The Supreme Court of India ruled that the workers engaged by a contractor to work in the statutory canteen of a company’s factory would be the workers of the said company only for the purposes of the Factory Act, 1948 (“Act”), and not for other purposes.
“The workers engaged by a contractor to work in the statutory canteen of a factory would be the workers of the said factory, but only for the purposes of the Act, and not for other purposes, and further for the said workers, to be called the employees of the factory for all purposes, they would need to satisfy the test of employer-employee relationship”, a Large Bench of the Court said adding it must be shown that the employer exercises absolute and effective control over the said workers.
The Court said that “the Act does not govern the rights of employees with reference to recruitment, seniority, promotion, retirement benefits, etc. These are governed by other statutes, rules, contracts or policies.”
The Court further said that in this particular case the company merely has control of supervision over the working of the given statutory canteen and hence the workers hired by the contractor were not under the effective and absolute control of the company.