How Should My Friend Handle a Contractual Laborer's Compensation Claim for Overtime?

Issue with Contractual Laborer and Compensation Claim

My name is Surya Narayan Sahu, and I am working in a PSU. My friend is also working as a Senior Manager in a different PSU company. He has been employing a contractual laborer since October 2011. The laborer's duties were limited as per the work order issued to the contractor. However, he was working beyond his designated duties as per the instructions of the Senior Manager. He was supposed to leave the office after 8 hours of duty, but he was working 10 hours daily without extra wages, as per the instructions of the senior manager. For the extra working hours, he used to issue a gate pass, mentioning that due to workload, he may need to stay beyond the specified time.

After continuously working for 4 years, he is now claiming compensation for the extra hours worked for the company beyond the limitations of the work order. Additionally, he is requesting a permanent job for performing extra duties not specified in the work order.

My friend mentioned that there is no proof of him performing these extra duties. He stated that whenever a gate pass was issued for working extra hours, the additional duties he undertook in the office were mentioned in the remarks column of the gate pass, which my friend signed without his consent.

He now threatens to take the matter to the labor court if compensation and a job are not provided. He is consulting a lawyer who suggested this idea when he joined the company, and he has been following the lawyer's advice, keeping all evidence as instructed. The lawyer is hopeful that with this evidence, my friend will win the case. Please advise on how my friend can address this issue with his seniors, his standing in this situation, and what steps he should take now.

Regards,
Surya Narayan Sahu

Legal and Ethical Issues in Contract Labor Management

Your post raises two primary issues: one legal and the other ethical.

With the limited information about the contract for service between the contractor and the PSU involving your friend, I can address the legal issue first. A contract laborer/employee cannot claim permanency against the Principal Employer/PSU simply due to the passage of time or because of overtime work unless they can prove the contract was a sham. Secondly, your Senior Manager friend might mistakenly believe there is no need to pay overtime wages to contract labor, assuming the contractor is solely responsible for supervision. He may have overlooked that he authorized the overtime work. If he paid the overtime wages to the contractor and the contractor failed to pay the contract laborer, that is a separate issue to be addressed differently, at least to mitigate the Principal Employer's responsibility. Remuneration for overtime work is considered wages under Section 2(vi) of the Payment of Wages Act, 1936, and Section 21(4) of the CLRA Act, 1970, which places the responsibility for wage payment to contract labor on the Principal Employer. It is advisable for your friend to settle this matter amicably before any claim is filed by the contract laborer under Section 15 of the Payment of Wages Act, 1936, which could result in compensation up to ten times the claim amount.

Ethical Considerations in Managing Contract Labor

Regarding the ethical aspect, your friend should remember that as a manager, he is responsible for managing people, not machines. How can he expect a low-wage worker to forgo wages for extra hours worked at the manager's request? If your friend resists the claim based on material evidence (which seems abundant according to the post), what does that say about his credibility as a manager?

Whether this situation pertains to your friend or yourself, it is advisable to consider making amends in the manner I suggested.

Regards

Exploitation of Labor Concerns

It seems like this situation involves the exploitation of labor. It is not mandatory to offer a permanent job to contract laborers in this manner.

Permanent Job and Extra Duties

Your friend mentioned that the worker is being asked to perform extra duties not specified in the work order. However, since your friend signed the gate pass, he cannot claim ignorance of its contents.

Overtime Pay and Legal Standing

Overtime pay is indeed payable, but I doubt that a court will issue a favorable order for a permanent job in this case. It is crucial to address these issues with proper legal advice.

Regards

Legal Implications and Strategies

Mr. Umakanthan has clarified the legal issues involved in this case well. Your friend might have unknowingly created evidence about its implications. It is true that the worker may not succeed in his claim for permanency of his employment in the principal employer's company. He cannot raise an industrial dispute individually about overtime except through the union. Even if the union raises it, your friend needs to contest it by stating that the union, being the union of contract workers, has no right against the principal employer. However, all this requires subtle expertise in labor laws.

Therefore, one option is to settle the overtime issue through the contractor, not directly, to control the situation, or else contest the demand when raised by the union. For now, your friend can keep track of the matter.

Regards, B. Saikumar
HR & Labor Law Advisor