Case Name: Independent Contractor V. Workman PDF

+-----------------------+-----------------------+-----------------------+ | **[[Case | **[[Facts]{.underline | **[[Ratio]{.underline | | Name]]{.s | }]{.smallcaps}** | }]{.smallcaps}** | | mallcaps}** | | | +===============...

+-----------------------+-----------------------+-----------------------+ | **[[Case | **[[Facts]{.underline | **[[Ratio]{.underline | | Name]]{.s | }]{.smallcaps}** | }]{.smallcaps}** | | mallcaps}** | | | +=======================+=======================+=======================+ | Independent contracto | | | | r v. workman | | | | ===================== | | | | ============ | | | +-----------------------+-----------------------+-----------------------+ | Dharangadhara Chemica | The appellants, | to qualify as the | | l Works Ltd. v. state | lessees of the Salt | workman : | | of Saurashtra | Works in | | | --------------------- | Dharangdhara, | a\. an employment of | | --------------------- | manufacture salt from | his by the employer | | -------------- | rainwater-impregnated | | | | soil for use in their | b\. There should be | | Issue:- whether | Chemical Works and | a relationship | | agarias would be | for sale. Supervised | between the | | qualified as workman | by a Salt | employer and | | under 2 (s) of the | Superintendent, | employee- right of | | act or not? | agarias (salt | control in respect | | | workers) are allotted | of how the work is | | Conclusion :- | plots (pattas) and | to be done- (it has | | | paid an initial sum | been criticised as | | | to start production. | in cassidy v. | | | Agarias, often | ministry - There | | | working with their | are many contracts | | | families, prepare the | of service where | | | land, manage brine | the master cannot | | | concentration, and | control the manner | | | crystallise salt, | in which the work | | | which is then tested | is to be done as in | | | and transported. They | the case of a | | | have no fixed work | captain of a ship. | | | hours and can hire | Therefore it has | | | extra labour at their | been stated that | | | expense. In 1950, | right to control | | | disputes over | must necessarily | | | employment conditions | vary from business | | | led to a referral to | to business. | | | the Industrial | | | | Tribunal, with | - The control and | | | appellants arguing | supervision says | | | that agarias were | that master would | | | independent | not only tell the | | | contractors, not | work, but also | | | workmen. The | determine the | | | conditions they were | manner in which | | | working aren\'t | the work is to be | | | humane enough. - they | done | | | were seasonal | | | | workers- given the | - we have to see | | | cost of carrying out | whether an | | | the particular task, | ordinary person | | | once delivered the | thinks about the | | | work, paid - they | work -- whether | | | were a non-standard | it is a contract | | | work relationship - | of service of | | | they might not be | not. | | | doing the work by | | | | themselves. | -To determine the | | | | relationship - it is | | | ○ Supervisory checked | the question of | | | the Density of brine, | facts:- \"The line | | | final quality, debt | between an | | | of well and quality | independent | | | of walls, quality of | contractor and a | | | crystals | servant is often a | | | | very fine one; it is | | | | a mixed question of | | | | fact and law, and the | | | | judge has to find and | | | | select the facts | | | | which govern the true | | | | relation between the | | | | parties as to the | | | | control of the work. | | | | | | | | -if a person is a | | | | worker and not a | | | | contractor, \"it | | | | makes no difference | | | | that his work is | | | | piece work- so piece | | | | worker argument | | | | rejected | | | | | | | | \- whether IC or | | | | workman - What | | | | determines whether a | | | | person is a workman | | | | or an independent | | | | contractor(in IC they | | | | agree to eneage other | | | | people to do the | | | | work) is whether he | | | | has agreed to work | | | | personally or not. | | | | (in the present case, | | | | it has been bound | | | | that agarias bind | | | | themselves to work as | | | | per the advice and | | | | instructions of the | | | | officers)- so IC | | | | argument rejected | | | | | | | | \- integration test - | | | | under a contract of | | | | service, a person's | | | | work is done as an | | | | integral part of the | | | | business (there is an | | | | aspect of