Is It Legal to Move Permanent Workers and Hire Contract Staff in Manufacturing?

Dear all, We have been in manufacturing for 18 years. Currently, we have some confirmed employees working in both our packing and manufacturing departments. Now, we are looking to hire contract employees for the packing and manufacturing departments (which involve helper roles) and transfer the confirmed employees to other manufacturing departments within the same company.

Legal Permissibility and Procedure

Is this legally permissible? If so, what is the procedure?

Thanks,
Raj

Have you read the standing orders of your company? Generally, employers include provisions in their standing orders to transfer any employee from one department to another. Secondly, what about the appointment letters of those confirmed employees? Have you included the clause of internal transfer? Internal transfer of an employee is at the discretion of the management and is legally tenable.

From a legal standpoint, aside from ensuring compliance, make sure that the employee being transferred has the right skill set to execute the new job. You should also provide training to that employee. Try to convince the employee that he/she cannot continue doing the same job for years on end; it is no longer economically viable for the company to have him/her do what they have been doing for years.

Thanks,
DVD

If, by means of transfer, there will not be any change in the status of the employee and no loss in the earnings/incomes of the employees, then there will not be any problem. However, if you are going to fill in the shortage by recruiting employees through a contractor, it may create problems in the future.

In the future, the employees so engaged should not say that they have been engaged in an activity that was being done by permanent employees over a period of years and hence it is perennial in nature. The recent verdict on contract labor states that unless it is proper in all respects, the employees of the contractors can claim absorption into company roles. Therefore, employers who engage contract labor should be very careful.

Regards,
Madhu.T.K

Thank you, Mr. Madhu, for sharing the information and guiding the people. Could you please forward the recent verdict on contract labor so that we can also review it? My email ID is [Email Removed For Privacy Reasons].

Regards,
Kameswarao

Supreme Court Ruling on Employment Subterfuge

Please refer to Bhilwara Dugdh Utpatak Sahakari Society Ltd Vs Vinod Kumar Sharma, in which the Apex Court has very categorically stated that “in order to avoid their liability under various labour statutes, employers are very often resorting to subterfuge by trying to show that their employees are, in fact, the employees of a contractor. It is high time that this subterfuge must come to an end. Labour statutes were meant to protect the employees/workmen because it was realised that the employers and the employees are not on an equal bargaining position.

Hence, protection of employees was required so that they may not be exploited. However, this new technique of subterfuge has been adopted by some employers in recent years in order to deny the rights of the workmen under various labour statutes by showing that the concerned workmen are not their employees but are the employees/workmen of a contractor, or that they are merely daily wage or short-term or casual employees when in fact they are doing the work of regular employees.”

Moreover, the Supreme Court has directed the Delhi International Airport Ltd to stop engaging contract labour and also to pay compensation worth Rs 5 Lakhs each to the 136 trolley workers who were not reinstated. The judgement says that privatisation does not mean that the government has no control over the establishment.

Regards,
Madhu.T.K

Thank you for your guidance on this matter. I have a few doubts. In the above case, if they have proposed to change the department of some permanent employees and if it affects the number of employees along with their working conditions, skills, and other relevant factors, and if these employees are unionized, is it necessary to provide a notice of change under the ID Act? It appears that a department change for some permanent employees by any means could lead to a dispute, and to rectify this, management must issue a notice of change as per Schedule IV under the ID Act.

I would appreciate your views on this.

Regards,
Atul S Malve

Transfer Between Departments: Key Considerations

Transfer from one department to another is always possible, provided it is mentioned in the appointment order or standing orders. Furthermore, the work to which the employee is transferred should involve the same skill or technique, and there should be no loss of earnings. However, if there are any changes in the service conditions, a 21-day notice is required to effect that change as per Section 9A of the ID Act.

Regards,
Madhu.T.K

Transfer and Retraining Allowance

Transfer from one department to another is definitely possible. If your company provides production incentives to the operators, then a retraining allowance can be provided to the transferred employees to ensure the monetary aspect is addressed.

Contract Workers and Legal Considerations

Regarding contract workers, you can opt for a service break before they complete 240 days of continuous work. It is advisable to have batches in rotation to prevent any legal issues.

Question on Contractor Transfers

Please help me solve the question below:

1. Can a company have the right to transfer one contractor operator to two other contract operators without providing written communication to the original contractor or the new contractors?

Regards