SnapshotRecap

Standing Orders Act

Contract of Service

Contract for Service

Distinction between the two

Contract Labour Act

Conclusion

Snapshot

Contract Special Contracts

Vicarious Liability

Labour LawStanding Orders Act

Contract of Service

Contract for Service

Distinction between the two

Contract Labour Act

Conclusion

Standing Orders Act

Contract for Service

Distinction between the two

Contract Labour Act

Conclusion

RecapEmployment

Terms & Conditions of Employment

Termination of the Employment

Contract

Service under government in its sovereign functions i.e.,

legislative, executive, and judicial

Governed by Constitutional Provisions and hence fall outside the

purview of labour law

Exception made to this general rule to bring employees of

‘departmental undertakings’ (Government employees) within

the purview of labour law

Contract of Employment ≡ Contract of Service ≡ Employment Contract ≡ Employment Relationship

the employe

e

the contract of employme

nt

the employe

r

Public Employme

nt

PrivateEmploym

ent

Ingredients of Employment

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Firstly, employee should accept the letter of appointment or Offer

letter issued by employer

Offer letter contains Terms and Conditions

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Payment of Wages Act 1936 Shops & Establishments Acts of Various states Maternity Benefit Act 1961 Payment of Gratuity Act 1972 Employees Provident Fund & Miscellaneous Provisions Act 1952 Employees State Insurance Act 1948 Workmen’s Compensation Act 1923

Legal Framework

Factories Act 1948Provisions: Working conditions, health, safety, welfare

Priority :

1

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Legal Framework Priority :

1 Legal Framework is the most important source of Terms

& Conditions This overrides all other sources In case of difficulty in interpretation, the benefit of doubt

is passed on to the employees

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Awards of Courts & Tribunals

Awards are final and binding on all the concerned parties and cannot be questioned

Overrides all other sources except the legal framework

Priority :

2

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Settlements signed under the Industrial

Disputes Act 1947 An Act to make provision and settlement of Industrial Disputes

Divides employees into workman and non-workman Subordinates in priority to the preceding two sources and

overrides all the succeeding sources

Priority :

3

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Industrial Employment Standing

Orders Act 1946 Objective of the act is to maintain uniformity in terms and conditions of employment in respect of workmen belonging to the same category . The rules made in the regard to these conditions is called Standing Orders

Priority :

4

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Express Terms and Conditions

Issued by the employer and accepted by the employee Could be seen in documents

Letter of appointment During the course of employment

Letters of Annual Increment Letters of Promotion Letters of transfer etc.,

Priority :

5

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Customs, Usages, and Practices

Become part of employment contract unless they are in conflict with any preceding sources

No need to be specifically expressed at the time of employment

Examples Employers providing two cups of tea every day to the

employees Distribution of sweet boxes on festivals Giving festival advances on certain occasions

Priority :

6

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Implied Terms & Conditions

Some conditions need not be expressed explicitly For ex, employee has to perform his duties

Diligently Honestly Personally Faithfully

Priority :

7

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

Sources of Terms and Conditions of

Employment

Rules, Regulations, Policies, Orders,

and Instructions issued/framed by company may relate to leave, medical benefits, LTC, discipline and

workplace conduct etc., become enforceable if they’re reasonable, lawful and not

contradictory to above 7 sources of terms exception will be given even if they’re contradicting

above sources if they are liberal in favour of the employee

Priority :

8

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

by the Employer

by the Employee

Superannuation

(Retirement)

By way of punishment

Death of an Employee

Retrenchment and Closure

Termination of the Employment

Contract

Terms & Conditions of Employment

Employment

The contractor does the work in his own promises either by himself personally or by employing other employees

The contract does the work in the premises of the principal personally and singly

The contractor does the work in the premises of the principal by employing some other employees. This option has often been misused by the employers and to check these practices the Parliament had enacted the Contract Labour (Regulation and Abolition) Act 1970

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s Organization

Respondeat Superior

Personal ContractRemuneration

Disciplinary Action

Machinery & Tools of Trade

As per Justice Subba Rao’s observations

There is a well understood distinction between a contractor and a workman and between contract for service and contract of service…A ‘contractor’ is a person who in the pursuit of an independent business, undertakes to do specific jobs of works for other persons, without submitting himself to their control in respect to the details of the work. Therefore, there is a clear-cut distinction between a contractor and a workman. The identifying mark of the latter is that he should be under the control and supervision of the employer in respect of the details of the work.

