Re: Difference Between Confirmed Employee & Permanent Employee

Dear Sir/Madam,

I wanted to know, is there any difference between a Confirmed Employee and a Permanent Employee, or are they the same?

Thank you.

Dear Ashvini,

A permanent employee is an employee who is on probation in the company. These employees are mostly not entitled to benefits such as paid leave, mediclaim, etc., in most companies. Neither are they bound to give notice to the company nor is the company bound to give notice before relieving the employee (although a few companies require a 15-day notice in probation).

Temporary employees are entitled to all benefits, and they also have to serve a notice period of 1, 2, or 3 months (differs from company to company) before leaving, with the same applying for the employer.

Regards,
Trusha

Dear Ashvini,

The terms Permanent Employee and Confirmed Employee are the same. They are awarded all the facilities and benefits.

On the other hand, temporary employees are those who are on probation. They may also be provided with some facilities, but not to the extent of confirmed employees.

Dear Trusha,

The term "permanent employee" has been confused with "temporary employee." Permanent employees are entitled to all benefits, whereas temporary employees are the ones who are in a probationary period.

Hi,

I would like to add a small note:

Temporary Employee: Employees who are in a probation period, as well as employees who are hired by the company for a short term of a specified period in order to meet an immediate deficiency of manpower on a temporary basis.

Statement 2 is correct because sometimes there may be a spike in workload or a deficiency of manpower. Under such circumstances, companies hire short-term employees for 1 month, 2 months, or 3 months to meet the deficiency or spike in workload. This is especially true for blue-collar employees.

Temporary employees may or may not be on the direct payroll of the employer.

Permanent Employees: Employees who have cleared the probation period and are entitled to facilities like CLs, EL, Mediclaims. For resignation, a notice period or buyback of the notice period is involved, and most importantly, the tenure of service can be up to the retirement age of employees unless exceptional situations arise during the service period. Here, the employee will always be on the direct payroll of the employer.

Confirmed Employee: This is a special case for permanent employees. Here, the employee may have cleared the probation period and become a permanent employee of the company (on direct payroll), whom we will call a confirmed employee. Again, employees on third-party payroll can also become confirmed employees.

For example, a company may hire employees from a third party with a criterion that the employees will work for the first party (employer) for a certain period of time. Once the employee meets the required competency or criteria, the first party will take the employee onto their payroll. This strategy is often used by companies to reduce the attrition rate and overall costs. Employees on third-party pay often receive lower salaries and fewer facilities than confirmed/permanent employees of the first party.

Regards,

Sovik B

Hi,

Sorry, I made a small error:

Confirmed Employee: It is a special case for permanent employees. Here, an employee may have completed the probation period and become a permanent employee of the company (direct payroll of the employer), whom we will call a confirmed employee. Additionally, employees on third-party payroll can also become confirmed employees.

Imagine a scenario where a company hires employees from a third party with the condition that these employees will work for the first party (employer) for a certain period of time. Once the employee meets this time requirement or fulfills the necessary competencies or other specified criteria, the first party will transition the employee onto their payroll. After this transition, these employees will become confirmed employees of the first party (i.e., the employer). This strategy is commonly used by companies to reduce attrition rates and overall costs. Employees on third-party payrolls often receive lower salaries and fewer facilities compared to confirmed/permanent employees of the first party.

Regards,

Sovik B

If we limit our attention to the focal point of the question, I think the answer will be very simple and clear. Confirmation is the process of declaring an employee's permanency to his/her post of employment after the successful completion of the period of probation. Therefore, a confirmed employee is also a permanent employee.

Hi Mr. Umakathan,

You are 100% correct. I agree with you, sir, on what you said: "Confirmation is the process of declaring an employee's permanency to his/her post of employment after the successful completion of the period of probation."

But I have one question, just for my personal interest. I would be highly obliged if you could clarify.

Say X (employer) hires employee Y, who is on the payroll of Z. This means that Y will perform tasks allocated to him/her by X, but he/she is receiving a salary from Z as X pays directly to Z. Z is a third-party vendor of X.

After a certain amount of time (let's say 6 months), X takes Y into their own payroll and provides a sum of money to Z. Consequently, Y becomes a confirmed/permanent employee of X. Throughout this process, Y learns the basic tasks he/she needs to perform under X, gains the required competencies, and his/her stability is also confirmed.