permanency | | | | and regularity). In | | | | contrast, under a | | | | contract for service, | | | | his work is not | | | | integrated into it | | | | but is only an | | | | accessory to the | | | | business (temporary | | | | basis). | | | | | | | | Henderson case (The | | | | Court alters this | | | | test also to some | | | | extent because | | | | various legislations | | | | limits the powers of | | | | the master.):- there | | | | are four indicia of a | | | | contract of service: | | | | | | | | i\. The master's | | | | power of selection | | | | of his servant. | | | | | | | | ii\. The payment of | | | | wages or other | | | | remuneration. | | | | | | | | iii\. The master's | | | | right to control | | | | the method of doing | | | | work, and | | | | | | | | iv\. The master's | | | | right of suspension | | | | or dismissal. | +-----------------------+-----------------------+-----------------------+ | Shivnandan Sharma v. | Three parties were | **[Treasurers]{.under | | The Punjab National B | involved -- the Bank, | line}**:- | | ank | the treasurers and | They are under the | | --------------------- | an independent | complete control and | | --------------------- | cashier given by the | direction of the Bank | | --- | treasurers. In the | through its manager | | | Una Branch, the | or other | | The issue before the | cashier was working. | functionaries. The | | court is whether the | The branch closed, | Treasurers have to | | cashier is employee | and the cashier was | take their orders | | of the bank, and | taken off | from day to day as | | hence entitled to | the payroll. He filed | regards the cash | | benefits. Ways to | a case asking to be | balance or other | | prove this: | restated as he is | cognate matters | | | an employee of the | relating to the safe | | The contract | Bank. The Tribunal | custody of cash, | | between the treasurer | presumed employment | valuable documents, | | and cashier is a sham | relation. In appeal, | etc. belonging to the | | contract, and the | the appellate | Bank or its | | actual relationship | Tribunal held that he | constituents. | | is between the bank | was an employee of | | | and cashier only. | the treasurer and not | **[Test of control | | | the Bank. | and | | The treasurer is | | direction]{.underline | | only there to guide. | The bank has several | } | | | branches. To run the | :- The primary test | | The relationship | cash department, they | to be applied to | | between treasurer and | have involved a | distinguish between | | bank is that of | treasurer. The | employee and IC is | | employee and | treasurers have to | the test of control | | employers. Treasurer | appoint their | and | | is the employee of | nominees to the cash | supervision/direction | | bank and being an | department, as | - | | employee, it is | decided between the | This test is taken | | authorized to | bank and Treasures | from the law of | | employee cashiers. So | through a contract. | torts-** | | employer is the bank | | | | only. | The dispute is | - **a servant is a | | | arising out of the | person subject to | | | contract, and the | the command of | | | relationship is to be | his master as to | | | determined by the | the manner in | | | contract. Looking at | which he shall do | | | the contract -- it | his work. An IC | | | provided for the | is one who is his | | | duties of the | own master. He is | | | treasurers and the | engaged to do | | | cash department. They | certain work, but | | | had to serve the bank | to exercise his | | | at the head offices. | own discretion as | | | Some clauses | to the mode and | | | regarding | time of doing it. | | | remuneration to be | He is bound by | | | paid by the Bank to | the contract but | | | the treasures, and | not by his | | | then treasurers would | employer's | | | pay the nominees in | orders.** | | | the cash department. | | | | The treasurers shall | - **the Court | | | be responsible for | observed that the | | | the safety of all | treasurers were | | | money, etc. received | told how things | | | by them. Cashiers | were to be done, | | | were also entitled to | and were not | | | provident fund, | given freedom to | | | allowances, etc. from | do things their | | | the bank and not from | own way. As | | | the treasurers. | opposed to this, | | | | in case of an IC, | | | Also, pool of names | the employer does | | | was to be suggested | not have the | | | by treasurers but the | power to tell how | | | Bank had the final | the work is to be | | | say as to whom to | done.