Long-term Contract Workers: Can They Ever Become Part of the Company?

If a contract laborer is working in a company for years together, will he continue to be seen as a contract laborer? Or will he become a part of the company? Is there any provision regarding this?

Please find below a few important judgments of the Supreme Court. I hope this helps.

• Engagement of Workers on Contract

Engagement of workers on contract merely as camouflage will be against the spirit of the Contract Labour (R&A) Act. Workers working under different contractors for the last ten years will be absorbed by the principal employer.

RK. Panda v. Steel Authority of India, (1994) 85 FLR 140: (1994) 2 LLN 378: (1994) 5 SCC 304: 1994 LLR 634: 1994 (69) FLR 256 (SC).

• Employees with 240 Days of Service

Employees having completed 240 days of service and engaged through unlicensed/unregistered contractors will be deemed as employees of the principal employer when the contract labour system was a sham and the contractor was only a name lender.

Secretary, Haryana State Electricity Board vs. Suresh, 1999 LIC 1323: (1999) 94 FJR 554: (1999) 1 LLJ 1086: 1999 LLR 433 (SC): 1999-1 CLR 959: 1999 (81) FLR 1016.

• Gardeners Engaged by a Government Company

The gardeners engaged by a Government company through a contractor for the upkeep of the parks inside the factory premises and its residential colony will be deemed as employees of the company.

Bharat Heavy Electricals Limited v. State of Uttar Pradesh & Ors., 2003 LLR 817: 2003-III LLJ 215: 2003(98) FLR 826(SC).

• Direct Relationship of Employer and Employee

The direct relationship of employer and employee between the Company and the workers of the contractor could not be frustrated on the plea that the work of the gardeners was not connected with the work of the establishment.

Bharat Heavy Electricals Limited v. State of Uttar Pradesh & Ors., 2003 LLR 817: 2003-III LLJ 215: 2003(98) FLR 826(SC).

Regards,
Sandip Saha

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In Andhra Pradesh, where a contractor engages five or more contract laborers, the contractor should have a license, and the employer must get it registered with the appropriate government. Furthermore, the principal employer is responsible for the payment of wages and remittance of all statutory deductions like ESI, PF, etc. However, the contract laborers have no right to claim permanency in the organization belonging to the principal employer. If the employer doesn't have registration and engages contract labor, then there will be a problem; the contract labor may become regular employees. This is my personal opinion.