minimum wages for some time, you can only ask for the DA increase (around 250 to 300 rupees per annum) to be paid to you.

If you are seeking permanency, you must be prepared to fight it out in court.

Dear,

In contract employment, increment will be at the discretion of your contractor. Please make an appeal to your contractor referring to the promise made by the principal employer. If he accedes, it is okay. Otherwise, when the contract comes up for renewal, you can negotiate.

VS Rajan Associates
Chennai

This is a popular loophole that Indian Pvt Sector companies lacking any sense of Corporate Governance employ on a regular basis. Putting people under a contractor not only reduces the headcount but also saves the company a lot of related expenses. This is nothing but exploitation and a shame for our country's industrial standing. This is outright illegal under the Contract Labour (A&R) Act and an unfair labor practice under the ID Act. Unfortunately, this practice is much prevalent as Indian private companies don't practice Balanced Scorecard; for them, the only concern is the bottom line in the P&L Account. The law has to become more proactive and must take suo-moto action.

Dear Sajid ji and Malik ji, I sincerely need your opinion on this. How can HR professionals contribute to alleviating this problem? Kindly give your feedback/viewpoints.

Regards.

Dear V S Rajan Associates,

FYI, on the 17th of this month, our HR representative from the principal employer insisted that I sign an extension letter. This letter states that I have agreed to an extension for three months from 01.06.2009 as per the terms and conditions mentioned in the Contractor (Mafoi) Offer Letter dated 01.08.2007.

I then discussed the possibility of an increment with the HR of the principal employer who had engaged me. They informed me that, currently, it is not possible. I was also advised to decide on my course of action. After three days, under protest, I signed the extension letter due to my financial situation, as I have a family to support and no other source of income. They mentioned that they would consider an increment after six months if I continued, although I should not take it as a guarantee. This is the current situation.

Thanks & Regards,
Kaygee1
Chennai

Dear Rajkumarji,

Your words clearly indicate what is happening in Indian industries, especially in software companies. Only HR personnel and software programmers are receiving more and more each year, while support staff are receiving very low pay. They are labeling us as non-billable staff as a tactic. Their billing structure includes all operating expenses, and they establish new subsidiary companies annually based on profits. They should acknowledge that we also contribute to the company in various roles, supporting their careers and meeting their needs to enhance company growth. The government should consider these aspects and take action for private sector employees like me. Like-minded individuals will also address this to the government in the future whenever such issues arise.

Thanks & Regards,
Kaygee1
Chennai

Sure Kaygee1, we empathize with your problem. I am hopeful that sooner or later, an amicable solution will come out. Meanwhile, be brave, keep working diligently, and take care of your family.

Regards.

Sure, Kaygee1. We empathize with your problem. I am hopeful that sooner or later, an amicable solution will come out. Meanwhile, be brave, keep working diligently, and take care of your family.

Regards.

There is no law in India that gives legality for the supply of slaves. If your company is asking you to sign a payroll of a manpower supply agency, they are totally wrong, and both your company and the manpower supply agency are liable for punishment under the law. You should immediately inform the labour commissioner, Ministry of Labour and Employment, and the PMO office. Your courage to highlight such unfair labour practices will help other similarly exploited employees. How can you receive a salary from your manpower supply agency and work for another company? Who will be your commanding authority to provide you with work for execution?