Aravind.K., (Consultancy) 28 July 2010

Engagement of personnel on Contract in Companies

Hi,

We hear that most Companies in India engage services of personnel for over a year in the capacity of "Consultants" on Direct Contract with the Company or through third party with whom the Company enters into Contract for Resource augmentation.

Notably, such personnel functions under direct supervision of an official of the Company and performs tasks similar to a regular employee of the Company.

Please advise with relevant case laws, if the risk by engagement of such "Consultants" is high and is there a remedy to Companies if such "Consultants" stake a claim to regularise their employment with the Company directly. Does Contract Labour (Regulation & Abolition) Act, provide for regularising such "Consultants" with direct employment.

Thanks and Regards,

Yours in fraternity,

Aravind

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2 Replies

Akashdeep Sharma (Consultant) 18 August 2010

To assume a relationship of Employer - Employee, the cardinal principle is the command and the obedience, Who is exercising superintendence over the work of the consultant.

If your company is directly involved in identifying/ hiring the consultant, negotiating the salary, allocation day-to day work, have overall supervision, with the third party involved only for the disbursment part, the consultant can at any stage counter that the entire arraangement is sham and in fact, he has always been employee of the Company.

The remedy is available to him to challange this arrangement directly before Labour Court. I suggest you to re-view the entire system so as to avoid any future hassles.

AKASHDEEP SHARMA

gautam (employee) 21 December 2010

A contract employees of central government organsation can be paid salary in the form of pay band pay, grade pay & dearness allowance as per rates applicable for central government employees in place of consolodated salary