We are witnessing such scenarios especially in the ITES, IT, and Telecom sectors (especially in maintenance and all divisions).

My question to you is, can we call Y a probationary employee when he/she is on the payroll of Z and not X? Y could also become a permanent employee of Z. In case Y does not meet the parameters and terms of service under X, Z can place him/her in their own work or assign to another company, say A (another employer).

Would the same laws and rules that apply to probationary employees also be applicable to Y?

In the case of the USA, classification is straightforward, and they have established categories for such employment. However, in India, if a complaint is raised by Y, how would the Commissioner of Labor view the situation? Which party would face action, X or Z? Y might work on X's premises alongside X's regular employees, but he/she does not receive a salary directly from X. Y may have problems or severe compliance allegations against X rather than Z.

If you can provide clarification, it would greatly help me understand this dilemma. If necessary, please use legal sections/labor laws as you see fit so that I can grasp how such issues are dealt with legally. I have had this question in my mind for a long time, and I would be very grateful if you could clarify my doubts.

Regards,

Sovik B

Dear Sovik,

The example you have cited is nothing but "leasing out of human resources" which has been in vogue in our country too for a long time. Of course, the nomenclature of such employees differs based on the type of contract, the parties involved, and the subject matter of the contract. If they are engaged through a contractor, they are called "contract labor." If they are engaged for certain specific works or special projects on a direct contract for a fixed payment on an assignment basis, they are referred to as "off-roll employees." The legitimacy of this form of indirect labor, not to mention any applicable legal restrictions, largely depends on the business ethics of the employers. However, in business, propriety is often judged based on financial considerations. If employers comply with all the provisions of the C.L.R.A Act 1970 and the states enforce it to the letter and spirit, the use of indirect labor will be justified only in deserving cases.

In your example, X and Z are separate entities. As long as Y, the employee, is engaged through Z, the real employer is Z, even though Y works in X's establishment. Therefore, the subsequent absorption of Y by X as a regular employee upon acquiring the necessary job competencies does not retroactively convert the earlier period of indirect employment into a probationary period. The probationary period will start only from the date of Y's regular appointment. In the true sense of "probation," it is at X's discretion to waive it in the case of Y's regular appointment. In the opposite scenario, Z can reassign Y from X to work for A. The concept of "regular employment" differs from "permanent employment." That's why, in practice, the entire duration during which the contractor, Z, is unable to find suitable employment for Y based on his skills is termed as a "bench period," with some minimal allowance to support himself as per their contract, if such a clause exists.

If Y has any complaints about not being employed during the bench period due to the absence of a specific clause, the complaint should be directed against Z alone and not against X or both.

Please let me know if you need further clarification or assistance.

Best regards,
[Your Name]

Mr. Umakathan,

Thank you for your time and answer. So, if we sum it up, and if I have understood you correctly, then we have to consider legally as long as Y is Z's employee, X does not possess legal authority to transfer any kind of its liabilities onto Y's shoulders without Y's consent or Z's. This means Y is not bound to follow X's policies/practices if it is not included in the agreement/offer letter/appointment letter between Y and Z.

Q1) Therefore, if X is a financial corporation and Y performs any kind of forgery, then X can't charge Y directly, except by going through Z. Since Z is the third-party vendor of X, Z possesses the liability for X's financial success/security/losses, not Y directly (in terms of laws). If Y does not have the authority to take legal action against X (or both), the same holds true for X, I believe.

Provided that if X is not a registered institute/company in India, doesn't perform any kind of business in India, is free from the intervention of RBI/SEBI or any other legal body of India, with headquarters in some foreign nation, and only connected to India via a third-party vendor (MOU or Legal agreement is in between X and Z), and Z is registered in both India and that foreign nation of X.

Q2) How much legal authority does Z possess to charge Y in India on behalf of the complaint of X in a court of law?

Based on what you have said, we are considering Y's employment with X and Z as two separate recruitments, and legally, employment is based on the discretion and individual decision of X and Z separately (never simultaneously at the same time).

Kindly answer these last two questions, sir. And once again, thank you.

Regards,

Sovik B