I joined this company in 2012. During the interview and signing of papers, I was informed that I was being hired on a contract basis. The only difference between me and other employees was that I would not have PF and medical insurance deductions. We only had a 10% TDS deduction, and we were paid a fixed "fee" every month.
After about 6-7 years of working in the company, following the introduction of GST, we were asked to submit monthly invoices for tax audit purposes. All company rules, regulations, and policies were applicable to me. I was recruited by the head of the department, asked to report to her, and assigned tasks similar to those of anyone else in the team. I was quite young back then and didn't realize that these wordings were simply abused, and recruits were tactfully made to sign them with the clandestine goal of circumventing labor law provisions.
My Role and Responsibilities
My work in the organization is as per the monthly roster prepared by the HOD for both "on rolls" staff and "on contract" staff. Often, within a year or two, "on contract" staff are simply put on payrolls. I was even asked if I wanted to be put on payroll, but I preferred to delay that formality because my salary was quite low at the time. Deductions such as PF and Diwali Bonus would have significantly reduced my monthly take-home pay.
To clarify, I was practically an employee with no rights to do a "come and go as I like" sort of job or to choose the amount of work I wanted to do and demand pay only for that. Not completing any chore or task assigned to me would have led to disciplinary action. Therefore, in practice, the word "independent" was null and void.
Company Policies and Benefits
Until recently, the company did not have well-framed policies and documents defining various employee entitlements and duties. Only recently, with a revamp in the human resources department, have these documents been uploaded on the intranet site. I have been using a magnetized ID card to swipe my attendance daily. I am entitled to annual pay hikes and have been promoted twice. The payslip only shows "consultant fees, number of days worked, LWP days," and no other allowances. There is only a 10% TDS deduction from the "fee."
Exit Interview and Gratuity Benefits
Currently, the exit interview form states that only "on roll" employees are entitled to gratuity benefits. I would only receive the "fee" after deducting the number of days I am unable to serve notice. I am not allowed to exit at my own free will and will have to pay for the notice period not served.
About 3-4 years ago, all "contract" employees were made to sign a letter stating they were voluntarily forfeiting their right to PF benefits. According to many threads, regardless of the agreement's wording, slyly calling wages "fee" and mentioning in the appointment letter that "you will always be an independent contractor and will not approach any labor court" is questionable.
Given that I have "signed" this tacitly worded letter, I see some forum commentators seem to side with the employer, causing me paranoia about whether the labor commissioner may have a divided opinion on this. My company is not ordinary; they have significant influence in high places. It makes me wonder whether this will be an open-and-shut case or if legal recourses will have to be pursued.
From India
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1After about 6-7 years of working in the company, following the introduction of GST, we were asked to submit monthly invoices for tax audit purposes. All company rules, regulations, and policies were applicable to me. I was recruited by the head of the department, asked to report to her, and assigned tasks similar to those of anyone else in the team. I was quite young back then and didn't realize that these wordings were simply abused, and recruits were tactfully made to sign them with the clandestine goal of circumventing labor law provisions.
My Role and Responsibilities
My work in the organization is as per the monthly roster prepared by the HOD for both "on rolls" staff and "on contract" staff. Often, within a year or two, "on contract" staff are simply put on payrolls. I was even asked if I wanted to be put on payroll, but I preferred to delay that formality because my salary was quite low at the time. Deductions such as PF and Diwali Bonus would have significantly reduced my monthly take-home pay.
To clarify, I was practically an employee with no rights to do a "come and go as I like" sort of job or to choose the amount of work I wanted to do and demand pay only for that. Not completing any chore or task assigned to me would have led to disciplinary action. Therefore, in practice, the word "independent" was null and void.
Company Policies and Benefits
Until recently, the company did not have well-framed policies and documents defining various employee entitlements and duties. Only recently, with a revamp in the human resources department, have these documents been uploaded on the intranet site. I have been using a magnetized ID card to swipe my attendance daily. I am entitled to annual pay hikes and have been promoted twice. The payslip only shows "consultant fees, number of days worked, LWP days," and no other allowances. There is only a 10% TDS deduction from the "fee."
Exit Interview and Gratuity Benefits
Currently, the exit interview form states that only "on roll" employees are entitled to gratuity benefits. I would only receive the "fee" after deducting the number of days I am unable to serve notice. I am not allowed to exit at my own free will and will have to pay for the notice period not served.
About 3-4 years ago, all "contract" employees were made to sign a letter stating they were voluntarily forfeiting their right to PF benefits. According to many threads, regardless of the agreement's wording, slyly calling wages "fee" and mentioning in the appointment letter that "you will always be an independent contractor and will not approach any labor court" is questionable.
Given that I have "signed" this tacitly worded letter, I see some forum commentators seem to side with the employer, causing me paranoia about whether the labor commissioner may have a divided opinion on this. My company is not ordinary; they have significant influence in high places. It makes me wonder whether this will be an open-and-shut case or if legal recourses will have to be pursued.
From India
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Consultant or Employee: Understanding Employment Terms
Whatever the stance of the employer, a consultant who receives a payslip detailing the total number of days worked, loss of pay, etc., is considered an employee. If the contract specifies adherence to company policies regarding timing, reporting, etc., it is deemed a contract of employment, and the compensation received is considered salary. Upon leaving after five years, gratuity should also be provided. Please review the attached case for reference. The case involves consultant doctors whose remuneration was categorized as professional charges, with the IT department asserting that the remuneration should be treated on par with salary, as they are considered employees.
