Contractor's Employee with 240 Days: Can They Seek Permanent Employment?

Dear Members/Seniors,

A contractor's employee worked in a single organization for more than one year and completed 240 days of attendance, but only on the contractor's payroll. Since there is no break in service and the employee has been with a single organization, can he claim permanent employment on the organization's payroll? What is the appropriate period/length of service for a contractor's employee to be allowed in an organization, and what is the correct practice?

Thanks and regards,

The contractor's employee, in any case, cannot claim permanency on the roll of the principal employer.

Regards, R. R. Pund

An employee, even if working through a contractor for 10 years without any break in service, cannot claim a permanent job (on the organization's payroll) with the principal employer.

Regards,
Kamal

Clarification on Contractor Employee Permanency

The Hon'ble Supreme Court has clarified this position in the Uma Devi case: any contractor employee, daily wager, or temporary worker who has not been recruited through a normal general procedure, even if they complete 240 days or more, cannot seek permanency.

The 240-day rule is distinct: if an employee completes 240 days in the service of management, they cannot be terminated without retrenchment compensation, which amounts to 15 days' pay for every completed year of service. This rule does not apply to contractor employees as they are employed by contractors. It also does not apply to badli workers and fixed-term contract employees. The 240-day rule will be applicable to casual workers and temporary workers.

The Uma Devi Judgment is attached. This case remains the law of the land to this date. Please call me in case of any clarification.

Regards

Compulsory Break for Contractor Employees

Is it compulsory to give a break to an employee on a contractor role in one organization?

Claiming Permanent Employment

If ESI and PF accounts continue for more than 240 days, can a person claim permanent employment?

A contractor's employee is not your employee. Please understand the difference. It is, I guess, a long-spread myth that if any contractor's employee completes 240 days in your service, that becomes your employee. The 240-day rule has been deeply debated in this forum in various threads. Although I will clarify the same once again.

Clarification on Contractor's Employee Status

A contractor's employee is not the employee of the Principal Employer; thus, they cannot claim permanency with the Principal Employer. The 240-day rule shall come into effect only if that employee is terminated. In such a case, to terminate him, you have to pay him the retrenchment compensation as per the ID Act. This demand will be raised with the contractor as he was their employee, and if he does not pay him the same, only then the principal employer might have to pay the same. So, as far as permanency in the services is concerned, he cannot seek employment with the principal employer.

"This 240-day rule will be applicable to casual workers and temporary workers."

Could you please provide further details regarding the statement above?

Regards.

Casual workers are those individuals whom you engage on a casual basis for a long time. Many companies hire employees on a daily basis for an extended period. If such employees remain in the system for more than 240 days, they are entitled to retrenchment compensation.

Hope you have found the answer you were looking for. Feel free to reach out in case you have any further doubts.

Regards

I meant a Casual Worker to be a worker who may be a fixed-term employee or an employee on a daily basis to meet the sudden demand for manpower. It has nothing to do with the process he is engaged in. Yes, he may be engaged in manufacturing activities, but it must be for some shorter sudden exigencies due to an order or something.

Yes, if you want to keep somebody on fixed-term employment or on a daily basis for longer terms, you can. But when they are terminated, they must be given retrenchment compensation. Though there are various technicalities related to the retrenchment of various sets of employees, one thing is for sure: if an employee is employed for 240 days or more, they are entitled to retrenchment compensation.

Can you clear my doubt, Kamal Kant ji? I have a few casual employees who have been working with us for more than 10 years. They are paid through vouchers, and we have no other records with the company regarding them. Can they claim permanency, PF, ESI, or Gratuity dues if their services are discontinued?

Regularizing Employment System

Now, we want to regularize the system by putting them under a contractual agency, with PF, ESI, minimum wages, etc. Can they claim the arrears?

Casual Employees and Their Rights

In my view, a casual employee is someone who works at the demand of the employer, typically for a few hours or days. However, in your case, these employees have been working in your organization for almost 10 years! This does not mean they are casual workers, as their services are essential for your organization. Therefore, they are entitled to all types of statutory and legal benefits.

