Labour Laws Q/A

Canteen in a Factory Through Contractor

What is the Status and Absorption of Canteen Workers in a Factory

As regards to controversy with regard to workers engaged in a canteen through the contractor where the employer employing 250 or more workers is under statutory obligation under section 46 of the Factories Act, 1948, the Supreme Court has clarified that the contract workmen of the statutory canteens are the workmen of the principal employer only for the purpose of Factories Act, even assuming that the Respondent No. 1, e.g., Artificial Limbs Mfg. Corporation is the specified meaning of section 46.1 Such contract workers are not entitled for absorption.2 This judgment has endorsed the earlier judgment of the larger bench.3

The Supreme Court has clarified that even though an employer is under statutory obligation under section 46 of the Factories Act to run a canteen in a factory when there are 250 or more employees since the judgment of the Constitution Bench in the case of Steel Authority of India Ltd. v. National Union Water Front Workers, 2001 LLR 961 (SC): AIR 2001 SC 3527: 2001 AIR SCW 3574 wherein it has been held that when a free hand has been given to a canteen contractor to engage employees to work in the canteen without any stipulation that he shall retain and engage compulsorily the employees who were already working in the canteen under the previous contractor, such contractor will be the employer of such employees and not the principal employer.4 However, when workers of contractor in the statutory canteen, controlled and supervised by the Company, will be employees of the principal employer. Also when canteen contractor was only a glorified supervisor, workers will be employees of Company.5 The Delhi High Court has held that the canteen workers through contractor in a factory required to provide a canteen, will be workers of principal employer only for the Factories Act.6


References:
1. Steel Authority of India Ltd. v. National Union Water Front Workers, 2001 LLR 961 (SC): AIR 2001 SC 3527: 2001 AIR SCW 3574.
2. Hari Shankar Sharma v. Artificial Limbs Manufacturing Corporation, 2002 LLR 88 (SC): 2001 AIR SCW 4888: AIR 2002 SC 226.
3. Indian Petrochemicals Corporation Limited v. Shramik Sena, (1999) 6 SCC 542: 1999 LLR 961 (SC).
4. Haldia Refinery Canteen Employees’ Union v. Indian Oil Corporation, 2005 LLR 529: AIR 2005 SC 2412: (2004) 1 LLN 971: 2005 (105) FLR 1051 (SC).
5. Kerala Electrical and A.E. Company Ltd. v. Leemns D’Cruze, 2008 LLR 1080 (Ker HC).
6. Badarpur Power Engineers & Workers Union v. The General Manager, Badarpur, 2009 LLR 584 (Del HC).

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