I disagree with the reply given by Anil Kaushik, Chief Editor, Business Manager - HR Magazine. the question and answers as follows:
Q. Who is to take disciplinary action against contract labor? Under what rules? Are standing orders applicable to contract labour?
Ans. Contractor as employer in relation to contract workman should take disciplinary action against such errant workman under the service rules of his organization / terms of employment. Standing Orders are not applicable to contract labour as the definition of the workman under Industrial Employment Standing Order Act does not cover contract labour unless your Standing Orders cover this category.
I want him to refer Sec. 2(e) (iv) of Industrial employment Standing Orders Act, 1946. Further, he is wrong in stating "the definition of workman inder industrial Employment Standing orders Act does not cover the contract labour" as the Act says for the definitions of "Wage and worker" Sec. 2(rr) and (s) are to be referred.
Therefore, it is now to be clarified whether the Standing orders are applicable to the contract labour establishment employing 100 or more?
From India, Chennai
10Q. Who is to take disciplinary action against contract labor? Under what rules? Are standing orders applicable to contract labour?
Ans. Contractor as employer in relation to contract workman should take disciplinary action against such errant workman under the service rules of his organization / terms of employment. Standing Orders are not applicable to contract labour as the definition of the workman under Industrial Employment Standing Order Act does not cover contract labour unless your Standing Orders cover this category.
I want him to refer Sec. 2(e) (iv) of Industrial employment Standing Orders Act, 1946. Further, he is wrong in stating "the definition of workman inder industrial Employment Standing orders Act does not cover the contract labour" as the Act says for the definitions of "Wage and worker" Sec. 2(rr) and (s) are to be referred.
Therefore, it is now to be clarified whether the Standing orders are applicable to the contract labour establishment employing 100 or more?
From India, Chennai
Mr.Anil Kaushik, Chief Editor, Business Manager - HR Magazine. the question and answers as follows:
Q. Who is to take disciplinary action against contract labor? Under what rules? Are standing orders applicable to contract labour?
Ans. Contractor as employer in relation to contract workman should take disciplinary action against such errant workman under the service rules of his organization / terms of employment. Standing Orders are not applicable to contract labour as the definition of the workman under Industrial Employment Standing Order Act does not cover contract labour unless your Standing Orders cover this category.
“The queriest Mr. Kesavapanda disagreed with the above and wanted to refer Sec. 2(e) (iv) of Industrial employment Standing Orders Act, 1946. Further, the queriest stated that it is wrong in stating "the definition of workman inder industrial Employment Standing orders Act does not cover the contract labour" as the Act says for the definitions of "Wage and worker" Sec. 2(rr) and (s) are to be referred.
Therefore, it is now to be clarified whether the Standing orders are applicable to the contract labour establishment employing 100 or more?”
In order to answer the above, it is necessary to extract the referred provisions as follows:
Industrial Employment (Standing Orders)
Act, 1946
2(e)(iv) “industrial establishment” means
(i) an industrial establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act, 1936, or
(ii) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948, or
(iii) a railway as defined in clause (4) of Section 2 of the Indian Railway Act,
1890, or
(iv) the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen;
(i) “wages” and “workman” have the meanings respectively assigned to them in
clauses (rr) and (s) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947).
It follows that “industrial establishment” means, inter alia, the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen.
Evidently, the establishment of a person i.e. contractor who engages contract labour for the purpose of fulfilling a contract with the owner of any industrial establishment, will be covered under the term “industrial establishment”. It applies to every industrial establishment wherein one hundred or more
workmen are employed, or were employed on any day of the preceding twelve months.
The contractor of the industrial establishment can thus frame his own standing orders in respect contract labours engaged by him. In the following Madras High Court decision, the workmen employed in INDCO Serve were governed by their own Standing Orders and the special Bye-laws applicable to them. The employees of the INDCO Serve were held to be the employees of the Contractor namely INDCO Serve and the Contract could not be said to be repugnant either under the provisions of I.D.Act or under the Contract Labour (Regulation and Abolition) Act, 1971:
Madras High Court
Madras Refineries Limited vs The Chief Commissioner Decided on 26 April, 2012
“56. At which point of time, the workmen claimed that they were no longer members of the Society was not established. But the CGIT on the other hand gave relief as if from day one they were the employees of the CPCL. The INDCO Serve is a registered contractor and the CPCL has registered itself as Principal employer under the provisions of Contract Labour (Regulation and Abolition) Act, 1971. The workmen employed in INDCO Serve are governed by their own Standing Orders and the special Bye-laws applicable to them. The employees of INDCO Serve are not appointed by CPCL by any recruitment process conducted by them but they were appointed by Contractors as well as by INDCO Serve.