From India, Kannur
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Whatever the stance of the employer, a consultant who receives a payslip detailing the total number of days worked, loss of pay, etc., is considered an employee. If the contract specifies adherence to company policies regarding timing, reporting, etc., it is deemed a contract of employment, and the compensation received is considered salary. Upon leaving after five years, gratuity should also be provided. Please review the attached case for reference. The case involves consultant doctors whose remuneration was categorized as professional charges, with the IT department asserting that the remuneration should be treated on par with salary, as they are considered employees.
From India, Kannur
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Thank you so much, Madhu sir. If I take a copy of this judgment to HR, the company is all the more likely to fight tooth and nail because acknowledging me as an employee will amount to paying significant amounts of retrospective taxes to the government under Section 192. I am not sure if that even applies because very few of the employees marked as "independent contractors" are drawing much in comparison to Wockhardt.
From India
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From India
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Alerting the Labor Department
If the company HR is driving in the wrong direction, somebody should alert him that he is heading the wrong way, right? Either the passengers on the bus should alert him, or you should inform someone outside who can stop the bus and ask the driver why he is going in the wrong direction! This means you can alert the labor department, who will intervene in the management's incorrect actions. If you fear reprisal from management, you can utilize the official web portals of EPFO and labor departments.
From India, Kannur
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If the company HR is driving in the wrong direction, somebody should alert him that he is heading the wrong way, right? Either the passengers on the bus should alert him, or you should inform someone outside who can stop the bus and ask the driver why he is going in the wrong direction! This means you can alert the labor department, who will intervene in the management's incorrect actions. If you fear reprisal from management, you can utilize the official web portals of EPFO and labor departments.
From India, Kannur
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From what you have narrated, it is evident that the organization has resorted to some paper arrangement to cover up the actual reality. This will stand the test of judicial scrutiny once the 'veil is lifted' and the stark reality will appear clear and vivid. There appears to be no escape from this; the only question is when this will happen and who is going to bell the cat.
Clarification on Queries
Regarding your queries, this is to clarify that:
1. Even if there is a tacit contract between the company and its so-called contractors, it is illegal, and no contract can be valid if it violates the law.
2. Competence of Labour Commissioners
Regarding the competence of Labour Commissioners (generally a senior IAS Officer) to decide on questions of law, normally these matters are dealt with by the Assistant or Deputy Labour Commissioner, who is an experienced person from the Labour Department. So, there is nothing to worry about in terms of their knowledge. Even in the worst case, if the Labour Commissioner takes it upon himself to deal with this, normally a qualified subordinate official will be helping and assisting him/her. The question of being an 'employee' or not is a complicated question of law and facts, so it will not be dealt with in a casual manner.
From India, Mumbai
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Clarification on Queries
Regarding your queries, this is to clarify that:
1. Even if there is a tacit contract between the company and its so-called contractors, it is illegal, and no contract can be valid if it violates the law.
2. Competence of Labour Commissioners
Regarding the competence of Labour Commissioners (generally a senior IAS Officer) to decide on questions of law, normally these matters are dealt with by the Assistant or Deputy Labour Commissioner, who is an experienced person from the Labour Department. So, there is nothing to worry about in terms of their knowledge. Even in the worst case, if the Labour Commissioner takes it upon himself to deal with this, normally a qualified subordinate official will be helping and assisting him/her. The question of being an 'employee' or not is a complicated question of law and facts, so it will not be dealt with in a casual manner.
From India, Mumbai
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@Madhu, yes, the company has a history of taking unfair actions against employees over petty personal grudges. They will pick up some trivial human error, which is very commonly made by just about anyone, and blow it out of proportion to fire the employee, making them immediately leave the premises and disabling their email account so that they can't gather evidence. There have been thousands of occasions in the past when such errors were just brushed away as part of work. Given that I am on notice right now, they are highly likely to pick some random nonsense to terminate me and then claim that I am not eligible for gratuity because I was fired on disciplinary grounds. Yes, they can go that far.
@KK!HR, much appreciated. The second question was of priority because I really needed to know if there was a possibility of the company pulling some strings to get the labor office to go in their favor. As stated before, the company has influence at top levels.
From India
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@KK!HR, much appreciated. The second question was of priority because I really needed to know if there was a possibility of the company pulling some strings to get the labor office to go in their favor. As stated before, the company has influence at top levels.
From India
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Soon after you are relieved from your position, you should send a notice to the company demanding your gratuity. If the gratuity is not paid, you can approach the Labor Office. Once the gratuity is received, other employees can also demand it, and the company will be compelled to change the employees' status.
From India, Kannur
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From India, Kannur
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What Madhu T K mentioned in his last post is absolutely correct. Collect and retain all necessary documents in your possession and first seek Gratuity Payment after leaving the organization. Once that is settled, address any other issues. Avoid referencing any court cases to your employer at this time.
Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity. http://www.usdhrs.in
From India, New Delhi
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Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] USD HR Solutions – To strive towards excellence with effort and integrity. http://www.usdhrs.in
From India, New Delhi
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