** | | | appoint as cashier. | | | | | - the Court | | | | considers the | | | | fact that the | | | | bank had full | | | | control over | | | | appointment and | | | | dismissal of | | | | cashiers through | | | | the treasurers. | | | | It also draws an | | | | analogy between a | | | | government | | | | department. | | | | Employees of | | | | government | | | | department are | | | | still employees | | | | of government, | | | | despite them | | | | being under | | | | employment of a | | | | department, and | | | | not the Ministry | | | | itself. | | | | | | | | **[The Court | | | | discusses dual | | | | contro]** | | | | l | | | | - Looking at the | | | | facts, Court observed | | | | that both the | | | | treasurers and | | | | nominees are servants | | | | of bank as both take | | | | orders from the bank. | | | | | | | | - The court finds | | | | that bank only | | | | had delegated | | | | their | | | | responsibilty - | | | | there is a flow | | | | of authority- if | | | | a master | | | | authorizes his | | | | servants to hire | | | | more servants | | | | (nominees), the | | | | nominees will be | | | | servants of bank | | | | only, and not the | | | | treasurers. This | | | | is because the | | | | master has given | | | | the authority to | | | | the treasurers to | | | | do so. | +-----------------------+-----------------------+-----------------------+ | Shri Chintaman Rao v. | Bidi factory engaged | **[test of control | | State of MP, 1958 SC | persons known as | and | | --------------------- | sattedars. The | supervision:-]{.under | | --------------------- | factory owners would | line}** | | | provide sattedars | also applied to | | | with tobacco and bidi | factories act. | | | leaves. They may roll | | | | the beedis | But applying the test | | | themselves, or engage | -- as not required to | | | others or outsource | work in factory, | | | further. Thus, it was | could take materials | | | their responsibility | home, he could get | | | how they wanted to | anyone to work on it. | | | get the beedis | Therefore, sattedars | | | rolled. Once rolled, | were ICs and not | | | they would bring to | workmen. The fact | | | factory. The selected | that they were | | | or approved bidis are | required to bring the | | | separately packed in | rolled bidis to | | | bundles of 10 and 25 | factories and the | | | and taken to tandul | management could | | | and left there. If | reject if not | | | rejected, the | properly rolled would | | | sattedars would be | be there in any | | | asked to roll again | contract, and cannot | | | and bring back. The | be considered as | | | management paid the | contract of | | | sattedars the cost of | employment. | | | manufacture of bidis | Similarly, coolies | | | after deducting the | were also not workmen | | | cost of raw materials | of the factory as | | | supplied to them. | they were engaged by | | | | the sattedars who | | | The sattedars were | were ICs. | | | not required to work | | | | in factories. They | Thus, the aspect of | | | could take them home | what determines | | | and give them to | supervision and | | | anyone to be rolled. | control becomes judge | | | One day, there was | specific. | | | inspection in | | | | factory. There were | [How is it different | | | coolies who were | from birdhichand | | | engaged by the | case]- In | | | sattedars. The | this case, the | | | question that arose | Sattedars were not | | | is whether sattedars | bound to work in the | | | are workers under | factory nor were they | | | factories act. | bound to prepare the | | | | biris themselves but | | | | could get them | | | | prepared by others. | | | | The Sattedars also | | | | employed some coolies | | | | to work for them and | | | | payment to the | | | | coolies was made by | | | | the Sattedars and not | | | | by the factory. The | | | | Sattedars in their | | | | turn collected the | | | | biris prepared by the | | | | coolies and took them | | | | to the factory where | | | | they were sorted and | | | | checked by the | | | | workers of the | | | | factory and such of | | | | them as were rejected | | | | were taken back by | | | | the Sattedars to be | | | | re-made. The payment | | | | by the factory was to | | | | the Sattedars and not | | | | to the coolies. | +-----------------------+-----------------------+-----------------------+ | Birdhichand Sharma v. | Bidi factory in | The Court said nature | | First Civil Judge Na | Nagpur. Workers | of control