Dear All,
Can anybody guide on whether a principal employer with an employee (or employees) who has completed around 8 to 10 years continuously under various contractors is eligible to claim permanent employment with the principal employer?
Furthermore, if an employee has been working for such an extended period, does it not indicate that the nature of the work is not purely contractual? Instead, could it be argued that the business requirement necessitates a permanent position rather than a contractual one? If so, does this fall under any provisions of the law, or is there any relevant regulation?
Looking forward to your advice.
Regards,
Tushar Swar.
From India, Mumbai
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218Can anybody guide on whether a principal employer with an employee (or employees) who has completed around 8 to 10 years continuously under various contractors is eligible to claim permanent employment with the principal employer?
Furthermore, if an employee has been working for such an extended period, does it not indicate that the nature of the work is not purely contractual? Instead, could it be argued that the business requirement necessitates a permanent position rather than a contractual one? If so, does this fall under any provisions of the law, or is there any relevant regulation?
Looking forward to your advice.
Regards,
Tushar Swar.
From India, Mumbai
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If the contract is genuine, there is no risk as far as the principal employer is concerned because an employee who has been engaged or even employed without following the recruitment processes of applying for the job, attending a written test/interview, and undergoing induction as applicable to regular employees of the company cannot claim regularization as decided by various courts including the Supreme Court of India. However, if the contract has been a sham, then employees engaged through the contractor who has been working for the principal employer but carrying out the same work as the regular employees can claim regularization.
The CLRA Act has made it very clear that no employee shall be engaged through a contractor in any work of perennial nature that can be performed by a full-time permanent employee. Keeping the employees under different contractors for years is clear evidence of a sham contract. Therefore, considering prima facie facts, I believe that the employees can claim regularization.
Madhu.T.K
From India, Kannur
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The CLRA Act has made it very clear that no employee shall be engaged through a contractor in any work of perennial nature that can be performed by a full-time permanent employee. Keeping the employees under different contractors for years is clear evidence of a sham contract. Therefore, considering prima facie facts, I believe that the employees can claim regularization.
Madhu.T.K
From India, Kannur
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Dear Madhu
Can you pl throw some light on this?
In absence of Labour License if any person is engaged by the Contractor in the establishment of the principal employer where the contractual work is being carried on, the said employee may be regarded as an employee of the Principal Employer. In the event of any inspection by the concerned authority may endanger the state of principal employer, as the identity of the said employee would be challenged by the visiting Inspector and in absence of any valid license in possession of the Contractor, in spite of the presence of agreement between the Contractor and the Principal Employer, the authority may not agree to accept that person as an employee of the Contractor because as per the provisions of the CLAR Act & Rules, no principal employer without having Registration Certificate cannot engage any Contractor and no Contractor without obtaining the CL License from the Licensing Authority is permitted to engage contract labour in the establishment of the principal employer
Also in the event of Contractor, who do not qualifies for licensing his/her establishment owing to lesser number of manpower being engaged by him, still the open ended contract poses threats on the principal employer, as Contract Labour as discussed above can be engaged in nature of job which would not be of sufficient duration where an open ended contract means the duration of the job is indefinite, being the core activity of the principal employer where only the regular employees can be engaged. So the entire arrangement between the contractor and the principal employer shall be regarded as a “camouflage” under a contract or agreement which is sham and illegal.
From India, Chennai
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Can you pl throw some light on this?
In absence of Labour License if any person is engaged by the Contractor in the establishment of the principal employer where the contractual work is being carried on, the said employee may be regarded as an employee of the Principal Employer. In the event of any inspection by the concerned authority may endanger the state of principal employer, as the identity of the said employee would be challenged by the visiting Inspector and in absence of any valid license in possession of the Contractor, in spite of the presence of agreement between the Contractor and the Principal Employer, the authority may not agree to accept that person as an employee of the Contractor because as per the provisions of the CLAR Act & Rules, no principal employer without having Registration Certificate cannot engage any Contractor and no Contractor without obtaining the CL License from the Licensing Authority is permitted to engage contract labour in the establishment of the principal employer
Also in the event of Contractor, who do not qualifies for licensing his/her establishment owing to lesser number of manpower being engaged by him, still the open ended contract poses threats on the principal employer, as Contract Labour as discussed above can be engaged in nature of job which would not be of sufficient duration where an open ended contract means the duration of the job is indefinite, being the core activity of the principal employer where only the regular employees can be engaged. So the entire arrangement between the contractor and the principal employer shall be regarded as a “camouflage” under a contract or agreement which is sham and illegal.
From India, Chennai
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Absence of Registration and/or License under the CLRA Act alone will not make the contract sham. However, interference of the principal employer on service matters of the contractor's employees, such as negotiating the wages of contract labor, making direct salary payments to the contractor's workers, approving other benefits, leave, advances to workers, and taking disciplinary action against them whenever the principal employer finds any fault, would make the arrangement a camouflage. The Supreme Court in General Manager (OSD) Vs. Bharat Lal (2011(128) FLR 560 SC) supports the above view on sham contracts. Mere non-compliance with registration and/or licensing by the principal employer or contractor, as the case may be, will not qualify for regularization [Municipal Corporation of Greater Mumbai Vs. K V Shramik Sangh & others (2002(93) FLR 838 (SC)]. Non-registration and/or failure to obtain a license violate the relevant provisions of the CLRA Act, for which prosecution provisions will apply, but the workers cannot attain the status of permanent workers.
