Legal Concerns: What Happens When Contract Workers Become Permanent Employees?

Hi everyone, I need to know about the legal liability of the company if the company transfers contract employees to permanent employees.

Without knowing the size of your company, employee strength, total number of permanent workers, contract workers, staff, and other details, we cannot speak much on this context. However, for permanent employees, our country's employment laws provide more job security and compensation compared to contract labor.

Dear Vinithakkar,

Types of Contract Employees

Contract employees are of two types, i.e., Fixed Term Contract Employees and Outsourced Contract Employees or Contract Labor.

Statutory Liability for Contract Employees

As per the amended provisions of the Industrial Employment (Standing Orders) Central Rules, which are in force currently, as well as the provisions of the yet-to-be-enforced Code on Industrial Relations, 2020, there is no difference in the statutory liability of the employer towards his regular employees and the contract employees on fixed-term contracts except for the calculation of terminal benefits.

Transitioning Contract Employees to Regular Employees

In both cases of contract employees, transitioning them to the regular rolls of the establishment creates a new contract of employment. Therefore, the statutory liability of the employer towards these new regular employees, compared to the existing regular employees, regarding various aspects of employment such as probation, confirmation, scales of salary, etc., remains the same.