Page 103 - DMGT516_LABOUR_LEGISLATIONS

Labour Legislations

Notes

Case Study Steel Authority of India (SAIL)

he Supreme Court has repeatedly asked government undertakings to be model
employers in the past decades, especially before the liberalisation wave. But one
Tarea where public sector undertakings (PSUs) fi nd it diffi cult to be such role models
is in the employment of contract labour. Private companies usually get away with their
outsourcing policy by various stratagems. But PSUs cannot find such escape routes as they

are presumed to be the ‘state’ in the eyes of the Constitution and the courts expect better
labour practices from public functionaries.
In the past few years, the Supreme Court had decided scores of appeals brought either by
the employees or the establishments regarding the status of the contract workers and the
demand for their absorption. Though the constitution bench decision in the Steel Authority
of India (SAIL) case in 2001 was deemed to have settled the question, the last word has not
been said, as the judgement itself is one of the most-misunderstood ones, and has led to a
lot of appeals.
The confusion relating to workers in the context of the provisions of the Contract Labour
(Regulation and Abolition) Act, the Industrial Disputes Act and the SAIL judgement was
evident in two cases dealt with by the Supreme Court in recent days. In the fi rst case, Sarva
Shramik Sangh vs Indian Oil, the union representing the workers of the canteen in Mumbai
succeeded in its appeal. They had alleged that the contract between the corporation and
the canteen contractor was a sham and their demand for absorption should be referred to
an industrial tribunal.
The Bombay High Court had asked the central government to consider their request for
reference. But it rejected the request on the ground that “the workers were not appointed
by the management of the corporation but were engaged by the contractor holding a valid
and legal contract.” This was challenged by the workers in the high court, but their petition
was dismissed. Therefore, they appealed to the Supreme Court. It asked the government
to reconsider its decision.
The crucial question in this case was whether the workers were contract labourers or
not. This question should have been decided by the tribunal. However, the government
answered this question on its own without referring it to the tribunal for a decision on
merits. This was unlawful. If there is a dispute which should be referred to the tribunal
under Section 10(1) of the Industrial Disputes Act and the government declines to do so,
the court can direct the government to make the reference.
The Supreme Court listed four situations when the court can order the government to
make a reference:
1. When the government cites irrelevant and extraneous grounds,
2. When it prejudges the merits of the dispute,
3. The refusal is mala fi de, and
4. When the government ignores the failure-report of the conciliation offi cer.

In spite of the much-misunderstood judgement in the SAIL case, the contract workers have
at least three remedies, and the Indian Oil judgement cites them. It says that when the
case of the workers is that the contract was bogus, they could demand that they should
be declared as direct employees of the principal employer. Secondly, if that contention
Contd...

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