What do you mean by contractual labour? Is it employees on roll of the company but on a fixed term contract or employees engaged by an outside contractor? The status of these two are different. The former is an employee of the establishment but unlike other permanent employees his employment will be terminated on a prefixed date as mentioned in the contract of employment. When his service is so terminated he will not be eligible for any retrenchment compensation. However, having been employed for more than one year he is eligible to get all other benefits like leave with salary, notice for pre mature termination of service, gratuity (if he has been in service for at least five years) and so on.
In the latter case, the relationship between the employer (principal employer) and the employee is not present in many situations and, therefore, he can not claim permanency provided he has been employed to do a work of non perennial nature and there has been no direct interference by the Principal employer in his salary negotiations and similar matters connected with his service conditions with his employer, ie, the Contractor.
Regards,
Madhu.T.K