If a contract term of a contractor under the Principal Employer comes to an end, and if the employees of the contractor join the new contractor under the same Principal Employer in a term which is equal or better, is the retrenchment compensation payable by the first contractor to these employees?
From India, Mumbai
Acknowledge(0)
Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
I would like to request the poster to go through the definition of the term "retrenchment" under section 2 (oo) of the I.D. Act, 1947.
Understanding Retrenchment Exceptions
If the definition is analyzed juxtaposing the four exceptions mentioned therein, namely: (1) voluntary retirement, (2) retirement on superannuation as per the contract of employment, (3) non-renewal of the contract of employment between the employer and the workman concerned, and (4) termination of the services of a workman on the ground of continued ill-health, retrenchment would include any action taken by the employer which results in the abrupt termination of the employment of a workman employed by him for whatever reasons other than by way of disciplinary action as well as the excluded ones.
Contract Labor and Retrenchment
A workman becomes "contract labor" only when his services are lent by his employer to another in pursuance of any contract for service between them. Therefore, the contract of service between the contractor and the so-called contract labor remains as it is, and in case of abrupt termination of the employment by the contractor for any reason other than those mentioned above, it is retrenchment, and the question of paying retrenchment compensation would arise automatically.
Completion of Contract and Retrenchment Compensation
If a particular contract for service with a principal employer gets completed, the contractor can divert his contract labor to any other subsisting contract elsewhere. If he fails to do so and calls it quits, certainly he has the liability to pay retrenchment compensation. On the contrary, if any workman is specifically employed by the contractor for a fixed term which is coterminous with any particular contract for service undertaken by him, he need not pay retrenchment compensation to the concerned workman rendered jobless on the completion of the contract because it comes under the exception of non-renewal of the existing contract of employment between them.
From India, Salem
Acknowledge(4)
Amend(0)
6108Understanding Retrenchment Exceptions
If the definition is analyzed juxtaposing the four exceptions mentioned therein, namely: (1) voluntary retirement, (2) retirement on superannuation as per the contract of employment, (3) non-renewal of the contract of employment between the employer and the workman concerned, and (4) termination of the services of a workman on the ground of continued ill-health, retrenchment would include any action taken by the employer which results in the abrupt termination of the employment of a workman employed by him for whatever reasons other than by way of disciplinary action as well as the excluded ones.
Contract Labor and Retrenchment
A workman becomes "contract labor" only when his services are lent by his employer to another in pursuance of any contract for service between them. Therefore, the contract of service between the contractor and the so-called contract labor remains as it is, and in case of abrupt termination of the employment by the contractor for any reason other than those mentioned above, it is retrenchment, and the question of paying retrenchment compensation would arise automatically.
Completion of Contract and Retrenchment Compensation
If a particular contract for service with a principal employer gets completed, the contractor can divert his contract labor to any other subsisting contract elsewhere. If he fails to do so and calls it quits, certainly he has the liability to pay retrenchment compensation. On the contrary, if any workman is specifically employed by the contractor for a fixed term which is coterminous with any particular contract for service undertaken by him, he need not pay retrenchment compensation to the concerned workman rendered jobless on the completion of the contract because it comes under the exception of non-renewal of the existing contract of employment between them.
From India, Salem
Acknowledge(4)Amend(0)
In this matter, Mr. Umakanthan can explain it well. However, in my understanding, no retrenchment compensation is required if the following conditions apply:
1. Retrenchment compensation is not applicable if the terms of a contract come to an end, upon the expiry of a license, or if a worker abandons their service, resigns, or passes away.
2. It does not matter whether the employer is good or bad regarding where the worker goes after their term with you is over. Retrenchment compensation is applicable if the worker is removed by the contractor/employer after having continuous service during the period of employment.
From India, Mumbai
Acknowledge(1)Amend(0)
1. Retrenchment compensation is not applicable if the terms of a contract come to an end, upon the expiry of a license, or if a worker abandons their service, resigns, or passes away.
2. It does not matter whether the employer is good or bad regarding where the worker goes after their term with you is over. Retrenchment compensation is applicable if the worker is removed by the contractor/employer after having continuous service during the period of employment.
From India, Mumbai
Acknowledge(1)Amend(0)
If the contract is terminated between the principal employer and the employer, and the workmen are hired by another contractor whom the principal employer has hired to perform similar job duties, and there is continuity in service, then the outgoing employer need not pay retrenchment dues. This is because there is continuity of the workmen with the same principal employer, possessing the same skills and receiving the same wages or even more.
From India, Bengaluru
Acknowledge(0)Amend(0)
From India, Bengaluru
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Contract employee & Principal employer 2017.pdf
EMPLOYEE CONTRACT.docx