Whether a workman who performs work other than the type of work specified in the contract license will be a direct employee of the principal employer?

Whether a workman who performs work other than the type of work specified in the contract license will be a direct employee of the principal employer?

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Whether a workman who performs work other than the type of work specified in the contract license will be considered a direct employee of the principal employer?

The contract employees will automatically become the employees of the principal employer if the following conditions are fulfilled:

1. If the wages are paid directly to the contract employees by the principal employer.
2. If the principal employer has the right to take penal and disciplinary action against the contract employees.
3. If the contract employee was working under the direct control and supervision of the principal employer to fulfill the obligation of the contract.
4. If the contract employees were recruited through the principal employer.
5. If there is an obligation on the new contractor as per the contract agreement to appoint the same contract employee continuously for the work with the principal employer.

Dear Kumar,

Mr. Shameel's post is correct. A contract worker cannot be deemed to be a permanent or direct employee on any random ground. The only instances where he will be deemed to be a direct employee are the conditions listed above.

Further, in such cases also, he does not automatically become a direct worker; it will happen if it is ordered by the labor court on a complaint by the worker or the labor officer.

However, in any complaint or case filed asking for regularization, the lawyers will try to show various supporting evidence to demonstrate that the contract is a sham, intended only to prevent the workers from becoming permanent and from receiving fair wages and benefits. The fact that the company made (or allowed) the worker to do work other than what was in the contract is a good indication that the agreement was not intended to be followed, and that the agreement/contract is a sham, meant as a cover for illegal or anti-labor activity.

The courts are likely to accept that contention.

No contract employees will automatically become the employee of the principal employer. The employee has to raise the matter with the appropriate authority to declare the contractor sham and camouflage for the following conditions:

1. The contractor does not hold a valid license under CL(R&A) Act.
2. The principal employer employed contract labour without having registration under CL(R&A) Act.
3. If the workers are performing the same work as a permanent employee on a continuous nature of work and are deprived of payment and facilities extended to the permanent employee of the principal employer.
4. Engagement of contract labour on work declared prohibition by the appropriate government under section 10(1) of the CLRA Act.
5. Wages paid directly and maintenance of records and register of the contract employees by the principal employer.

6. Where the Principal Employer involves in penal and disciplinary action against the contract employees.

7. If the contract employee was working under the direct control and supervision of the Principal Employer to fulfill the obligation of the contract.

8. If the contract employees are recruited through the Principal Employer.

However, the following do not:
1. Non-compliance with section 7 and 12 of the CLRA act will not lead to a sham contract. Violation of these provisions will only lead to penal consequences.
2. 'Control' is one of the important tests but is not to be taken as the sole test in determining the relationship of employer and employee.
3. 'Integration' test is one of the relevant tests. It helps in determining whether the person was fully integrated into the employer's concern or is independent of it.
4. The other factors which may be relevant are who has the power to select and dismiss, to pay remuneration, deduct insurance contributions, organize the work, supply tools and materials, and what are the 'mutual obligations' between them.
5. Mere supervision of the contract labor work by the officers of the principal employer cannot be the sole determinative factor to prove a contract to be a sham.
6. If any obligation is on the new contractor as per the contract agreement to appoint the same contract employee continuously for the work with the Principal Employer.

Perfectly explained, Mr. Prabhat!

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Dear HR Leaders,

Thank you for your erudite and knowledgeable replies, which are useful for my understanding.

Dear Team,

Whether a workman who performs work other than the type of work specified in the contract license will be a direct employee of the principal employer?

The Hon'ble Supreme Court judgment in the case of State of Karnataka vs Umadevi is the landmark judgment to stop the backdoor entry of contract laborers into the establishment of the Principal Employer.