A contractual employee is defined under Section 2(b) of The Contract Labor (Regulation and Abolition) Act, 1970 which states that a contractual employee is employed by a principal employer in connection with the work of an establishment through a contractor. Earlier, a contractual employee could be terminated merely in accordance to the terms set out in the employment contract. However, over the decade, there has been a notable shift in the legal position of the employee and their relationship with the employer.

The Bombay High Court has held that contract workers are not employees of the principal employer. Suryawanshi, J., Contract workers are hired through contractors, and because their service contracts are governed by these agreements, they must direct any complaints to the contractor rather than the primary employer.

Fact Matrix-There were 806 permanent workers in the original plaintiff-defendant company. The petitioner had outsourced some of his ancillary functions to various contractors and for this reason he had registered himself as a principal employer under section 7 of the Contract Labor Act ( Regulation and Repeal), 1970.

The petitioner’s contract was authorized under section 13 of the 1970 Act. There was no registered trade union in the local area where the petitioner was incorporated.

Government Labor Officer announced the election program to conduct elections under Section 28 of the MR Act, to elect 5 employee representatives. 301 contract workers applied to have their names included in the voter list and grant them the right to vote. In respect of the above complaint, the management informed the contract workers that the management could not take a decision in this regard and they could approach the Government Labor Officer or the Labor Commissioner.

 Several contract workers submitted their representations to the Labor Commissioner asking for their names to be included, but the commissioner declined citing Sunflag Iron & Steel Co.’s decision. Ltd. vs. State of Maharashtra, 2008 III CLR 983 Contract workers are not directly employed by the principal employer and, therefore, their names cannot be included in the electoral roll. The respondents approached the Industrial Court and claimed that the Labor Commissioner had engaged in unfair labor practice within the meaning of Section 9 o Schedule IV of the Trade Union Recognition and Prevention of Practices Act Maharashtra Labor Injustice, 1971. The petitioner opposed the petition asserting that there was no employer-employee relationship between the complainant and the petitioner. The labor court rejected this claim but found preliminarily that the claim could be accepted and that the court had jurisdiction.

The plaintiff contended that the Industrial Court had no jurisdiction over defendant 2 and therefore the complaint was not maintainable and could be dismissed in short order.

Analysis, law and decision Established legal status

Contract workers are not employees of the main employer. In the  Supreme Court judgment, Vividh Kamgar Sabha v. Kalyani Steel Ltd., (2001) 2 SCC 381, it was held that “the provisions of MRTU and PULP Act can  be enforced only by persons admitted to be workmen. If there is a dispute as to whether an Employee is an employee of the Company, such dispute must first be  esolved by bringing the dispute in the appropriate forum. Only when the status of the worker has been established in an appropriate forum can a complaint  be filed under the provisions of the MRTU and PULP Act. » In Central Labor Union (Red Flag) Bombay v. Ahemdabad Mfg. v. Calico Printing  Ltd., 1995 Supp (1) SCC 175, the Supreme Court held that “in case the workman is not  accepted by the company as its employee, a complaint cannot be filed under the MRTU and PULP laws”. The Supreme Court held that for a claim to be maintainable under the MRTU and PULP Act, the relationship between the employer and the employee is recognized as a pre-requisite. The provisions of the MRTP and PULP laws can only be applied when the worker’s status has been established before the competent authority. In the present situation, the contract officer is an employee of the contractor and not the petitioner. Therefore, they have no right to sue the petitioner alleging unfair labor practices.

Therefore, the complaint filed by the respondents/contract officers under the MRTU and PULP Act is not maintainable. Under the MIR Act, jurisdiction is vested in the Labor Court and the Labor Court has the power to decide disputes raised. For enforcement of rights under the MIR Act, a forum is provided. The Bench held that to enforce the powers available under the MIR Act, a complaint cannot be filed under the MRTU and PULP Acts. Contract employees are hired through subcontractors, whose terms of service are governed by the contract between them. The order to appoint contract workers is not given by the main employer but by the contractor. They work with the main employer through a contractor, only for the term of the contract. When the contract period ends, their contractor can sign a contract with another facility and assign them to work there. Also in view of this, they cannot be considered permanent employees of the main employer and, therefore, they cannot claim the same voting rights as permanent employees. Because contract workers are governed by contracts between contractors, service conditions, salaries, etc. they are similarly regulated, so in case of any complaints, they must contact the contractor and not the main employer.

 Misread and misunderstand

 The Labor Court ignored the established legal position that an unfair labour practice claim is admissible only if there is a recognized employer-employee relationship between the parties. beside. Contract employees, who are employees of the contractor and not the principal employer, cannot file complaints under the MRTU and PULP Act. Therefore, the labor court’s decision is unsustainable. While allowing the petition, the court concluded by holding that the complaint under the MRTU and PULP Act by the contract employees for exercise of their rights under the MIR Act is not maintainable and the Labor Court has no jurisdiction to entertain that.
Over the decade, there has been a notable shift in the legal position of the employee and their relationship with the employer, however, there exists a need for a generous system of protection for contractual employees. By ensuring that principles of natural justice are followed while terminating contractual employees, the judiciary is attempting to bridge the gap that exists between contractual law and the interests of the contractual employee.


Advocate Muskan Chauhan


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