Counting Contract Workers in Maharashtra: Do They Affect the 50-Worker Rule?

Dear Seniors, In Maharashtra, an establishment where 50 or more workmen are working is covered under the Standing Orders Act of 1946. In this case, are the contract workers working on the premises being counted towards the count of 50? Thanks in anticipation...

For the purpose of coverage of the Act, all workmen, whether directly employed or engaged through a contractor, are considered as workmen. This is because the contract workers are also engaged for the purpose of the end result of the establishment. However, the standing orders (as drafted by the establishment) shall be made applicable only to workers employed directly by the employer.

Regards, Madhu.T.K

I think the definition of Workman under IDA and Standing Orders is the same. So, based on my interpretation of the ID Act, the definition of Workman excludes Contract Workers. How can contract workers be included in counting the total of 50? I hope you can clarify this concept.

"For the purpose of coverage of the Act, all workmen whether directly employed or engaged through a contractor are considered as workmen. This is because the contract workers are also engaged for the purpose of the end result of the establishment. However, the standing orders (as drafted by the establishment) shall be made applicable only to workers employed directly by the employer.

Regards,
Madhu.T.K

Understanding Employee Classification Under Labor Laws

Under all labor enactments, be it the Industrial Disputes Act, Employees' State Insurance Act, Employees' Provident Fund and Miscellaneous Provisions Act, Payment of Bonus Act, Payment of Gratuity Act, or others, a workman or employee is defined as a person employed to do work connected with the company. The 2010 amendment in the ID Act has provided for the redressal of disputes of contract workers. Therefore, whether employed directly or indirectly, all who are engaged to get something done are considered workmen, with the exception of a few specific exemptions given in various Acts based on wages or the functions, determining whether they are engaged to do managerial or administrative work alone or not. Consequently, the number of employees should include contract workers because it is with the help of these employees that the company carries out its business, and it is solely for the company's administrative convenience that they are put in a separate role as contract laborers.

Applicability of Standing Orders

Standing Orders are a set of rules and regulations that bind the employer-employee relationship. In the case of contract laborers engaged through a contractor, there exists no employer-employee relationship between the laborer and the principal employer, which is why the standing order is not applicable to them. Furthermore, the applicability of Standing Orders will be clearly stated in the standing orders themselves.

Regards,
Madhu. T. K.

So far as the Contractor's establishment is concerned, the contract workers are workmen within the meaning of Sec. 2(s) of the I.D. Act 1947. In so far as the Principal Employer's establishment is concerned, they are not workmen of the Principal Employer (Company).

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

I fully subscribe to the view expressed by Mr. S. Saikumar. The Industrial Employment Standing Orders Act of 1946 is applicable to employees of the company. There should be a Master and Servant relationship between the Employer and Employee. In the absence of such a relationship (Contract of Service), the provisions of this act will not apply. However, in the case of contract workers, they are entitled to raise Industrial Disputes against their Principal Employer (i.e., Contractor).

Regards,
P.N. Pathak
Sr. HR Manager
[Phone Number Removed For Privacy Reasons]

As per Section 1 of the Act, the act applies to every establishment in which 50 or more workmen are employed or were employed on any day of the preceding 12 months. Section 2(i) further defines workmen as it is defined in the Industrial Disputes Act. Since under the Industrial Disputes Act, as a general rule, it can be said that contract laborers are excluded from the definition of workmen, in my view, the same concept applies here too.

In case it was stated that the Act would apply to factories or establishments in which 50 or more are employed either directly or otherwise, as stated in the Factories Act, PF Act, etc., then it would have followed that contract labor could be counted. But since that's not the case, I am of the opinion that contract labor cannot be counted as workmen in this regard.

Regards,
KK

Dear Seniors,

In Maharashtra, an establishment where 50 or more workmen are working is covered under the Standing Orders Act, 1946. In this case, are the Contract Workers working in the premises being counted towards the count of 50?

Thanks in anticipation.

For the purpose of coverage of any Act, you have to consider the employees engaged through a contractor. For the purpose of coverage of the Standing Order Act also, the same applies. If your number of employees, considering the contract labor, is 50 or more, you should have an independent Standing Order, regardless of whether the contract labor is covered by the provisions of the standing orders.

Madhu