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s OrganizationRespondeat Superior

Personal Contract

Remuneration

Disciplinary Action

Machinery & Tools of Trade

Exclusive Employment

Employee works, exclusively, for one employer

within the specified period of the day

She (he) can get into a full time employment with

one employer and a part time employment with

another for period of day fixed by each employer

A contractor can work for more than one client at a

time

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s OrganizationRespondeat Superior

Personal Contract

Remuneration

Disciplinary Action

Machinery & Tools of Trade

Right of ControlEmployee (Contract of

Service)Contractor(Contract for

Service)

A. Acts under direct supervision and control of the supervisor and bound to conform to all the reasonable and lawful orders given to him in the course of employment

A. Produces a specified result and may adopt his own means and methods. A mere right to issue instructions as to what work should be done no necessarily constitute a relationship of employer and employee

B. Power is vested with an employer to interfere with the work of an employee. It is the right or precisely existence of the right which distinguishes a contract of service and contract for service.

B. Such power may or may not exist in the case of a contractor engaged by the same employer

C. High degree of control is exercised by the employer

C. In the absence of degree of control required for employer-employee relationship, the relationship is principal-contractor

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s OrganizationRespondeat Superior

Personal Contract

Remuneration

Disciplinary Action

Machinery & Tools of Trade

Part of the Employer’s Organization

Employee, the part and parcel of the employer’s

organization

Contractor, always outsider to the organization

(even when performing job within the premises of

the principal) and a businessman in his own right,

often having own organization and employees

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s OrganizationRespondeat Superior

Personal Contract

Remuneration

Disciplinary Action

Machinery & Tools of Trade

Respondeat Superior Doctrine of Respondeat Superior is applicable for

employees but not for contractors due to two important

characteristics of employment contractA. Employer’s right to control the manner of the work

B. Employee’s requirement to be part and parcel of the

employer’s organization

The doctrine is based on vicarious liability and considers

an employer to be liable to the third parties for the

consequences of the acts which are done by an

employee within the scope of employment

The principal does not have any such vicarious liability

for the acts done by the contractor

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s OrganizationRespondeat Superior

Personal Contract

Remuneration

Disciplinary Action

Machinery & Tools of Trade

Personal Contract Contract of Service is a contract of personal service Until expressly permitted by the employer, the employee has to

personally perform the work entrusted to him by the employer Unless expressly prohibited by the principal, a contractor can get

the work done through other workers or sub-contractors Contract of Service automatically gets terminated with the death

of the employee or upon expiry of a specified period of service,

whichever is earlier Consequent to the death of an employee, neither the employer

can claim any damages from the legal heirs of the employee nor

can the heirs of the deceased employee can claim employment

or continuation of the same work If contractor dies, the principal has certain rights against the

deceased contractor’s estate

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s OrganizationRespondeat Superior

Personal Contract

Remuneration

Disciplinary Action

Machinery & Tools of Trade

Remuneration Normally, the basic remuneration of an employee is

time-based-daily, weekly, monthly, or yearly. There

may be additional performance-based incentives

Remuneration of a contractor is task based. The

principal remunerates the contractor on the basis of

the quantum of the work done

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s OrganizationRespondeat Superior

Personal Contract

Remuneration

Disciplinary Action

Machinery & Tools of Trade

Disciplinary Action

An employee is subjected to disciplinary action by the employer in case of violation of the rules and regulations applicable to the employer’s organization

A principal has no power or authority to initiate any disciplinary action against an contractor

Tests to distinguish Contract of Service from Contract for Service

Exclusive Employment

Right of Control

Part of the Employer’s OrganizationRespondeat Superior

Personal Contract

Remuneration

Disciplinary Action

Machinery & Tools of Trade

Machinery & Tools of Trade

Normally, an employer provides the machinery and the required tools of trade to an employee for carrying on work

Normally, a contractor uses his own machines and tools

Matters to be provided in the Standing Orders

Duration & Modification of Standing Orders

Posting of Standing Orders

Certification of Standing

Orders

Date of Operation of

Standing Orders

Applicability

The act requires employers in industrial establishments to formally define the conditions of employment under them by having certified standing orders.