57. These facts will clearly show that the arrangement which CPCL has with INDCO Serve is not sham and nominal as understood in industrial law. The employees of the INDCO Serve were the employees of the Contractor namely INDCO Serve and the Contract cannot be said to be repugnant either under the provisions of I.D.Act or under the Contract Labour (Regulation and Abolition) Act, 1971. Therefore, the demand raised by the workmen are misconceived and are not legally sustainable.”
Even Section 30 of the Contract Labour (Regulation and Abolition) Act, 1971 makes the provisions of the Act effective notwithstanding anything inconsistent therewith contained in any other law or in the terms of any agreement or contract of service or any standing orders applicable to the establishment:
Supreme Court of India
B.H.E.L. Workers' Association ... vs Union Of India & Ors., Etc. Etc on 18 January, 1985
“Section 30 makes the provisions of the Act effective notwithstanding anything inconsistent therewith contained in any other law or in the terms of any agreement or contract of service or any standing orders applicable to the establishment. It, however, saves to the contract labour any favourable benefits that the contract labour may be entitled to under the agreement, contract of service or standing orders.”
It is well settled by the Apex Court in Dena Nath case below that the employee employed through the contractor do not become the employees of the principal employer and merely because contractor or the employer had violated any provision of the Contract Labour (Regulation and Abolition) Act, 1971 or the rules, the Court could not issue any mandamus for deeming the contract labour as having become the employees of the principal employer:
Dena Nath & Ors Vs. National Fertilizers Ltd. & Ors [1991] INSC 310 (22 November 1991)
HEAD NOTE:
“Following its earlier decision in 1991(1) P.L.R.I. the High Court held that the principal employer and the Contrac- tor were liable for prosecution under the Contract Labour (Regulation and Abolition) Act, 1970, if they made non- compliance of section 7 and section 12 of the Act, respec- tively. Further, it was held that the employee employed through the contractor did not become the employees of the principal employer
…..
The only consequences provided in the Act where either the principal employer or the labour contractor violates the provision of Sections 9 and 12 respectively is the penal provision, as envisaged under the Act for which reference may be made to Sections 23 and 25 of the Act. We are thus of the firm view that in proceedings under Article 226 of the Constitution merely because contractor or the employer had violated any provision of the Act or the rules, the Court could not issue any mandamus for deeming the contract labour as having become the employees of the principal employer. ……We are of the view that the decisions of the Kerala High Court and Delhi High Court are correct and we approve the same.”
The Jharkhand High Court referred to the approval of the above Dena Nath Case by the Constitution Bench decision. It also held that there has to be finding regarding the payment of salary or the control and supervision by the management and material to show that the contract labour was a sham or camouflage or the contractor was merely a name lender or a facade and the work was of a perennial nature or the workman was engaged in the production of goods integral to the business of the management.
Thus the disciplinary action has to be taken by the contractor against his contract labour.
Jharkhand High Court
Usha Martin Limited (Usha Isma vs Presiding Officer, Labour Cour on 10 January, 2014
L.P.A. 308 of 2011 (Arising out of C.W.J.C NO.1408 of 1999(R) )
“2. The Reference made by the Government of Bihar, vide Notification No.4/D2-6033/94 issued under Section 10(1)(c) was:
"Whether termination of services of workman Dashrath Upadhyay by the management of M/s.Usha Martin Industries Ltd.,Ishmal Division,Tatisilwai,Ranchi is justified? If not what relief the workman is entitled to?"
