Contract Worker Terminated for Misconduct Now Seeks Job Regularization: What Are His Rights?

Termination of Contract Worker Under the Contract Labour Act

Terminate contract worker "a" (working under the Contract Labour Act) due to liquor use and collecting money from other workers during work. He also left the workplace at his discretion.

Before termination, he was verbally warned multiple times, suspended for six working days from duty, and then he submitted an undertaking not to repeat the same behavior. If found guilty, action would be taken against him.

Despite his continued misconduct, we terminated him, paid his dues, and settled his PF.

Now, after about one year, he filed a complaint under Section 10 of the ID Act at the office of ALC regarding his retrenchment benefit and regularization of the job. It should be noted that he worked with us for more than 240 days.

Please advise on whether he is entitled to receive retrenchment benefits and continue in the job.

Regards,
Mahesh Prasad Gupta

Dear Mahesh,

Firstly, the contract laborer is not your employee. If he has completed 240 days, he can claim permanency from the contractor, not from you. However, if your company engaged him in perennial types of work similar to what your permanent workers do, then he may claim permanency from your company.

Since he has worked for more than 240 days, he is eligible for retrenchment benefits under the ID Act.

Regards,
Sacheein

There are many aspects to this issue. Was the contractor having a license, and was your establishment registered with the authorities? What was the nature of work being performed by the contractual employees, and who was in control and supervision over them? Who was disbursing their salaries, and who has done the full and final payment? Also, as you have stated he was issued warnings, who issued them? See, if all these questions point out to the contractor's employees purely, there is no need to worry, as long as the contract is not a sham and merely camouflage. There is a catena of decisions that contractual employees' absorption is ruled out.

Regards

Determining Entitlement to Retrenchment Benefits

The answer will depend on how he was terminated. If you have terminated him on account of misconduct, with proper inquiry and following the rules, then he will not be entitled to retrenchment benefits. If you have not completed the formalities, then he has an upper hand.

Understanding Employee-Employer Relations in Legal Disputes

For any legal dispute, the first and foremost point for discussion is the "Employee-Employer" relationship. A contract employee who has been on the rolls of a contractor under the supervision and control of the contractor cannot be treated as an employee of a Principal Employer simply because he is engaged on the premises of the Principal Employer (PE).

This point is crucial in many cases. For any issue, such as the enforcement of PF/ESI contributions or the implementation of any Acts/Laws, this will be the yardstick.

The way in which you narrated the incident makes it seem like you (your organization) reprimanded him earlier, warned him, suspended him, and finally terminated him. Although you had no business interacting with this individual (as it was supposed to be within the scope of the contractor), you exercised your power of "supervision and control" and acted as if you were his employer. Hence, this is considered a "Sham" contract; in this case, the so-called "contractorship" is null and void, and you will certainly be the employer of this person.

Therefore, it is better to be prepared for any eventualities.

Regards,
V. Balaji

Request for Advice on Subcontractor Worker Case

Here, I would like to inform everyone about the topic we previously discussed. I am "X," a contractor of PE "Y," and "Z" is a worker who worked under subcontractor "A."

PE (Y) ➔ Contractor (X) ➔ Subcontractor (A) ➔ Worker (Z)

In the above situation, please advise me on our next course of action regarding the aforementioned case.

Regards,
Mahesh Prasad Gupta

Can you please restate the full question with all details?

I have corrected the spelling, grammar, and formatting as per your request. Let me know if you need any further assistance.

We are a contractor "X" carrying out work for PE "Y," and we are executing the work through a subcontractor "Z." However, all statutory compliance is being maintained by us, i.e., "X." One of the workers, "A," working under subcontractor "Z," is constantly consuming alcohol and collecting money from other workers at the worksite. Additionally, he frequently leaves the workplace as he desires.

Despite verbally warning him several times and suspending him for six working days, he submitted a written undertaking promising not to repeat his actions. These disciplinary actions were taken through "X." Despite this, he has not changed his behavior. Consequently, we terminated his employment, settled his dues, and also cleared his PF contributions.

Around a year later, he lodged a complaint under Section 10 of the ID Act at the office of the ALC regarding his retrenchment benefits and regularization of employment. It is worth noting that he worked with us for more than 240 days.

Please advise on whether he is entitled to receive retrenchment benefits and if he can continue in his job.

Regards,
Mahesh Prasad Gupta

Okay, what you need to see first is whether there are any records of the termination/absconding and of the warnings that were given. I assume you have found him to be working at some other place in the meanwhile. You will need to show records to convince the labor officer that he left on his own or was terminated due to misconduct (drinking while on duty will qualify). If possible, you need to show details of the warning and domestic inquiry conducted.

Background of the Case

We are a contractor "x" carrying out work for PE "y," and we have been executing the work through a subcontractor "z." However, all the statutory compliance is being maintained by us, i.e., "x." One of the workers, "a," working under subcontractor "z," is consistently using liquor and collecting money from other workers during work hours. He also leaves the workplace at his discretion.

Actions Taken Before Termination

Before terminating him, we verbally warned him several times and suspended him for six working days. After that, he submitted a written undertaking promising not to repeat the same actions. If found guilty, action would be taken against him; all these actions were taken through "x." Despite this, he did not change his behavior, so we terminated his employment, paid his dues, and settled his PF.

Current Legal Situation

Now, about a year later, he has filed a complaint under Section 10 of the ID Act at the office of the ALC regarding his retrenchment benefits and regularization of his job. It should be noted that he had worked with us for more than 240 days.

Please advise whether he is entitled to receive retrenchment benefits and to continue in his job.

Mahesh Prasad Gupta

The disputes mentioned above have been forwarded by the ALC to the labor court, and the court may soon call for representation of the matter. We have some documents:

1. We have complete documents of his full and final settlement, which were received by the complaining worker.
2. His PF was settled after deduction by us.
3. The complainant submitted a copy to me after four months, stating that he wrote a letter to the ALC to withdraw his complaint because he was misled by a union leader, and also mentioned that he received his full and final settlement.

Please provide advice regarding the disputes.