‘Contract staff with 480 days work can be made permanent’: Madras High Court
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 job 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 the labourers had not rendered continuous service of 480 days, as they were transferred from the management’s control to the control of the contractors and that there was no employer-employee relationship between the management and the workers.
He also said the workers were not under the settlement reached as per Section 12 (3) of the Industrial Disputes Act, 1947, and therefore, could not be considered for regularisation.
Advocate NGR Prasad, appearing for the workers, contended 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.
Justice Bharatha Chakravarthy observed the documents proved they had completed 480 days of service.
“I conclude that the workmen have successfully proven that they have completed 480 days of service within two calendar years and, as such, are entitled to be granted permanent status, as awarded by the ACL (Enforcement),” the judge said. 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 PSUs. The judge 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 with continuity of service but without back wages, counting their service from the date they completed 480 days.
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, the court added.