3. Learned counsel for the appellant has assailed the impugned judgment and order passed by the learned Single Judge in C.W.J.C NO. 1408 of 1999(R) and submitted that the learned Single Judge should have considered the legal position as decided in the case of Dena Nath and Others vs. National Fertilizers Ltd. & Ors., reported in 1992 L.A.B. I.C.75 which was affirmed by the constitutional bench of the Apex Court in the case of Steel Authority of India Ltd. Vs. National Union Waterfront Workers, reported in (2001) 7 SCC 1 which was also relied upon and confirmed in the case of National Thermal Power Corporation Ltd. Vs. Badri Singh Thakur, reported in (2008) 9 SCC 377. Hence, the impugned judgment is bad in law as without assigning any valid or legal reason the learned Single Judge has dismissed the writ petition particularly when the finding of fact that the concerned workman was an employee of the contractor and not of the appellant-Company had not been controverted. It was contended that the learned Single Judge erred in law by not appreciating the fact that the only question of law, whether by virtue of theory of deemed employment as propounded by Madras High Court in the case of Workmen vs. Best and Crompton Engineering Ltd., Madras, reported in (1985) 1 LLJ 492(MAD), has been over ruled in Dena Nath case(Supra) by the Hon'ble Apex Court and the said deeming theory had not been over ruled in the case of Air India Statutory Corporation vs. United Labour Union, reported in (1997) 2 Supreme 165 and the said Air India case has been over ruled by the constitution Bench in the Steel Authority of India case(Supra).
11. The learned Single Judge has accordingly upheld the same finding it is true that though this court under Article 226 of the Constitution of India has limited jurisdiction in interfering with the finding of the fact on material and record on the basis of which the Labour Court came to the conclusion that the workman was an employee of the management. In this connection it is relevant to state that it has been settled in the case of General Manager (OSD), Bengal Nagpur Cotton Mills, Rajnandgaon Vs. Bharat Lal and others, reported in (2011) 1 SCC 635 wherein the Apex Court, in paragraph-8 held "the appellant relied upon the decision of this court in NTPC Vs. Badri Singh Thakur, reported in (2008)9 SCC 377 where the Court held that the provisions of the C.L.R.A Act would override the provision of MPIR Act and in Municipal Corporation of Greater Mumbai Vs. K.V Shramik Sangh and ors, reported in (2002) 4 SCC 609 where the court observed that merely because the principal employer and contractor have not complied with the provisions of C.L.R.A Act in regard to registration, the system of carrying out work through contract labour could not be termed as sham."
In the aforesaid case, the Apex Court held that for determining whether the contract labour was a sham, a camouflage or the contractor was a name-lender, then the recognized test for determining the same is firstly whether the principal employer pays the salary? and secondly, whether the principal employer controls and supervises the work of the employee?. The principle of sham and camouflage and piercing the veil theory has also been the touch stone for holding a contract labour to be the employee of the management as has been held in the case of Hussainbhai Vs. The Alath Factory Tezhilali Union and others, reported in AIR 1978 SC 1410 and in the case of Secretary, Hariyana State Electricity Board Vs. Suresh, reported in 1999 L.A.B I.C 1323
13. The labour court has not given any finding as to whether the principal employer was paying the salary to the respondent and whether the principal employer was controlling and supervising the work of the employee and we are constrained for the interest of justice to look into the fact that the labour court has in paragraph-12 found that the respondent admitted that no appointment letter was issued to him neither any description of salary nor the post on which he had to work, neither any pay-slip was issued to him nor any deduction in provident fund was made and respondent No. 2 admitted that he received his salary by signing on a register and that belonged to M/s Agarwal Traders of M/s Usha Ishmal Division and also gave the opinion that the names of the persons in the register varied and the maximum number of persons was 40.
14. Thus, in view of the evidence on record it is apparent that there was no finding regarding the payment of salary or the control and supervision by the management and no material was brought forward to show that the contract labour was a sham or camouflage or the contractor was merely a name lender or a facade and the work was of a perennial nature or the workman was engaged in the production of goods integral to the business of the management.
15. It would not be out of place to note that the respondent No. 2, workman has clearly stated that no appointment letter was issued to him nor the post on which he was employed or worked or neither any termination letter was served on him and it has been held by the Hon'ble Apex Court in (2013) 4 SCC 490 (B.T.Krishnamurthy Vs. Shree Basaveswara Education Society) that in absence of appointment letter termination simplicitor is not illegal and is not violative of the principle of natural justice.
