Navigating Employer-Employee Relationships in Contractual and Service Provider Setups: Legal Insights Needed

Dear all, Good afternoon. Presently, I am working in a Livelihood project in UP as the State Project Manager-HR. This project is being run by an autonomous society constituted under the aegis of the Rural Development Department of UP. Currently, we are operating in all 75 districts of UP with a workforce of more than 500 employees, including government employees, contractual employees, and employees through a service provider. I would greatly appreciate your valuable opinion on the following subjects:

1. Our project recruited 75 employees and placed them on the society's payroll on a contract basis. After June 30, 2015, the Government of UP issued a notification stating that all employees on the society's payroll would have their services continued through a service provider from July 1, 2015. I would like to know if it is legal to change the employer in this situation.

2. We engaged an agency to recruit competent employees for our project. The recruitment agency hired candidates for the project, and now we are planning to engage an agency to deploy them on their payroll. I am interested to know whether solely managing payrolls and other benefits will establish an employee-employer relationship with that agency, or if they will be considered employees of the project.

I look forward to hearing from all forum members.

Regards, Sandeep

Understanding the Issue of Employee Transition to a Contractor

Your issue is not clear to me. Is it that you had employed around 75 people, and now these employees have become part of another agency, i.e., a contractor? If this is the case, the problem is straightforward. The government, which should be limiting contract labor, is actually promoting it through what can be termed as a SHAM CONTRACT.

I would describe it as a sham contract because there is merely a shift in the employer. The contractor, who is now positioned between these 75 employees and the principal employer (who they used to work for directly and receive salaries from until June 30th), acts as a mere facade or cover-up. This arrangement is designed to deprive the employees of benefits that would have been available to them if they had remained directly employed by the organization.

Considering that they were previously on the organization's payroll, received direct payments, and were hired by the organization for project-related tasks (rather than non-operational or non-permanent roles), this arrangement is deceptive and unlawful. However, when such actions are taken by the government, my commentary is limited because they have the authority to overlook laws they themselves enforce. Yet, if a smaller business were to engage in similar practices (I emphasize a smaller business since numerous major corporations violate the Contract Labor Act without facing consequences, despite inspectors under the Contract Labor (Regulation and Abolition) Act having the power to take action), the government would promptly introduce laws and relevant provisions of the CLRA Act.

Regards,
Madhu.T.K

Dear Sandeep,

Your post is not clear to me. Can you please elaborate on the following:

(1) "The Livelihood Project"
(2) The objective of the autonomous society.

Thank you.