Employers Must Ensure Fair Pay, if Not Regularised Jobs

Published: 29th August 2015 10:00 PM  |   Last Updated: 27th August 2015 11:26 PM   |  A+A-

The Indian employment law system offers a variety of employee categories to choose from in order to suit business requirements. Its stringent labour laws force companies to opt more for contractual, temporary and ad hoc categories or outsourcing its operations than engaging regular employees.

Employees are primarily of two categories—workman and non-workman. The workmen are those who perform clerical, operational, technical, mechanical, skilled and unskilled work. Such work come within the ambit of the Industrial Disputes Act, 1947, and these functions enjoy vast protection, especially when it comes to the question of their termination. Since it is the nature of duties that defines whether an employee is a workman or not, instead of his salary or designation, many highly paid employees fall in the ‘workman’ bracket. Pilots, IT, call centre and BPO employees, software engineers, technicians, accountants, executives, namesake managers, et al are in this category unless they perform administrative, supervisory or managerial functions.

Strict laws make the separation of regular employees within the workman category tougher than a divorce. Due to this, companies find recruitment of fixed employees to be the safest option. Employees for fixed terms are somewhat similar to the ‘at-will’ employments of the US. They are hired for a fixed tenure that can be terminated on completion of the period as mentioned in the contract or even earlier, if the contract provides for it. Compliance with the provision of retrenchment, which includes permission from the government, is not required.

Earlier, this category of employment was chosen more for project-based jobs or for some temporary increase in work. But now, fixed-term employees are engaged even in jobs that are perennial in nature. At times, companies engage the same employees on contract basis for years together under the garb of giving artificial breaks. Such contracts, if challenged, may be ultimately held as camouflage by the court. However, the duration of work has to be substantially long.

Another category of employees are the temporary, ad hoc, daily wagers. These employees do not have rights, pay scales or perks like that of regular employees. Nor do they have any right to regular post. However, in case they complete 240 days of continuous service in a year, retrenchment has to be complied with for terminating their services. The same includes giving 15 days’ wages for every completed year of service, notice/notice pay, permission/approval from the government, etc. The principle of ‘last come first go’ also has to be followed, i.e. the senior-most employee is to be retrenched last. Temporary employees often approach courts seeking regularisation, i.e. claiming regular posts.

The most popular practice resorted to by companies nowadays is outsourcing. In this arrangement, companies enter into contracts with third party vendors for either outsourcing the job or seeking deployment of manpower. A huge amount of litigation is pending in courts with respect to this kind of arrangement. After working for a couple of years, employees seek regularisation, or in case of termination seek reinstatement, etc., from the principal employer. The basic contention of employees in these cases is that the contract is a sham and only a paper to destroy their rights.

All categories of employees are entitled to statutory benefits such as minimum wages, provident fund, ESI, gratuity and bonus. The recent trend of judgments looking into economic conditions, burden of salaries and the inefficiency in systems caused by backdoor entries is towards declining claims of regularisation.

Though imposing regular employments may not be practically feasible, fixing better pay scales for lower paid employees, increasing minimum wages, improvement of working conditions, etc. may be considered by the appropriate authorities.

Birbal is an advocate specialising in labour, civil, litigation and corporate laws

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