Matters to be provided in the Standing Orders

Duration & Modification of Standing Orders

Posting of Standing Orders

Certification of Standing

Orders

Date of Operation of

Standing Orders

Applicability

to every ‘industrial establishment’ wherein greater than 100 workers

are currently employed (or) were employed on any day of the preceding 12 months.

“Industrial establishment” meansi. an industrial establishment as defined in the Payment of Wages Act,

1936ii. a factory as defined in the Factories Act, 1948iii.a railway as defined in the Indian Railway Act 1890iv.the establishment of a person who, for the purpose of fulfilling a

contract with the owner of any industrial establishment, employs workmen

Matters to be provided in the Standing Orders

Duration & Modification of Standing Orders

Posting of Standing Orders

Certification of

Standing Orders

Date of Operation of

Standing Orders

Applicability

The Government shall appoint an officer to be called as the Certifying Officer

The employer will submit the draft standing orders proposed by him for adoption in him/her industrial establishment to the Certifying Officer

The draft should contain all matters prescribed by the Act and be in conformity with the model standing orders set out in the Act

On receipt of the draft standing orders, the Certifying Officer shall forward a copy thereof to the trade union of workers or their representatives

After giving opportunity of being heard to employers and workmen’s representatives, the Certifying Officer shall certify the draft standing orders after making necessary modifications which he deems necessary

In case of any grievance, either of the two parties can prefer and appeal against the orders of the Certifying Officer to the appellate authority

Matters to be provided in the Standing Orders

Duration & Modification of Standing Orders

Posting of Standing Orders

Date of Operation of

Standing Orders

Applicability

Standing Orders shall come into operation

In case no appeal is preferred

At the expiry of thirty days from the date on which

authenticated copies were sent

In case an appeal is preferred

On the expiry of seven days from the date on which

copies of the order of the appellate authority were sent

Certification of Standing

Orders

Matters to be provided in the Standing Orders

Duration & Modification of Standing Orders

Posting of Standing Orders

Date of Operation of

Standing Orders

Applicability

The Text of the standing orders shall be prominently

posted by the employer in English and in the

language understood by the majority of the workers

on special boards at or near the entrance and in all

departments where the workers are employed.

Certification of Standing

Orders

Matters to be provided in the Standing Orders

Duration & Modification of Standing Orders

Posting of Standing Orders

Date of Operation of

Standing Orders

Applicability

An employer or worker of a trade union or other representative body

of the workmen may apply to the Certifying Officer to have the

standing orders modified

However, certified standing orders cannot be modified

o except on agreement between the employer and the workmen

(and)

o until the expiry of six months from the date on which the standing

orders or the last modifications thereof came into operation

Certification of Standing

Orders

Matters to be provided in the

Standing Orders

Duration & Modification of Standing Orders

Posting of Standing Orders

Date of Operation of

Standing Orders

Applicability

1. Classification of workmen, e.g., whether permanent, temporary, apprentices, probationers

2. Manner of intimating periods and hours of work, holidays, pay-days and wage rates

3. Shift working

4. Attendance and late coming

5. Conditions of and procedures for applying leave and holiday

6. Requirement to enter premises by certain gates, an liability to search

7. Closing and reporting of sections of the industrial establishment, temporary stoppages of work and the rights and liabilities of the employer and workmen rising there from

8. Termination of employment, and the notice thereof to be given by employer and workmen

9. Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct

10. Means of redress for workmen against unfair treatment of wrongful exactions by the employer or his agents or servants

Certification of Standing

Orders

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

To regulate the employment of contract labor

To provide for its abolition

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

Contract laboro When a workman is hired for the purpose of worko Contractor not obliged to inform the Principal Employer

