Understanding Permanent vs. Temporary Employees: What Do Labor Laws Say?

Dear Seniors, can anyone explain what is the correct definition of a permanent employee and what is the definition of a temporary employee under the Shops & Establishment Act or any other labor act?

Thanks & Regards,
Srinivas B

There is no definition of a permanent employee or a temporary employee under the Bombay Shops & Establishment Act, and I am also sure that there is no such definition in any other Shops & Establishment Act in India. This is the specific answer to your question.

Dear Srinivas, the Shops and Establishments Acts do not define an employee in terms of permanent and temporary categories and include every person whether employed permanently or temporarily in the establishment in connection with the business, as Afzar said. This is true at least of the Bombay Shops Act, as Mr. Keshav Koregaonkar stated. The fact that you too asked for clarification on this issue implies that the A.P. Shops Act also does not distinguish between a permanent employee or a temporary employee.

However, for your knowledge and information, I can refer to the definition of 'permanent employee' and 'temporary employee' as contained in the model standing orders (Central) in Schedule-I, appended to the Standing Orders Act 1946.

Definition of Permanent Employee

Clause (2)(b) of the Model Standing Orders defines a permanent employee as follows:

"A 'permanent workman' is a workman who has been engaged on a permanent basis and includes any person who has satisfactorily completed a probationary period of three months in the same or other occupation in the industrial establishment including breaks due to sickness, accident, leave, lock-out (not being an illegal strike), or involuntary closure of the establishment."

It means a permanent employee is someone who is appointed in a vacancy of permanent nature or to do work of permanent or perennial nature and whose lien on employment stays irrespective of his absence due to sickness or accident or legal strike or illegal lock-out.

Definition of Temporary Employee

Clause (2)(e) defines a 'temporary workman' as a workman who has been engaged for work which is of an essentially temporary nature likely to be finished within a limited period.

It means a temporary employee is not recruited against a permanent vacancy or in any work of a perennial nature. He is recruited to do work which lasts for a limited period. For example, an employee appointed for a tenure of one year is a temporary employee or an employee appointed to finish work which increased temporarily in a permanent post. Thus, a temporary employee loses his lien on employment after some time or after the expiry of the contracted period.

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

Thank you once again for your detailed explanation. However, it appears that you may have overlooked mentioning the provision under the ID Act. In some of your previous posts, you did refer to it.

Section 25-B of the Industrial Disputes Act

Section 25-B of the Industrial Disputes Act establishes that a worker who completes 240 days should be treated on par with a permanent worker. Consequently, this section imposes certain obligations that the employer must fulfill.

I hope this clarifies the point I was trying to convey.

Best regards,

Initially, a person can join in a temporary role. His performance would be analyzed, and if management is satisfied, he can switch to a permanent role. If management is not satisfied, they will extend that employee's probationary period. The only drawback for a temporary employee is that they won't be eligible for bonuses, appraisals, leaves, etc.

Understanding Temporary Employees

The concept of a temporary employee is nicely explained by Saikumar ji in his previous post. A temporary employee is not recruited against a permanent vacancy or for work of a perennial nature. They are recruited to perform work that lasts for a limited period. A temporary employee is also eligible for bonuses, leave, etc.