CHENNAI: In a significant ruling that could impact the regularisation of contract workers in public sector undertakings, the Madras High Court has held that contract labourers are entitled to permanent status if they have completed 480 days of service within two years.
Justice D Bharatha Chakravarthy delivered the judgment while dismissing a batch of appeals filed by the Chairman of Tamil Nadu Power Distribution Corporation Limited (TNPDCL), formerly Tangedco. The petitions sought to quash the orders issued in favour of the workers by the Assistant Commissioner of Labour (Enforcement) on 28 April 2023.
Advocate G Anand Gopalan, representing the petitioners, argued that the labourers had not rendered continuous service of 480 days, as they were transferred from the management’s control to contractors. He contended that the period worked under the contractor could not be counted and that there was no employer-employee relationship between the management and the workers.
Further, he submitted that the workers were not covered under the 12 (3) settlement under the Industrial Disputes Act, 1947, and therefore, could not be considered for regularisation.
Countering the arguments, advocate NGR Prasad, appearing for the workers, contended that they were originally appointed directly by the management before being transitioned to contract labourers. Since they had completed 480 days directly under the management, Section 3 of the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981, deemed them permanent employees.
"Once they are considered permanent employees, the subsequent engagement as contract labourers does not alter their status, as the management is not entitled to change it," he argued.
Justice Bharatha Chakravarthy observed that the workers had produced documents proving they had completed 480 days of service within two years. He noted that the management had failed to present any register or evidence to dispute this claim.
“In this context, I conclude that the workmen have successfully proven that they have completed 480 days of service within a period of two calendar months and, as such, are entitled to be granted permanent status upon completing 480 days, as awarded by the ACL (Enforcement),” the judge stated in the order.
Citing a Supreme Court ruling, he held that transferring workmen to a contractor and denying an employer-employee relationship could not be used as grounds to overturn the ACL (Enforcement) award. He also ruled that the provisions of the 1981 Act could not be interpreted in a way that excludes public sector undertakings with statutory rules.
Additionally, he ruled that a 12 (3) settlement could not nullify the rights of workers who were not included in such an agreement from approaching the adjudicating authority.
Upholding the ACL (Enforcement) awards, the judge directed the authorities to absorb the workers on a permanent basis, counting their service from the date they completed 480 days. The absorption would be with continuity of service, though the workers would not be entitled to back wages.
The management was ordered to complete the process within 12 weeks. In the case of any deceased workers, they would be considered to have died while in regular service, and their legal heirs would be entitled to due death or terminal benefits. Retirement benefits were to be provided to workers who retired during the relevant period.