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sangram (service)     23 January 2009

Finding case law

As per contract labour act,1972 if employee completes 240 days of his employment he will be entitled for permanency. but if he is working under subcontract in any establishment and completes his 240 days, then he will be considered permanent employee of contractor, is it correct assumption? can some one has any case law on it? Regards, Sangram


 4 Replies


No where does it say that completion of 240 days would make workman as a permanent employee.  The latest case law regarding contract labour system has been delivered by the Supreme Court in "Steel Authority of India" case.  It was delivered in 2001 by constitutional bench.  The decision in this case is applicable at present.  As per the decision, the High Court and S.C. cannot regularise (means making permanent) the services of the contract labour.  If there is contract labour system, the workers have to approach the contract labour board for its recommendations.  If it recommends, then the appropriate Government will abolish the contract labour system in that particular establishment.  Then also, the SC says, the contract labour working there cannot become permanent.  Then, they have to approach the Industrial Tribunal and it would decide whether these people would be made permanent or not?  

Next point is that if the contract labour system is sham contract labour system, the contract labour have to approach the Industrial Tribunal, then the I.T. will decide whethere the contract labour system is sham or not and if it is sham, it will give direction to the management to make them permanent.

You go through the judgement and several things would be clarified.

I do not accept the ratio laid down in the above judgment.



sangram (service)     24 January 2009

 Dear Mr.Prabhakar,

Thanks for the prompt reply.

if we appointed a contractor in our establishment who has valid contract labour license. the worker starts working in our establishment under his contract. if one of his labour completes his 240 days in our establishment. Then who will be held liable to make him permenant. (i.e. our establishment or contractor) 

(Because as per Industrial Employment (Standing Orders) Act, 1946 the workmen deemed to be permenant if he complets 240 day of continuous service in establishment)




As per the above said judgment, if there is no prohibition of contract labour system in the category in which the workman is working in your establishment and the cotract is not sham (false) one, then even after completion of 240 days work, the workman cannot be the employee of your establishment and he will remain the employee of the contractor.  Whatever the demands he has, those have to be addressed to the contractor (except in case of non-payment of minimum wages, non-payment of wages in time, non-payment of over-time wages, the principal employer will also be jointly held responsible)(The payment of PF subscription, ESI and bonus would be the responsibility of the contractor and the principal employer does not have any joint responsibility.)

Industrial Employment Standing Orders Act is applicable only to industrial establishments where more than 100 workmen are engaged.  For all practical purposes, as the workman would be treated as contractor's employee, the number of workmen working in the principal employer's establishment (if they are more than 100), is immaterial.  In such case, IESO Act will be applicable to the permanent employees of the principal employer and not contractual workers working in the same establishment through contractor.

The above opinion is in accordance with the prevailing law and personally I do not agree with the logic above.



Vikas Kr. Sinha (Labour Lawyer Ranchi Jharkhand)     26 January 2009

Mr. Prabhakar is absolutely right. Good work.

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