Different Wages for Contract vs. Permanent Employees: Is It Fair or Legal?

Can we have different service conditions and wages for contract and permanent employees doing the same or similar job? Please clarify.

The simple answer to your query is no. You cannot have two sets of rules for permanent workers and workers of contractors. You have to have the same set of rules, conditions of service, and benefits as both are doing the same job and work.

This is in addition to what Adv Kulkarni has said. I would like to ask you the following questions:

a) What is the nature of your industry? What is your finished product?

b) What is the ratio of permanent to contract workers?

c) What additional benefits would you like to give permanent workers? What savings will your organization accrue by not providing these benefits to contract workers?

d) By keeping two sets of rules, will it create an "us and them" divide among the workers? Is there any provision for contract workers to become permanent, and if yes, after how many months or years?

e) Have you studied the impact of treating a few workers as second-class workers? Will it impact your organization's culture? Will the impact be positive or negative? If it is negative, then what is the cost of the negative impact? Is this cost more or less than the savings that you would accrue by depriving the contract workers of certain benefits?

f) Will the contract workers be able to maintain the same motivation level as that of permanent workers? If not, will you be able to measure the cost of their low motivation or the cost of lost opportunities?

g) Lastly, have you conducted a survey of organizations who maintain this dual status? What does the survey report say?

The question is not "yes" or "no." The more important question is whether this dual status is "advisable" or "not advisable." Therefore, study the above questions carefully and then make the decision.

Thanks,

Regards,
Dinesh V Divekar

Generally, it is difficult when your permanent workers and contractual workers are performing the same tasks because the first group mainly focuses on tasks relevant to the primary objective of the company, while the second group is performing a supporting role that is not in the nature of permanency.