How Can We Motivate Temporary Workers to Transition to Permanent Roles?

Differentiating Between Permanent and Temporary Workers

I need help with the above topic. We have two categories of workers: one is permanent (on payroll) who receives benefits such as leave, PF, and ESIC, and another is a temporary worker who receives only ESIC benefits. The issue is that permanent workers receive less cash compared to temporary workers because of PF deductions from the permanent worker's salary, resulting in less cash received compared to temporary workers.

This situation poses a significant challenge for permanent workers' turnover, which will impact productivity, quality, and the time taken for worker recruitment. Please assist me in figuring out how to positively differentiate between permanent and temporary workers. I aim to retain both, but there needs to be some motivation for temporary workers to become permanent.

Regards,
Pundlik Bhavsar
HR Executive

You may distinguish between a permanent worker or temporary worker in terms of benefits such as P.F and ESI, but in my view, the law does not do so. An employee, whether permanent or temporary, is entitled to the above benefits if employed by the employer to work for the establishment or any related work as long as they are under the company's employment. The company may choose not to keep them on the payroll for its own reasons, but that does not deprive the employee of these benefits. This approach can create parity between temporary and permanent workers and may motivate temporary workers to continue.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

Understanding Employment Types: Temporary vs. Permanent

When an employee's work period is specific and they are subjected to work only for that predetermined time period, they are considered a "temporary employee." According to the Indian Contracts Act, "temporarily" is interpreted as subject to time, for a specific amount of time.

On the other hand, when the time period of employment is unknown and not predetermined, the employee is considered a "permanent employee."

When an employee joins the company, but their performance is yet to be evaluated, they are put on probation or observation for a specific period. Such an employee is called an employee under probation. They are also temporary because their status is still under observation.

When an employee signs an agreement for a specific purpose or time and works according to such an agreement or contract, they are called an employee under contract or contractual employment. This employee agrees to perform specific work in a specified manner within a specified time.

A company may enter into a contract with a person who is a contractor, who then sends employees to work at the company. These employees are also considered contract employees.

When an employee is hired by one company but is sent to another company for work, such employees are called outsourced employees. Essentially, they are hired to be outsourced to another company.

Refer to section 2(f) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, if you want the definition of an employee with reference to the PF.

Refer to the Factories Act Section 2 for the definition of a worker.

Regards,

Understanding Employment Terms Under Labor Laws

The expressions "permanent," "temporary," or "probationer" need to be understood in the context of the meaning ascribed to them under the labor laws, having regard to the practice and customs prevailing in the industry. Thus, they cannot be loosely defined nor can they be defined subjectively.

For example, a permanent employee is not one whose period of employment is not known nor was decided for any amount. In fact, the period of employment of a permanent employee is limited by the age of superannuation or retirement, and everyone knows that he will cease to be an employee after that date and cannot continue eternally. Similarly, a probationer cannot be classified as a temporary employee merely because he is kept under probation. If confirmed, he becomes a permanent employee, whereas there is no question of confirming a temporary employee because a temporary employee is terminated once the work for which he was appointed is completed or the period for which he was appointed expires.

Again, the distinction between contract labor and outsourced employees is nebulous. If the work is outsourced to an outside agency, how can he be the employee of the company which is outsourcing the work? He can only be the employee of the outside agency.

These words and expressions have been defined by the Model Standing Orders framed under the Industrial Employment (Standing Orders) Act 1946 and thus have a statutory flavor, and by the respective acts like the Contract Labor Act or the Sales Promotion Employees Act, and need to be understood within the four corners of the relevant Acts.

Regards,
B. Saikumar
HR & Labor Law Advisor
Mumbai.

Understanding Temporary and Permanent Workers

A temporary worker is one who is "engaged" in work of a temporary nature, such as carrying out repairs, whitewashing, or similar tasks that are not related to or incidental to the activities of the company. In contrast, a permanent worker is one who is "employed" in work of a permanent nature. A probationer is also someone employed in a permanent job but is not yet confirmed.

I have used the words "engaged" and "employed" to distinguish the two because "engaged" suggests a casual engagement, while "employed" refers to formal employment. This distinction has been clearly interpreted by the Punjab and Haryana High Court in Employees State Insurance Corporation v. Malhotra and Co., Chandigarh, (1981 Lab I.C. 475), as follows:

“In fact, a clear distinction must be made between a casual worker and a person engaged for a specific item. The distinction is between employment and an engagement. If a person is engaged casually for a process unconnected with the operations of the establishment or some work which does not form an integral part of such operations, he will not be an employee. There is no relationship of employer and employee. The employer has no control to take disciplinary action. He would only be engaged for the purpose.”

A similar interpretation has also been given by the Kerala High Court in the case of Regional Director, E.S.I. Corporation v. P. R. Narahari Rao, (1986 Lab I.C. 1981).

Regards,
Madhu.T.K

Understanding the PF Act and Its Implications

First, you should read the PF Act. Based on that, all workers and staff are covered under the PF Act if they are receiving a salary of less than 6500 as basic and DA. What you are doing is a wrong practice in HR. Whoever is in the role of HR should convey the message to management regarding the act because if any problems arise in the future, the PF authorities will approach HR.

Regards,
Rajesh