They can also claim permanency, PF, ESI, gratuity, and other dues if their services are discontinued, provided they have any proof or document that can confirm their employment. They can approach labor authorities for these benefits, and if they succeed in proving their case, your organization will have to pay all the benefits with retrospective effect.

Dear Sir/Friend, I am an employee in the position of Data Entry Operator at an Autonomous Education Institute (Govt) for the past six years on a contract basis (initially for two years), which was then extended annually at a fixed amount slightly above the minimum wage. I want to clarify that I obtained this job through the proper channels—through an Open Advertisement, Written test, Interview, and subsequent selection based on merit.

Termination of Employment

Now, my first employer is terminating my employment after six years of service. When I initially joined the job, I was unaware of the distinction between a contract and permanent employee. At that time, the state government was also hiring employees in a similar manner and subsequently regularizing their positions. However, currently, everything appears bleak and uncertain to me. I am unsure of what steps to take and where my family and I will end up. Is this situation my fault? If the employer advertised the position on a contract basis even though it is a sanctioned post, and I successfully passed through all stages like a regular employee, is it fair to treat me differently now?

Employer's Responsibility

The fault lies solely with the employer where there was no negotiation of salary or terms and conditions. Every aspect was dictated by the employer. We have sacrificed six valuable years of our lives for meager compensation, and now the Institute is revealing its true nature. It feels as though, when the Institute needed us, we were utilized and now we are being discarded.

Seeking Regularization and Support

Can I fight for regularization? Can I fight for the survival of myself and my family against powerful entities? Will the laws of India support us? I ask because I have already faced a setback. We have toiled hard here, only to be exploited in return through meager wages disguised as a fixed salary—akin to a rich man tossing coins to a beggar. Please help me.

Regards, Kamal Kant Tyagi

Dear Sunil,

This all depends on your appointment procedure. It is true that the Government engages people on a Temporary Contractual Basis for various positions. However, if it was made clear from the beginning that the position was temporary, your chances of claiming permanency are very slim. Only if they do not fill the position permanently for a long time and keep you continuously employed for the entire term, you may have a chance. But please note, this chance is not a guarantee. You could apply for a permanent position when such advertisements are published and will have to follow the selection procedures as declared.

I am afraid the battle to claim permanency can be long-lasting with no guarantee of success. Please refer to the Uma Devi Judgement of the Supreme Court on this matter.

Regards,

At the time of calculating the retrenchment benefits of employees, we have adopted the below-mentioned approach for temporary workers.

- One year completed with 240 days of working (26 days' notice pay and 15 days of retrenchment benefit).
- One year and six months completed (26 days' notice pay and 15 + 15 = 30 days of retrenchment benefit, but for the second 15 days, the total number of days must be [240 + 120 = 360 days]).
- If a worker works for one year and eight months, but the total number of working days is 320, then we will pay only 15 days of retrenchment benefit because for a 30-day retrenchment benefit, the total number of days must be 360 working days.

Please advise whether our calculation of benefits is correct or incorrect.

If we appoint someone as a contract employee for one year and then renew their contract for the next year, and the next day marks the completion of the contract period without any break in service, is there a possibility for them to be considered for permanent employment according to Indian Contract Law?

That depends upon his contract of employment. Things also depend on the nature of the job done by such an employee. If he is a badli worker, he might continue for years. When a regular appointment is done, he may be removed by giving compensation. He may become permanent if he is shown to be engaged on a contract basis just to deprive him of the statutory facilities available to him under various Indian Labour Laws.

So, there are a lot of scenarios. If you can share the actual scenario, that would be easy to opine. Please mention how long this contractual thing has been going on. Also, mention the post the person is working.

Regards

I have been working in a government organization for eight years on a direct payroll but in a contractual mode. I joined this organization through an interview (via a consultancy agency) and not through an advertisement in a newspaper. Can you please provide me with information regarding the security of my job? Also, may I inquire about the possibility of switching to a permanent position within this organization?