16. In the backdrop of the discussions made above and the settled law that violation of the provisions of C.L.R.A Act does not give rise to automatic absorption of the workman in the establishment and the violation of Sections 7 and 12 of the CLRA Act will be visited by prosecution and penal consequences as provided under Sections 23 to 25 of the C.L.R.A Act, resultantly this Court holds that the learned single Judge and learned labour court have not appreciated the provisions of law and the impugned award passed by the Labour Court and the judgment of the learned single Judge cannot be sustained in view of the settled principle of law as held in the cases discussed above.”
The Delhi HC also held that the employees of contractor do not ipso facto become employees of principal employer:
Delhi High Court
New Delhi General Mazdoor Union, v Standing Conferance Of Public decided on 30 April, 1991
ILR 1992 Delhi 358
“(30) In this view of the matter it is with respect that we are unable to agree with the view expressed by the Madias High Court in Best and Crompton case that the petitioners would become ipso facto the employees of the first respondent..”
Thus the disciplinary action has to be taken by the contractor against his contract labour.
Therefore, Contractor as employer in relation to contract labour should take disciplinary action against such errant workman under the service rules of his organization / terms of employment. Separate Standing Orders are required to be framed by contractor for his contract labours under the Industrial Employment Standing Orders Act, 1946 as has been upheld by the Madras High Court in Madras Refineries Limited vs The Chief Commissioner Decided on 26 April, 2012, cited above.
Thanks
Sushil
From India, New Delhi
Q. Who is to take disciplinary action against contract labor? Under what rules? Are standing orders applicable to contract labour?
Ans. Contractor as employer in relation to contract workman should take disciplinary action against such errant workman under the service rules of his organization / terms of employment. Standing Orders are not applicable to contract labour as the definition of the workman under Industrial Employment Standing Order Act does not cover contract labour unless your Standing Orders cover this category.
“The queriest Mr. Kesavapanda disagreed with the above and wanted to refer Sec. 2(e) (iv) of Industrial employment Standing Orders Act, 1946. Further, the queriest stated that it is wrong in stating "the definition of workman inder industrial Employment Standing orders Act does not cover the contract labour" as the Act says for the definitions of "Wage and worker" Sec. 2(rr) and (s) are to be referred.
Therefore, it is now to be clarified whether the Standing orders are applicable to the contract labour establishment employing 100 or more?”
In order to answer the above, it is necessary to extract the referred provisions as follows:
Industrial Employment (Standing Orders)
Act, 1946
2(e)(iv) “industrial establishment” means
(i) an industrial establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act, 1936, or
(ii) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948, or
(iii) a railway as defined in clause (4) of Section 2 of the Indian Railway Act,
1890, or
(iv) the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen;
(i) “wages” and “workman” have the meanings respectively assigned to them in
clauses (rr) and (s) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947).
It follows that “industrial establishment” means, inter alia, the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen.
Evidently, the establishment of a person i.e. contractor who engages contract labour for the purpose of fulfilling a contract with the owner of any industrial establishment, will be covered under the term “industrial establishment”. It applies to every industrial establishment wherein one hundred or more
workmen are employed, or were employed on any day of the preceding twelve months.
The contractor of the industrial establishment can thus frame his own standing orders in respect contract labours engaged by him. In the following Madras High Court decision, the workmen employed in INDCO Serve were governed by their own Standing Orders and the special Bye-laws applicable to them. The employees of the INDCO Serve were held to be the employees of the Contractor namely INDCO Serve and the Contract could not be said to be repugnant either under the provisions of I.D.Act or under the Contract Labour (Regulation and Abolition) Act, 1971:
Madras High Court
Madras Refineries Limited vs The Chief Commissioner Decided on 26 April, 2012
“56. At which point of time, the workmen claimed that they were no longer members of the Society was not established. But the CGIT on the other hand gave relief as if from day one they were the employees of the CPCL. The INDCO Serve is a registered contractor and the CPCL has registered itself as Principal employer under the provisions of Contract Labour (Regulation and Abolition) Act, 1971. The workmen employed in INDCO Serve are governed by their own Standing Orders and the special Bye-laws applicable to them. The employees of INDCO Serve are not appointed by CPCL by any recruitment process conducted by them but they were appointed by Contractors as well as by INDCO Serve.
57. These facts will clearly show that the arrangement which CPCL has with INDCO Serve is not sham and nominal as understood in industrial law. The employees of the INDCO Serve were the employees of the Contractor namely INDCO Serve and the Contract cannot be said to be repugnant either under the provisions of I.D.Act or under the Contract Labour (Regulation and Abolition) Act, 1971. Therefore, the demand raised by the workmen are misconceived and are not legally sustainable.”