If the nature of work continues without interruption, but is not directly related to the core activities of the company, then it cannot be considered perennial. A similar stance was observed in a recent case, Bharat Coking Coal Ltd Vs. Their Workmen, Bihar Colliery Kamgar Union and another (2014 LLR 64), where the Jharkhand High Court ruled that working for 240 days in a year would not qualify for regularization, even in light of the fact that the principal employer and the contractor did not possess the required registration and license, respectively, under the CLRA Act.
Madhu.T.K
From India, Kannur
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If the nature of work continues without interruption, but is not directly related to the core activities of the company, then it cannot be considered perennial. A similar stance was observed in a recent case, Bharat Coking Coal Ltd Vs. Their Workmen, Bihar Colliery Kamgar Union and another (2014 LLR 64), where the Jharkhand High Court ruled that working for 240 days in a year would not qualify for regularization, even in light of the fact that the principal employer and the contractor did not possess the required registration and license, respectively, under the CLRA Act.
Madhu.T.K
From India, Kannur
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Dear Tushar,
I partially agree with the learned follower, Mr. Madhu, in his explanation given in the first part of his reply. Mr. Madhu, please correct me if I am wrong.
As far as I remember, there is one verdict given by the Special Bench of the Honorable Supreme Court of India in the matter of Reeta Devi in the recent past (I do not have full details right now) that merely being employed with any contractor for a long period and having completed 240 days of attendance in a calendar year will not make a contractor's employee eligible for regularization as an employee by the principal employer. Details will be provided if you so desire, shortly.
AK Jain
From India, New+Delhi
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I partially agree with the learned follower, Mr. Madhu, in his explanation given in the first part of his reply. Mr. Madhu, please correct me if I am wrong.
As far as I remember, there is one verdict given by the Special Bench of the Honorable Supreme Court of India in the matter of Reeta Devi in the recent past (I do not have full details right now) that merely being employed with any contractor for a long period and having completed 240 days of attendance in a calendar year will not make a contractor's employee eligible for regularization as an employee by the principal employer. Details will be provided if you so desire, shortly.
AK Jain
From India, New+Delhi
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That is what I have also said! Please read what I have written. Being employed with a principal employer for years will not give the employee the right of regularization, provided the contract is not a sham. However, at the same time, there is a risk if the contract is a sham.
Madhu.T.K
From India, Kannur
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Madhu.T.K
From India, Kannur
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Dear Sir,
How can the contract be declared a sham? Suppose we have an agreement for engaging workers in housekeeping, security, loading, and unloading. Now, if we are utilizing them in core activities instead of housekeeping and security, and no one knows where the contract workers are actually working, how can the contract be deemed illegitimate?
Regards,
Dinesh
From India, New Delhi
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How can the contract be declared a sham? Suppose we have an agreement for engaging workers in housekeeping, security, loading, and unloading. Now, if we are utilizing them in core activities instead of housekeeping and security, and no one knows where the contract workers are actually working, how can the contract be deemed illegitimate?
Regards,
Dinesh
From India, New Delhi
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A sham contract is one which is a windscreen arrangement, not a genuine one. If you are utilizing the housekeeping or security persons in core activities, the arrangement is not with a genuine view. How can you say that nobody comes to know that they are being utilized for perennial activities? At least those who are engaged should know that they are being utilized for perennial work. Can you guarantee that they will not raise a dispute in the future?
Madhu.T.K
From India, Kannur
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Madhu.T.K
From India, Kannur
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Madhu Sir,
Thank you very much for your valuable feedback and for helping me understand the sham contract. However, as I do not have much experience in labor disputes, I have a doubt. I agree that they can raise the dispute as they know that they are engaged in core activities. But how can anyone prove that they have been utilized in core activities? What evidence is needed in this case to prove that they are being utilized in core activities? How will the conciliation officer believe that the worker is correct? I am asking this from a worker's point of view, not an employer's point of view.
Thanks & Regards,
Dinesh
From India, New Delhi
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Thank you very much for your valuable feedback and for helping me understand the sham contract. However, as I do not have much experience in labor disputes, I have a doubt. I agree that they can raise the dispute as they know that they are engaged in core activities. But how can anyone prove that they have been utilized in core activities? What evidence is needed in this case to prove that they are being utilized in core activities? How will the conciliation officer believe that the worker is correct? I am asking this from a worker's point of view, not an employer's point of view.
Thanks & Regards,
Dinesh
From India, New Delhi
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It depends on how other employees cooperate with them. If the issue is taken up by a union, the employer may find it difficult to prove otherwise because the union can produce witnesses in support of their views. Moreover, your production logs should have details about such engagement, I presume.
Madhu.T.K
From India, Kannur
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Madhu.T.K
From India, Kannur
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