How Can Illegally Retrenched Contract Labourers Seek Justice Under the ID Act?

Contract Labourer Coverage Under the ID Act

How is a contract labourer covered under the ID Act? There is no specific provision in the CLRA Act, 1970, regarding the applicability of the ID Act for all purposes or concerning disputes. There is no express provision that an illegally retrenched contract labourer can seek a remedy under the ID Act. Thus, it is always a debatable question in any dispute between a contractor and a contract labourer, as the enactment that precisely settles the dispute is absent in the applicable labour enactments.

The broad view is that once a reference is made by a labour department of any state to the labour court, it is considered, and several judgments have favored contract labourers on their illegal terminations. However, the provision under which enactment expressly directs the aggrieved contract labourer to raise the dispute under the ID Act for a reference later to the labour court in case of non-settlement of the issue by the labour department is not known.

Exclusion Categories and Apex Court Verdicts

Some refer to the exclusion categories in the definition of "workman" under Sec. 2(s) of the ID Act, which includes contract labourers, while others depend on the verdicts of the Apex court. My query is how an illegally retrenched contract labourer can blindly approach the labour department for redressal and what provisions of any applicable enactments would help him to do so?

A worker who is engaged through a contractor is not a workman of the principal employer for whom he works. However, for all remedies and grievances, he can approach his employer, i.e., the contractor. Between them, the provisions of the Industrial Disputes Act will apply. It is only when the contractor himself is a dummy or when the contract is a sham that the question arises whether the principal employer should interfere in the dispute or not. Certainly, if the contract is a sham, the basic contract is void, and the workers engaged through the contractor shall get regularization as employees of the principal employer.

This issue has been discussed at length by various courts on various occasions. Let us reopen with some expert opinions about it.

I hope Umakanthan Sir will comment on it and take the discussion further. Please, Sir.

Thank you, Madhu, for inviting me to the discussion on the query raised by our friend Kesavapanda. I am really sorry for my belated response due to my preoccupation with some personal work.

Scheme of Redressal of Industrial Employment Grievances

Before coming to the ultimate query, I think it is pertinent to look into the scheme of redressal of industrial employment grievances under the existing labor laws in India.

Mechanism of Dispute Resolution

The first and foremost mechanism of dispute resolution has been provided under the Industrial Disputes Act, 1947, in the forms of collective bargaining through direct negotiation and conciliation, arbitration, and adjudication. If we analyze this, we will easily understand that the process is generally linear in its operation. The only exception in this regard is the power of the appropriate Government to refer the dispute directly for adjudication under section 10 of the Act based on the theory of apprehension. Thus, the IDA, 1947, is the only comprehensive means of investigation, inquiry, and peaceful resolution of employment disputes, particularly collective disputes pertaining to the specific class of employees employed in any industry falling within the ambit of the term 'workman' defined under the Act. This is clearly amplified by the definition of the term 'industrial dispute' under section 2(k) of the Act. By the Amending Act of 1965, individual disputes of workmen relating to their discharge, dismissal, etc., are dealt with under section 2-A of the Act and further simplified by the later amendment in this regard. Therefore, any contract labor falling within the definition of the term 'workman' under section 2(s) of the IDA, 1947, can seek remedy against his unlawful discharge, dismissal, or retrenchment under section 2-A. But the respondent should be the immediate employer, viz., the contractor, unless the cause of action can also be attributed to the Principal Employer for whose benefits the contract labor was engaged as such.

Provision for Appeal Against Dismissal

The provision for appeal against dismissal found in the States' Shops and Establishments Acts and other establishment-specific laws could have triggered this question. This was due to the absence of the provision for discharge, dismissal, etc., of individual employees under the IDA, 1947, till 1965. Such a provision of appeal is not included in the subsequent Acts like the Model Shops and Establishments Rules, 2016, and the Maharashtra Shops and Establishments Act, 2017.

Role of the CLRA Act, 1970

The CLRA Act, 1970, is a comprehensive legislation to regulate as well as to abolish the indirect form of labor through the contractors, and as such, it does not provide for the direct absorption of contract labor even if it is prohibited by section 10 of the Act unless the contract is proved to be a sham as observed by Mr. Madhu. Therefore, the contract labor can raise collective disputes as well as individual disputes under the IDA, 1947, for their employment grievances against both the contractor and the Principal Employer, if the dispute fastens vicarious liability on the Principal Employer or only against the respective contractor if otherwise.

Thank you very much, Madhu ji and Umakanthan ji, for participating and enlightening me on this issue. It is clear that the definition of Sec. 2(s) of the ID Act would attract the contract laborer, though it is not expressly included (as in the case of an apprentice) in the definition as a contract laborer or by any other name. Furthermore, since there is a separate mechanism existing within the Shops and Establishments Act for the workers working in shops and establishments, and this enactment is not applicable to the contract laborers working in factories, according to the illustration provided by Mr. Umakanthan ji, the ID Act only provides the remedy for them in case of disputes. Am I right, sirs?

Dear Mr. Kesav Panda,

In the captioned matter, Mr. Umakanthan has already provided his valuable guidance, as well as Mr. Madhu.

Role of the Principal Employer

The principal employer would definitely come into the picture if engaged directly or where the contractor did not obtain the CLR&A license. Any retrenchment without adhering to laws pertaining to retrenchment or termination falls under the purview of the ID Act.

Provisions in State CL-R&A Rules

Furthermore, there are provisions in state CL-R&A rules where a laborer can be terminated directly without referring to the ID Act, provided the labor termination falls under such service conditions.

Therefore, every employer should follow the provisions available in the state rules of the CL(R&A) Act.