Even Section 30 of the Contract Labour (Regulation and Abolition) Act, 1971 makes the provisions of the Act effective notwithstanding anything inconsistent therewith contained in any other law or in the terms of any agreement or contract of service or any standing orders applicable to the establishment:
Supreme Court of India
B.H.E.L. Workers' Association ... vs Union Of India & Ors., Etc. Etc on 18 January, 1985
“Section 30 makes the provisions of the Act effective notwithstanding anything inconsistent therewith contained in any other law or in the terms of any agreement or contract of service or any standing orders applicable to the establishment. It, however, saves to the contract labour any favourable benefits that the contract labour may be entitled to under the agreement, contract of service or standing orders.”
It is well settled by the Apex Court in Dena Nath case below that the employee employed through the contractor do not become the employees of the principal employer and merely because contractor or the employer had violated any provision of the Contract Labour (Regulation and Abolition) Act, 1971 or the rules, the Court could not issue any mandamus for deeming the contract labour as having become the employees of the principal employer:
Dena Nath & Ors Vs. National Fertilizers Ltd. & Ors [1991] INSC 310 (22 November 1991)
HEAD NOTE:
“Following its earlier decision in 1991(1) P.L.R.I. the High Court held that the principal employer and the Contrac- tor were liable for prosecution under the Contract Labour (Regulation and Abolition) Act, 1970, if they made non- compliance of section 7 and section 12 of the Act, respec- tively. Further, it was held that the employee employed through the contractor did not become the employees of the principal employer
…..
The only consequences provided in the Act where either the principal employer or the labour contractor violates the provision of Sections 9 and 12 respectively is the penal provision, as envisaged under the Act for which reference may be made to Sections 23 and 25 of the Act. We are thus of the firm view that in proceedings under Article 226 of the Constitution merely because contractor or the employer had violated any provision of the Act or the rules, the Court could not issue any mandamus for deeming the contract labour as having become the employees of the principal employer. ……We are of the view that the decisions of the Kerala High Court and Delhi High Court are correct and we approve the same.”
The Jharkhand High Court referred to the approval of the above Dena Nath Case by the Constitution Bench decision. It also held that there has to be finding regarding the payment of salary or the control and supervision by the management and material to show that the contract labour was a sham or camouflage or the contractor was merely a name lender or a facade and the work was of a perennial nature or the workman was engaged in the production of goods integral to the business of the management.
Thus the disciplinary action has to be taken by the contractor against his contract labour.
Jharkhand High Court
Usha Martin Limited (Usha Isma vs Presiding Officer, Labour Cour on 10 January, 2014
L.P.A. 308 of 2011 (Arising out of C.W.J.C NO.1408 of 1999(R) )
“2. The Reference made by the Government of Bihar, vide Notification No.4/D2-6033/94 issued under Section 10(1)(c) was:
"Whether termination of services of workman Dashrath Upadhyay by the management of M/s.Usha Martin Industries Ltd.,Ishmal Division,Tatisilwai,Ranchi is justified? If not what relief the workman is entitled to?"
3. Learned counsel for the appellant has assailed the impugned judgment and order passed by the learned Single Judge in C.W.J.C NO. 1408 of 1999(R) and submitted that the learned Single Judge should have considered the legal position as decided in the case of Dena Nath and Others vs. National Fertilizers Ltd. & Ors., reported in 1992 L.A.B. I.C.75 which was affirmed by the constitutional bench of the Apex Court in the case of Steel Authority of India Ltd. Vs. National Union Waterfront Workers, reported in (2001) 7 SCC 1 which was also relied upon and confirmed in the case of National Thermal Power Corporation Ltd. Vs. Badri Singh Thakur, reported in (2008) 9 SCC 377. Hence, the impugned judgment is bad in law as without assigning any valid or legal reason the learned Single Judge has dismissed the writ petition particularly when the finding of fact that the concerned workman was an employee of the contractor and not of the appellant-Company had not been controverted. It was contended that the learned Single Judge erred in law by not appreciating the fact that the only question of law, whether by virtue of theory of deemed employment as propounded by Madras High Court in the case of Workmen vs. Best and Crompton Engineering Ltd., Madras, reported in (1985) 1 LLJ 492(MAD), has been over ruled in Dena Nath case(Supra) by the Hon'ble Apex Court and the said deeming theory had not been over ruled in the case of Air India Statutory Corporation vs. United Labour Union, reported in (1997) 2 Supreme 165 and the said Air India case has been over ruled by the constitution Bench in the Steel Authority of India case(Supra).