Contractoro One who, in addition to the supply of goods, undertakes

to produce a result, through contract laboro Also, one who supplies labor to any establishment and

includes a sub-contractor Principal Employer

o Owner or manager or any person responsible for supervision & control of the establishment

Establishmento Any office/department of the government or local

authority, or any place where industry, trade, business, manufacture or occupation is carried on

(1/2)

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

(2/2)

Workmano Any person employed in or in connection with the work of any

establishment to do any skilled, unskilled, semiskilled or

unskilled, manual, supervisory, or clerical work for hire or

reward

o Terms of such employment can be either expressed or implied

Does not include any such persons:-

• Who is employed in a managerial or administrative capacity

• Who, being employed in a supervisory capacity, draws wages

in excess of five hundred rupees per mensem

• Who is an out-worker

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

The act applies to:-

o Every establishment in which twenty or more workmen, are

employed or were employed on any day of the preceding

12(twelve) months as contract labor

o Every contractor who employs or who employed on any day of the

preceding twelve months, twenty or more workmen

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

The Act empowers the appropriate government to order the prohibition of employment of contract labor in certain jobs/areas through the issue of notification after consultation with the Contract Labor Advisory Boards constituted under the Act

Contributing factors leading to the enforcement of prohibition of contract labor:-o Whether the process, operation or other work is incidental to, or

necessary for the industry, trade business, manufacture or occupation that is carried on in the establishment

o Whether it is of perennial natureo Whether it is done ordinarily through regular workmen in that

establishment or an establishment similar theretoo Whether it is sufficient to employ considerable number of whole-

time workmen

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

Registration and License

Health and welfare

provisions

Responsibility for

payment of wages

Penalties

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

The contractor should obtain a valid licence from a Licencing

Officer appointed by the Government.

The principal employer of every establishment intending to get

any work done through contract labour should obtain a valid

certificate of registration from a Registering Officer appointed

by the Government.

Health and welfare

provisions

Responsibility for

payment of wages

PenaltiesRegistraRegistration and tion and LicenseLicense

RegistraRegistration and tion and LicenseLicense

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

If Government prescribes the contractor should make provision for

basic facilities such as canteen, rest room, drinking water, first aid

etc. for his contract labour.

If any of those amenities are not provided by the contractor, they

shall be provided by the principal employer.

All expenses incurred in doing so by the principal employer may be

recovered by the principal employer from the contractor.

Registration and License

Health and Health and welfare welfare

provisionsprovisions

Responsibility for

payment of wages

PenaltiesHealth and Health and

welfare welfare provisionsprovisions

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

A contractor shall be responsible for payment of wages to each worker

employed by him as contract labour within the prescribed period.

The principal employer shall nominate a representative duly authorized by

him to be present at the time of disbursement of wages by the contractor.

The representative will be there to certify the amounts paid as wages.

In case the contractor fails to make payment of wages within the prescribed

period or makes short payment, then the principal employer shall be liable

to make payment of wages in full or the unpaid balance due.

Registration and License

ResponsibiliResponsibility for ty for

payment of payment of wageswages

PenaltiesHealth and

welfare provisions

ResponsibiliResponsibility for ty for

payment of payment of wageswages

Regulation of Contract

Labour

Purpose of the

Act

Prohibition of Contract

Labour

Definitions

Applicability

Persons who contravene any provision of this Act or of any rules made there

under shall be punishable with imprisonment or with fine or with both.

If the person committing an offence under this Act is a company, the company

as well as every person in charge of, and responsible to, the company for the

conduct of its business at the time of the commission of the offence shall be

deemed to be guilty of the commence.

Where an offence under this Act has been committed by a company and if it is

proved that it has been committed with the consent or due to any negligence

from the part of the director, manager, managing agent or such other officer

of the company shall be shall be deemed to be guilty of that offence.

Registration and License

PenaltiesPenaltiesHealth and

welfare provisions

Responsibility for

payment of wages

PenaltiesPenalties

Employment Employment ContractsContracts

Contract of Contract of ServiceService

Contract for Contract for ServiceService

DifferenDifferencesces

Standing Orders Standing Orders ActAct

Contract Contract Labour ActLabour Act