Labour Laws Q/A

Relationship of Employer and Employee – Factors for Determination

Contract Labour (Regulation & Abolition) Act, 1970

Relationship of Employer and Employee – Factors for Determination

What are the main factors for determining relationship of employer and employee?

Whether a particular relationship being employer and employees engaged through the contractor is genuine or camouflage is essentially a question of fact to be determined on the basis of features of relationship hence to be adjudicated by the Industrial Tribunal and neither by the Administrative Tribunal nor by the High Court. In determining the relationship of employer and employee ‘control’ is one of the important tests but is not to be taken as sole test.1

The Karnataka High Court2 has given the tests to be applied for determining the existence of master and servant relationship are as to when it can be termed as a sham contract.

Who pays?

For whose benefit the workmen work?

Under whose supervision?

Whether disciplinary action can be taken?

If so, by whom?

Has the employer the right to reject the end product?

Even though the workers through the contractor have been working for many years but the Apex Court, in a catena of cases, has held that this would not be conclusive factor determining nature of relationship between the parties as held by Bombay High Court. It was further clarified that merely because a register is maintained by the principal employer for the purpose of attendance of workers of the contractor, that by itself cannot be a factor which would disclose the complete control by the company over these workmen hence no fault can be found with the Award of the Tribunal holding that the principal employer did not exercise any control or supervision.3

Well-recognised tests, for ascertaining as to whether the workman is employee of the principal employer or the contractor. Also ‘whether the principal employer (i) pays the salary instead of the contractor, (ii) controls and supervises the work of the employee, and (iii) regulates the employment of the employee’.4

Wages/salary payment, control and supervision are the main deciding tests if the workmen are of contractor’s employees or of principal employer’s employees. Hence, mere control and supervision of the contractor’s employees by the principal employer will not make them employees of the principal employer because when the contract is for supply of labour, necessarily the labour will work under the control and supervision of the principal employer.5 Mere non-registration under the Contract Labour (Regulation and Abolition) Act, 1970 by the principal employer and contractor would not create relationship of employer-employee between principal employer and contractor’s labourers.6 When the relationship of employer-employee is missing, the provisions of Contract Labour (Regulation and Abolition) Act, 1970 would not apply.7


1. Ram Singh v. Union Territory, Chandigarh, 2004 LLR 47 (SC): AIR 2004 SC 969: 2003 AIR SCW 6567.
2. Management of V.I.S.L. v. P.O., 1994 (69) FLR 536 (Kant HC).
3. Bharatiya Kamgar Sena v. Udhe India Ltd., 2008 LLR 344: 2008 (116) FLR 457: 2008 (I) LLJ 371 (Bom HC).
4. Subodh Kumar v. Presiding Officer, Labour Court-II, Meerut, 2012 LLR 1249: 2013 (136) FLR 16 (All HC).
5. Their Workmen, Bihar Colliery Kamgar Union v. Bharat Coking Coal Ltd., 2014 LLR 842 (Jhar HC).
6. M.M.T.C. Ltd. v. The Learned Fourth Industrial Tribunal, 2015 LLR 292 (Cal HC).
7. Bindeshwar Pathak v. State of Gujarat, 2015 LLR (SN) 1115: 2015 (146) FLR 545 (Guj HC).

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H.L Kumar

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