11. The learned Single Judge has accordingly upheld the same finding it is true that though this court under Article 226 of the Constitution of India has limited jurisdiction in interfering with the finding of the fact on material and record on the basis of which the Labour Court came to the conclusion that the workman was an employee of the management. In this connection it is relevant to state that it has been settled in the case of General Manager (OSD), Bengal Nagpur Cotton Mills, Rajnandgaon Vs. Bharat Lal and others, reported in (2011) 1 SCC 635 wherein the Apex Court, in paragraph-8 held "the appellant relied upon the decision of this court in NTPC Vs. Badri Singh Thakur, reported in (2008)9 SCC 377 where the Court held that the provisions of the C.L.R.A Act would override the provision of MPIR Act and in Municipal Corporation of Greater Mumbai Vs. K.V Shramik Sangh and ors, reported in (2002) 4 SCC 609 where the court observed that merely because the principal employer and contractor have not complied with the provisions of C.L.R.A Act in regard to registration, the system of carrying out work through contract labour could not be termed as sham."
In the aforesaid case, the Apex Court held that for determining whether the contract labour was a sham, a camouflage or the contractor was a name-lender, then the recognized test for determining the same is firstly whether the principal employer pays the salary? and secondly, whether the principal employer controls and supervises the work of the employee?. The principle of sham and camouflage and piercing the veil theory has also been the touch stone for holding a contract labour to be the employee of the management as has been held in the case of Hussainbhai Vs. The Alath Factory Tezhilali Union and others, reported in AIR 1978 SC 1410 and in the case of Secretary, Hariyana State Electricity Board Vs. Suresh, reported in 1999 L.A.B I.C 1323
13. The labour court has not given any finding as to whether the principal employer was paying the salary to the respondent and whether the principal employer was controlling and supervising the work of the employee and we are constrained for the interest of justice to look into the fact that the labour court has in paragraph-12 found that the respondent admitted that no appointment letter was issued to him neither any description of salary nor the post on which he had to work, neither any pay-slip was issued to him nor any deduction in provident fund was made and respondent No. 2 admitted that he received his salary by signing on a register and that belonged to M/s Agarwal Traders of M/s Usha Ishmal Division and also gave the opinion that the names of the persons in the register varied and the maximum number of persons was 40.
14. Thus, in view of the evidence on record it is apparent that there was no finding regarding the payment of salary or the control and supervision by the management and no material was brought forward to show that the contract labour was a sham or camouflage or the contractor was merely a name lender or a facade and the work was of a perennial nature or the workman was engaged in the production of goods integral to the business of the management.
15. It would not be out of place to note that the respondent No. 2, workman has clearly stated that no appointment letter was issued to him nor the post on which he was employed or worked or neither any termination letter was served on him and it has been held by the Hon'ble Apex Court in (2013) 4 SCC 490 (B.T.Krishnamurthy Vs. Shree Basaveswara Education Society) that in absence of appointment letter termination simplicitor is not illegal and is not violative of the principle of natural justice.
16. In the backdrop of the discussions made above and the settled law that violation of the provisions of C.L.R.A Act does not give rise to automatic absorption of the workman in the establishment and the violation of Sections 7 and 12 of the CLRA Act will be visited by prosecution and penal consequences as provided under Sections 23 to 25 of the C.L.R.A Act, resultantly this Court holds that the learned single Judge and learned labour court have not appreciated the provisions of law and the impugned award passed by the Labour Court and the judgment of the learned single Judge cannot be sustained in view of the settled principle of law as held in the cases discussed above.”
The Delhi HC also held that the employees of contractor do not ipso facto become employees of principal employer:
Delhi High Court
New Delhi General Mazdoor Union, v Standing Conferance Of Public decided on 30 April, 1991
ILR 1992 Delhi 358
“(30) In this view of the matter it is with respect that we are unable to agree with the view expressed by the Madias High Court in Best and Crompton case that the petitioners would become ipso facto the employees of the first respondent..”