Sir, how do I calculate the 240 days? I have been in this job since 2010, but for the past two years, the institute has given a one-day break. Am I eligible for permanent employment? Can you provide me with some suggestions? Many of my colleagues joined in 2010 or even earlier.

Dear Keshav Sir,
Please let me know is it required to show a service Discontinuation of few days between 2 contracts, if the employee is hired on contract basis and on principal employer’s roll.
If we do not show any gap between 2 contracts, can employee claim a permanency with the principal employer ?
Kindly guide me with regards to this; we are a school working under CBSE by-law.
Thanks

Dear Kamal Sir,
Please let me know is it required to show a service Discontinuation of few days between 2 contract, if the employee you are hiring is on contract basis and on principal employer’s roll.
If we do not show any gap between 2 contracts, can employee claim a permanency with the principal employer ?
Kindly guide me with regards to this; we are a school working under CBSE by-law.
Thanks

Dear Sir,

I am working as a Data Entry Operator in the Health Department for the past four years through outsourcing. Should I claim any regularization of my current position or any other position within the Health Department? Please guide me in this matter.

Thank you.

Dear Smita,

There is no need to give a gap between two contract periods. One important point is that such contract employees will be eligible for all statutory benefits. The service of a contract employee (period specific) will end as per the contract period, and they cannot claim permanent employment.

Regards,
KP

I am working as an accounts supervisor in a milk plant in Sirsa city, Haryana, since 01-09-1999 on a contract basis through various contractors. Every year, the contractor changes, and a new contractor is selected through a tender, but our services continue uninterrupted. My job responsibilities are similar to those of regular employees, and we sign the same documents as they do. Currently, there are around 70 vacant regular positions in the milk plant. We only have 48 permanent employees, with over 300 workers on contract through various contractors for the past 18 years. About 30 to 40 of us have been continuously working for the last 15 years or even longer.

Supreme Court Verdict on Regularization

I recently came across a Supreme Court verdict regarding the regularization of contractual staff in the Steel Authority of India, which is similar to our situation. The Supreme Court ruled to regularize 112 contractual staff. In light of this, could you please advise us on whether we can claim regular employment status from our principal employer?

Thank you for your guidance.

Regards

I was working in a PSU organization on contract from 2003 to 2016. Initially, my contract term was for 3 months, but it got renewed/extended to 6 months with breaks. I was awarded the contract by the principal employer and not through a contractor from 2003 to 2012. I used to receive a consolidated salary and was entitled to 1 casual leave per month only. No other benefits were admissible. I was supervised by the director and other officials of the department, as mentioned in the contract. The work carried out by me was perennial in nature. Efforts were made to create a permanent post for me, but the matter is still pending due to the negligence of the department.

In 2013, I was put under a contractor without any information to me, though my job profile remained the same. In 2016, my employer informed me that they could not renew my contract, and I am now jobless. They have also hired another person in my place through a contractor. There are a few more important things/documents regarding my case which I can't post here. I really need guidance on this. I would be grateful if I could have your email ID for seeking further guidance.

Age-wise, I'm also not eligible for a government job. Please let me know whether I can claim a permanent job/absorption.

Regards

I am also working at Mizoram University (a central university) from 1st Sept. 2001 to 13th Nov. 2011 on a contract basis. Initially, I worked continuously from 1st Sept. 2001 to April 2005 without any breaks. After that, our contract period was for 3 months with a 2 to 3-day break, and this pattern continued until 13th Nov. 2011. On 14th Nov. 2011, I was regularized through the proper channel. Should I claim all these 10 years of the contract period for qualifying service?

Dear C LALFELA ji, the breaks given to you by your employer are artificial. The nature of your employment is permanent, but still, your employer has provided you with fixed-term contracts from time to time with breaks in between. The intention of your employer is very clear - to prevent you from claiming certain benefits. Your employer is engaged in unfair labor practices.

It seems you worked for 240 days every year. Moreover, the breaks in your service are not due to any fault of yours, and therefore, there is no question of denying you the payment of gratuity. However, gratuity is payable to you upon cessation of your employment, and that will benefit you. Your years of service from September 2001 to November 2011 should be added to your service account. You may have to make a case for gratuity during that time.

