Can a Principal Employer Legally Interview Contract Labor? Seeking Clarity on Rules and Acts

Can a principal employer conduct interviews with any contract labor? If not, please provide a reference to the relevant act or rule.

No, the principal employer cannot conduct an interview with a contract laborer. They can communicate to the contractor about the qualities and attributes that the worker should possess, but they should not directly participate in the selection process or determine the worker's wages. Engaging in such direct involvement would defeat the purpose of the engagement, and the contract could then be deemed a disguised arrangement.

In HR language, often the jargon we use can lead to confusion and violations. To answer your question, a Project Manager cannot conduct the "interview" of a Consultant for certain, as it implies a connection between the Project Manager and the Employee in the selection of the Consultant, which should not exist.

However, I suggest changing the terminology to "assessment of the skills of the Consultant," which can be carried out by the Project Manager before the Consultant is assigned to work. The assessment can be conducted through interactions, questionnaires, or any other suitable methods, but it is essential to have the presence of the Contractor or Contract Supervisor during the process.

Feel free to ask if you need further clarifications on this matter.

Best regards, [Your Name]

Contract Labor in Non-Core Areas

Basically, contract labor ("Labour") is deployed in work that is not a core area of the business. If so, we should employ permanent workers. Do you think that an employer should "assess the skills" of those engaged in housekeeping or gardening work?

I think it is better to employ direct workers/employees rather than depending on contract workers for such activities through interactions, questionnaires, etc.

Non-Compliance with Labor Rules in India

It is true that many multi-crore business houses in India do not follow labor rules, and most of these companies engage contract labor without complying with the CLRA Act. They do so not out of ignorance but based on their belief that they will receive protection from the ruling political parties. However, if an issue arises and the media gets involved, the top management will distance themselves by stating, "We have an HR person whose primary role is to ensure compliance, and it is unfortunate that they have not performed their job properly." This is the history of any dispute that has been exposed.

Therefore, do not consider it as HR jargon but as an HR truth.

Dear Sir, can you provide any document or a copy of the act to prove the above-mentioned fact in this post? If it happens, I will be very grateful to all of you.

Understanding Sham Contracts

You will get a number of interpretations on sham contracts by various courts. If the contract between the Principal Employer and the Contractor is a ruse or camouflage, it will be treated as a sham contract.

Instances of Sham Contracts

1. When the Principal Employer signs as a party to a wage settlement between the Contractor and his workmen.
2. When the Principal Employer has absolute control and supervision over the work of contract workers.
3. When the Principal Employer fixes the service conditions of contract workers and initiates disciplinary action against them as and when required.
4. When the Principal Employer ordinarily pays salaries and allowances to contract workers other than when the contractor fails to pay on time.
5. When the Principal Employer himself becomes the authority for granting leave to contract workers.

If the contract is deemed sham, the Principal Employer is liable to absorb the workers as permanent or regular workers.

Contractual Employment vs. Contractor Engagement

Contractual employment is different from an employee engaged through a contractor. Employees on a fixed-term contract are certainly employees of the organization. In such cases, the employer himself makes decisions regarding interviews, selection, and fixing of salaries for these employees. An employee under a fixed-term contract is paid directly by the employer. However, the principal employer should not select or fix salaries for employees engaged through a contractor or under a third-party role. If this is done, the contract will be considered a sham.

Contract Labor in Core Activities

In the corporate world, many companies engage contract labor even in core activities. The Contract Labor Regulation and Abolition Act (CLRA) itself is not properly enforced, even in Kerala, which is known for strong labor law enforcement. We must not forget the incidents that occurred at the Manesar plant of Maruti, which resulted from the poor working conditions of contract laborers in the plant. The rights of contract workers should not be denied. Employers are required to provide statutory wages, PF, ESI, canteen, and other facilities to laborers even when they are hired through a contractor. Despite this, employers still choose to involve a contractor between themselves and the employees. Why? Why introduce a contractor when it only adds costs in the form of service charges paid to the contractor?