Contractual Labor and Permanency Claims: Should We Give Them a Break to Avoid Issues?

Hi,

I just want to know whether we should give a break to contractual labor to avoid their claim for permanency. Earlier, I heard that no contract labor can claim permanency. If anybody has any circular regarding this amendment, please send it to me.

Regards,
Jitender

Please check the attachment. I hope this could help you.

Employees engaged through a contractor do not have an employee-employer relationship with the principal employer. Therefore, they cannot claim direct employment with the principal employer, even if they have worked for the entire year with them. However, if the principal employer has behaved in a manner that indicates the existence of the aforementioned relationship, then the contractor's employees can request direct employment status. For instance, if the principal employer has participated in a conciliation proceeding where the wages and other conditions of service of the contractor's employees were discussed and finalized, it should be interpreted as the principal employer establishing an employer-employee relationship with these employees. This situation may result in a scenario where the principal employer cannot deny permanent employment to the contractor's employees.

If by contractual employment you mean employment for a fixed term or fixed-term contract (FTC), then the employee will be on your payroll only. To prevent them from claiming permanent employment status, you will need to limit their working days to fewer than 240 days in a year.

Regards,

Madhu.T.K

Contractual labor, as mentioned by you, perhaps means that employees are directly engaged by the company for a specific period. According to legal standards, if such employment is ongoing and linked to the primary activities of the company, it cannot be continued on a contract basis for an extended period. In case of a dispute, the onus lies on the management to establish that the nature of employment is seasonal.

Regarding the regulation of 240 days, it is a convention that an employee should be regularized if they work for 240 days in a calendar year. The Industrial Disputes (ID) Act states that such employees are eligible for compensation under the ID Act. There is no mention about regularization.

Please let me know if you need further assistance or clarification.

Dear Shrikant,

If the job is not perennial in nature, you can also engage contract labor. I do not think that Railways have Engine Drivers, Ticket Examiners, or Booking clerks engaged through any contractor. Similarly, there may be government/public sector establishments hiring contract labor but within the ambit of the Contract Labor (Regulation and Abolition) Act only.

Regards,
Madhu.T.K

I hope there is no need to give a break in service during the currency of the contract with the Principal Employer. The services of the contract labor will cease the moment the Principal employer terminates the contract with the contractor.

Shrikant sir, you are very much correct. I have the same question all over India. In state and central governments, they are employing contract workers on a regular basis, which is essentially a permanent job.

Concerns About Contract Labour Practices

The government of India itself is not obeying the Contract Labour Act. Why do all of us Indians have fear in mind to employ contract labour? For example, look at the railway employee; he is spending his entire life in the railway as contract labour with very low wages. Similarly, in Hindustan Organic Chemical Co. of the Government of India, plenty of workmen have been working for the last 30-35 years as contract labour. Why is this act not applicable to these contract labourers? Why is it that only this company belongs to the Government of India? Why are we, the private industry people, not raising our voices against the Government of India?

Regards,
Shrikant.

As per law, is it necessary for a company to provide its contractual workers with an equal number of leaves (EL, CL, SL, etc.) as its regular on-role workers? I have received an objection in one of the inspection reports claiming that the company needs to give contractual workers the same number of leaves as on-role workers. There should be an equal leave policy. Please clarify.