How Do You Handle Terminating a Contract Worker for Absenteeism or Disruption?

Hi, I wanted to know how one can terminate the services of a contract worker in the case of absenteeism or inciting other workers not to work. Is there any notice to be given to the worker, or can they be verbally told not to come, and then given full and final settlement?

Ensure there is a single line break between paragraphs.

If he/she is a contractor, ask the contractor to stop the services of the above-said "He/She."

Hi,

The issue needs to be handled methodically. The terminated person may raise legal proceedings against both the principal employer and the contractor. Please follow the steps mentioned hereunder.

In case of absenteeism:
a) Sufficient records need to be built up by the contractor showing the earlier instances of absenteeism, the memos' warnings issued, show cause notices issued if any, and of course the records of the domestic enquiry.
b) In case of provoking others not to work: As this amounts to gross misconduct, a systematic enquiry needs to be followed with all pre- and post-requisites, and then the termination can follow.

Kind regards, Dayanand L Guddin

Dear Navin,

If there is a Tripartite Agreement (Principal Employer, Contractor, and Union of Contract Workers), Service Agreement, Work Order, or Certified Standing Orders in place, and there are clauses dealing with Termination of Contract Workers, then the same is to be followed.

In the absence of the above, the following is suggested:

1. The Contract Worker is not your employee, so the right of termination lies with the Contractor and not the Principal Employer.
2. The Principal Employer has the right to debar a Contract Worker from entering the premises of the Company and/or ask the Labour Contractor for a replacement.
3. It is up to the Contractor (Immediate Employer) to decide whether he is going to terminate the services of the worker or employ him in another Organization/work.

Regards,
SC

As stated by Swastic, since there exists no legal relationship between the principal employer and the worker engaged through a contractor, you cannot take any disciplinary proceeding against him. You can direct the contractor that the worker should not be sent to your workplace.

At the same time, if you issue memos or a charge sheet and initiate disciplinary action against an employee engaged through a contractor, the same will put you, i.e., the principal employer, in trouble because the act of issuing a charge sheet and initiating disciplinary action against an outsourced employee is evidence of the existence of 'direct control' by the principal employer over the contract worker. If the workers engaged through a contractor can prove that they have been directly supervised by the principal employer, then the contract will be deemed a sham contract. The consequence of a sham contract is that the employees of the contractor would become eligible for permanency or regularization of service with the principal employer.

Therefore, inform the contractor of his poor performance or habitual absenteeism and ask the contractor to remove him from your plant.

Now, one more piece of advice from a different perspective. If by contract employee you mean an employee appointed for a fixed term, then he is a direct employee of yours, and the situation in that case will be different. In such cases, if the fixed term for which he is appointed is, say, one year, you have to issue a memo before discharging him for misconduct. Certainly, you can terminate his services without any show cause notice or disciplinary action on the expiry of the term for which he is appointed.

Regards,

Madhu.T.K

Madhu Sir, in the last paragraph, you mentioned the fixed term. Even during this period, if any contract employee creates similar issues, should the principal employer wait until his/her term completes, or can the principal employer directly involve (being a direct employee as you said) or get the contractor involved directly for replacement or termination. Seek your input.

Suresh

Naveen,

I am in agreement with Mr. Madhu. Unless you have an employee-employer relationship, you can't take any action against him/her. On the contrary, if you do so, you are accepting that he is your regular employee. In that case, the contractor will be free from his responsibility.

D V Gosavi

Dear Madhu,

Very useful and appropriate comments on the subject. Please let me know "SHAM" contract.... Can anyone have an idea.. In my plant, due to union problems, we have stopped operating the plant for some time... For this, do we need to put a written notice at the gate... If we put it, what will be the legal matters involved in this... Which government authorities do I have to send a copy of the notice...

Regards,
Supriya

Dear Group,

What if we add this clause in the appointment letter of the contract employer: Can we terminate him/her with immediate effect?

Contractors will be responsible, and it does not matter about the absence of the contractor's workers; it is the contractor's responsibility.

I am from Pakistan, Lahore city.
Email: imran.mahmood@kohinoormills.com

Prakhar_SS, it is clearly mentioned that the contractor employee is not part of the organization. How can you issue an appointment letter? It's a clause of the contract, and the contractor will be responsible. Your answer is not up to the mark.

Suresh, I have only put a different angle on contract employees. Sometimes, employees are appointed for a fixed term, for example, one year from 1st Jan 2010, and will be referred to as contract employees. In such cases, the employee is directly appointed by the employer, but termination will occur automatically at the end of the fixed period for which they are appointed. If the employer wishes to terminate the service before the fixed time, for example, today, notice must be given. Additionally, termination occurs automatically on 31st December 2010.

Supriya, a sham contract refers to a contract to engage employees through another person, known as a contractor, created solely to circumvent the legal rights of permanent employees. There are instances where employees are engaged through an outside agency and work regularly. However, since they are not on the company's payroll, they are deprived of the statutory rights enjoyed by permanent workers. If the intention behind such a contract is proven to be deceitful, it will be considered a sham or fraudulent contract.

The Contract Labour (Regulation and Abolition) Act is enforced to oversee such contracts and eliminate the engagement of workers in jobs of a regular or enduring nature. Therefore, an employer is not supposed to engage employees through a contractor for the core activities of the establishment.

To close down a unit, you must adhere to the provisions of the Industrial Disputes Act. For more details, please start a separate thread.

Regards,

Madhu.T.K

A very useful discussion with excellent inputs! I would like the budding HR professionals to take special note of the following excerpts from Mr. Madhu's post:

I personally know of many cases wherein the contract workers had to be regularized and made permanent employees of the organization (under the provisions of CL(A&R) Act, 1970) even with retrospective effects. This was due to some over-enthusiastic HR officers having issued them show cause notices, warnings, etc., thus prompting the Labour Court to take cognizance of this direct link between the organization and the contract workers.

Warm regards.

I also agree with Mr. Madhu's view. If you take any steps against an employee who is originally an indirect employee of the organization, in my personal view, our first priority should be to safeguard our employer. If you take any steps against the employee, it will be the responsibility of the principal employer. In that matter, this is the responsibility of the contractor.

Dear Imran,

I am referring to the employees who are under contractual employment with the company, not to the third-party processing technique.

Regards,
Prakhar

Dear friends,

Please go through the service rules and conditions mentioned in the Contract Labour Act. The contractor can give a 3-day notice to the contract worker and terminate the services as per 14(1) for any misconduct and 14(5) for absenteeism of 5 days or more. We did this with the contractor in our unit. Kindly refer to the service conditions of the act.

Regards,
Sudheer Reddy
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