Sudden Job Termination at Mine Site: Are We Obligated to Compensate Without Contracts?

Our company is a subcontractor in the mining sector providing technical support. We have employees ranging from uneducated to BE level. Salary levels range from 9,000 per month to 50,000 per month. We pay PF for all employees.

We have recently terminated 5 people from a particular mine site as the work at the mine site has stopped due to High Court orders. We could not give any notice to them as this happened suddenly. However, we did not have any written contract or appointment letter issued to these employees. Are we liable to give any compensation to these employees? We have paid the salary due to them for the number of days worked.

Kindly guide us. We do not have any factory; we only work at the project site as per customer requirements.

Employer Obligations in Contractual Employment Situations

It is discernible from your narration that your company provides simultaneous technical support to different mines, i.e., different principal employers on a contract basis. As such, it can be implied that you can very well redeploy your employees among the various principal employers in the event of an abrupt stoppage of work in a particular unit due to reasons beyond your control, like the one cited in the post. Therefore, your normal status as an employer cannot be altered by the ad hoc deployment of the workmen as contract labor. The resultant effect is that your contractual and legal obligation of providing continuous work to them remains the same as any other employer engaging workmen for their own work.

Basically, employment is a matter of a contractual relationship between the employer and employee in which physical factors such as the nature of activity, type of establishment, place of work, etc., pale into insignificance. So, in the event of any such impasse like the present one, my personal opinion is that you have to pay them statutory retrenchment compensation and all other terminal benefits commensurate with their length of service and last-drawn wages.

Legal Liability for Employees Without Appointment Orders

Whether a person employed by an employer without a written or verbal appointment order is still considered an employed person on the muster roll of that concerned employer as per the laws of the land and business ethics. Irrespective of the cause resulting in the said termination, the erstwhile employer has legal liability intact and should act according to the spirit of the laws.

Regards, Kritarth Consulting Pvt Ltd
IR, HR, and Organization Management Consultant
Bengaluru Base
14.2.16
[Email Removed For Privacy Reasons]
[Phone Number Removed For Privacy Reasons]