Dear Sir,

I have been working at Kolkata Corporation since 2001. There are 340 workers deployed through a contractor in Kolkata Corporation. The contractor has not registered us under the P.F. and ESI scheme till date. The Principal Employer is totally silent on this matter. We are deprived of our due P.F. and ESI.

In this case, we want to know what the responsibility of the Contractor and Principal Employer is. Is there any law that protects us?

Thank you for your valuable advice.

Regards,
Devashish Verma

Thank you very much for sharing the interesting news about my contract period with me. May I request one more thing? When they changed our contract system in May 2005, we were informed to encash our Earned Leave (E.L.). I encashed only 50 days. If five years were completed, we could encash in full; if not, only 50 days. As a result, I was regularized. We were verbally informed that we cannot claim our contract period for qualifying service; they said, "you have a break," which is why we did not apply for a long time. Last year, upon visiting this website, I had expectations. In July 2016, I submitted an application, but to date, I have not received a formal response. Verbally, I was informed that "you are not successful." Please advise me on how to proceed. Help me, please.

Regards, C. Lalfela

Thank you very much for sharing the very interesting news about my contract period with me.

Request for clarification on contract system changes

May I request one more thing? When they changed our contract system (from May 2005), we were informed to encash our E.L. I only encashed 50 days (for 5 years completed encash in full, and if not complete 5 years, only 50 days). As a result, I was regularized. We were verbally informed that we cannot claim our contract period for qualifying service. They said, "You have had a break," which is why we have not applied for a long time.

Seeking advice on application status

Last year, when I visited this website, I had expectations. In July 2016, I submitted an application, but until today, I have not received a formal response. However, verbally, I was told, "It is hopeless." Please advise me on how to proceed. Help me, please.

Regards, C. Lalfela

Pending Application for Service Recognition

Last year, I posted my problem as follows: "I am also working at Mizoram University (a central university) from 1st Sept. 2001 to 13th Nov. 2011 on a contract basis. From 1st Sept. 2001 to April 2005 without a break; after that, our contract period was for 3 months with 2 or 3 days break, and it continued like that until 13th Nov. 2011. On 14th Nov. 2011, I was regularized through the proper channel. Should I claim all these 10 years of the contract period for qualifying service?"

I received a good answer from you: "Dear C LALFELA ji, The breaks given to you by your employer are artificial. The nature of your employment is permanent, but your employer had you on fixed-term contracts from time to time with some breaks in between. The intention of your employer is very clear in that you should be prevented from claiming certain benefits. Your employer is engaged in unfair labor practices. It seems you worked for 240 days every year. Moreover, the breaks in your service are not due to any fault of your own, and therefore, there is no question of denying you the payment of gratuity. However, gratuity is payable to you upon cessation of your employment, which will be beneficial to you. Your years of service from September 2001 to November 2011 should be added to your service account. You may have to make a case for gratuity at that time."

Request for Further Assistance

Dear Sir, my application has been pending to date, and I haven't received any information from our Administrator. Please advise me on how to proceed or provide me with any court rulings related to my case. If anyone can help me, please do so.

Thanks and regards,
Keshav Korgaonkar

From C. Lalfela

Eligibility for Permanent Employment as a Contractual IT Officer

I have been working as an IT Officer at a central government organization since July 2013 on a purely temporary contractual basis without any service breaks, receiving consolidated pay. I am wondering if I am eligible to claim a permanent job.

Unfortunately, there are no permanent positions available for IT Officers in this organization. I was hired through an interview process and possess an experience certificate. I am currently a temporary contractual employee of the organization, selected through a direct selection process.

Possibility of Legal Action for Permanent Employment

Is it possible for me to file a case in court to seek a permanent job? I was initially recruited for a central government project, but I am currently working on the same project and for the organization simultaneously. Additionally, according to the organization's policy, we should be treated under the same umbrella in terms of processes, rules, etc.

I kindly request your assistance in exploring any potential processes or opportunities for securing permanent employment.

Thank you for your support.

Best regards,
Babu Saha