Can Contractor Workers Form a Trade Union and Be Seen as Employees by the Principal Employer?

1. Are the contractor workers considered as employees of the Principal Employer with respect to the Trade Union?

2. Can the contractor workers establish a Trade Union under the Trade Union Act?

3. If you have any citations or rulings from the Honorable Supreme Court or High Court, please provide them to me via email at mohan.k.chaubey@indiaglycols.com.

Contract Workers and Union Formation

If you employ contract workers as per the CLRA, those employees cannot start a union in your unit. However, in most cases, the employer engages a sham contractor, whereby the workers become employees of the principal employer. Therefore, you must be careful in selecting a genuine contractor who can control their employees and take action against employees who are active in starting the union. There are numerous legal citations available on the internet. It is in your best interest to navigate through the vast sea of information to find what you need.

Regards

Contract labor cannot be the workmen of the Principal Employer. Contract labor can form a Trade Union for themselves. However, such a TU cannot raise any dispute solely against the PE.

Contract Labor and Trade Union Rights

The Trade Unions Act, 1926 does not bar or prevent contract labor from forming or joining a union.

Contract Labor as Employees of the Principal Employer

Regarding the query of becoming a worker or employee of the Principal Employer, the provisions of Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, and the simultaneous notification published by the appropriate government in this regard are crucial elements in deciding whether contract labor can be engaged in certain activities. Factors such as whether the activities are core to the establishment, the duration of the activities, and whether regular workers or employees are also performing the same tasks as the contract labor are considered in determining whether the engagement of contract labor is prohibited in a specific nature of activity. Ultimately, the decision lies with the Registering and Licensing Officer to assess the facts based on the available documents on record to determine if the principal employer can be issued a Registration Certificate and subsequently a License to the Contractor for the deployment of Contract Labour.

In the absence of a properly drafted agreement between the principal employer and the contractor, or if the agreement is deemed to be a sham, disputes may arise where the contract labor claims to be treated as an employee of the Principal Employer. "Supervision and control" are significant factors in defining and demarcating the relationship among the contract labor, contractor, and the principal employer.

Impleading the Principal Employer in Industrial Disputes

There is no legal bar to implead the Principal Employer as one of the parties in the Industrial Dispute. In the context of the fact that certain obligations are cast upon the Principal Employers to ensure proper wages are paid to the Contract Employees and amenities are made available, any shortfall in the wages is to be made good by the Principal Employer immediately and thereafter recovered from the Vendor. The Principal Employer cannot shirk his responsibility totally since he is the ultimate beneficiary of the services of the contract labor. If the Agreement is proved to be a sham and camouflage, then the contract employees shall be deemed to be employees of the Principal Employer.