Thus the disciplinary action has to be taken by the contractor against his contract labour.
Therefore, Contractor as employer in relation to contract labour should take disciplinary action against such errant workman under the service rules of his organization / terms of employment. Separate Standing Orders are required to be framed by contractor for his contract labours under the Industrial Employment Standing Orders Act, 1946 as has been upheld by the Madras High Court in Madras Refineries Limited vs The Chief Commissioner Decided on 26 April, 2012, cited above.
Thanks
Sushil
From India, New Delhi
Dear Mr. Sushil,
Tnks for your very lucid and vivid clarification on the quuery. I agree with your views.
The judgements are very clear and it is an eye opener for those organisation who runs sham contracts.
Keep it up.
G.K.Manjunath
Sr. Manager-HR
From United States, Cambridge
Tnks for your very lucid and vivid clarification on the quuery. I agree with your views.
The judgements are very clear and it is an eye opener for those organisation who runs sham contracts.
Keep it up.
G.K.Manjunath
Sr. Manager-HR
From United States, Cambridge
It is very clear that in respect of the contract labour, the contractor is the employer and as such he is the disciplinary authority in respect of such labour. In case the principal employer takes any action against contract labour, it will prove against him when an issue of deciding whether the contract is sham or genuine comes.
In the Standing Order, the applicability is usually mentioned. It is common to state to whom these orders apply. Therefore,if the standing orders clearly state that these orders apply to workers on rolls of the company, then, naturally, the standing orders are applicable only to them and the contract labours cannot follow it. Obviously, if the standing orders is drafted and certified with the clause that these are applicable to workers including contract labours, the picture would be different.
Madhu.T.K
From India, Kannur
In the Standing Order, the applicability is usually mentioned. It is common to state to whom these orders apply. Therefore,if the standing orders clearly state that these orders apply to workers on rolls of the company, then, naturally, the standing orders are applicable only to them and the contract labours cannot follow it. Obviously, if the standing orders is drafted and certified with the clause that these are applicable to workers including contract labours, the picture would be different.
Madhu.T.K
From India, Kannur
However, the crucial precaution has to be taken by the employer that he does not entrap himself in direct master and servant relationship in the venture of adopting contract labour in its standing orders pertaining to its own muster roll workmen. Further para 5 of the model standing orders does not envisage any category of contract labour. The decision of the Apex court in Workmen of FCI v FCI decided in 1985 held that direct payment by principal employer to contract labour implies that contract labours are workmen of principal employer because master and servant relation is established. Similarly model standing orders provide for various conditions of services including payment of wages and disciplinary action etc which allude to master servant relationship. Only well crafted SO will be able to save such principal employer, if possible.
Thanks
Sushil
From India, New Delhi
Thanks
Sushil
From India, New Delhi
Thank you Mr. Sushil. Delayed a little to see your reply and therefore, many threads were received in the mean time. My doubt was not relating to who has to take disciplinary action against a contract labour. I sought clarification regarding the reply given by Mr. Anil Kaushik, Chief Editor, Business Manager - HR Magazine that "Sos are not applicable to the contractor", which generated apprehension that it will disseminate wrong signals to the contractors who may dispense with the process of preparation of their own SOs, where Sec. 2(e)(iv) the IESO is quite clear on that. Further, in his reply he added that "the definition of the workman under Industrial Employment Standing Order Act does not cover contract labour unless your Standing Orders cover this category", which was also a matter of assumption without base as there was no illustration on the definition of worker and wages, which clearly specifies to read the definitions from ID act for both of them. My dis agreement was on these two points but not on the whole.
However, you have consented that IESOs are applicable to contract establishment, though the other material was verbose but informative for others. I actually wanted to see how Mr. Kaushik defends his case. But I received reply from an other source. However it would be very much obliged if Mr. Kaushik would responds to it.. Thank you all for participation.
From India, Chennai
However, you have consented that IESOs are applicable to contract establishment, though the other material was verbose but informative for others. I actually wanted to see how Mr. Kaushik defends his case. But I received reply from an other source. However it would be very much obliged if Mr. Kaushik would responds to it.. Thank you all for participation.
From India, Chennai
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf
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