varies | | gpur, 1960 SC | applied for leave for | from industry to | | --------------------- | 15 days. The | industry. [Since bidi | | --------------------- | appellant did not pay | rolling is a simple | | ------------- | wages for those days. | task, supervision | | | The workers applied | would not be required | | Conclusion:- the | to the Payment of | at all times and all | | workers were held to | Wages Authority | stages of the task. | | be 'workers' within | claiming that they | Supervision is only | | the meaning of | were entitled to 15 | required at the end | | Factories Act and | days leave in the | stage of quality | | therefore entitled to | year under section 79 | check] | | wages for the leave | and 80 of Factories | | | period. | Act. While the | Also, it is not the | | | appellant said that | manner in which | | | the workers were not | supervision is | | | workers within the | exercised that is | | | meaning of Factories | important, rather it | | | Act. | is the right to | | | | supervise if one | | | The conditions of | wants is important. | | | work were -- work at | Since the employer | | | the factory and are | retains that right at | | | not at liberty to | all times, it | | | work at their homes. | signifies control. It | | | Also, they were | does not matter | | | required to work for | whether he chooses to | | | certain hours. They | exercise that right | | | could go away for | or not. | | | some time in between, | | | | but their attendance | | | | was noted at every | | | | time. If absent for 8 | | | | days continuously, | | | | the name would be | | | | removed from | | | | register. Owner had | | | | the right to reject | | | | the bidis which were | | | | not found suitable, | | | | then bidis had to be | | | | re-rolled | | +-----------------------+-----------------------+-----------------------+ | D.C. Dewan Mohideen S | They are bidi | the tribunal noted | | ahib and Sons v. The | workers. A factory is | that this is just a | | Industrial Tribunal, | in business of | sham contract entered | | Madras, 1964 SC | selling bidis. They | into. Beyond this, 2 | | --------------------- | have ICs who take | more facts are | | --------------------- | leaves and tobacco | pointed out: | | --------------------- | from factory, they | | | --------------- | take to their own | i\. If bidis were | | | factories, and there | not rolled, raw | | The 9 number is | they have workmen who | materials had to be | | important as the | take it home, cut it, | returned to the | | moment threshold of | bring it to | factory owners, and | | 10 is triggered, most | contractors factory | the contractors | | of the industrial | where they fill it | were forbidden from | | legislations would | with tobacco, and | selling to any one | | become applicable, | then IC takes it to | else. This shows | | and attention of | the original factory. | that there was no | | various authorities | No attendance | sale of raw | | would be directed to | register, no fixed | materials followed | | you. A lot of | working hours, and no | by resale of | | benefits, amenities, | need to work | finished products. | | etc. will have to be | everyday. Contractors | | | provided to workers | are required to work | ii\. The contractors | | then. Thus, 9 is | on piece rate basis | were indigent, and | | there to avoid | -- they are paid | did not have the | | triggering those | after deducting the | capacity to open a | | requirements. | raw materials cost. | factory by | | | There is also a | themselves. In all | | Prices are fixed | contract between the | respects, they were | | throughout the year - | proprietor and the | under the control | | if true sale then the | contractors | of the appellants | | prices would | (intermediary): | (Economic Reality | | fluctuate but this is | | Test). This again | | not happening. | i\. The proprietor | shows that contract | | | should supply the | was a camouflage. | | Two types of contract | tobacco and bidi | | | - a. direct | leaves. | Thus, in reality, the | | relationship- | | factories were merely | | employer and employee | ii\. Intermediary | branches for | | b. genuine/ indirect | should engage | providing the bidis, | | relationship - | premises of his own | and to engage workmen | | contractor, employee | and obtain license. | without triggering | | and sub contractor - | | the labour law | | find out whether is | iii\. Intermediary | legislations | | it genuinely there or | should meet all | | | is there to defeat | incidental charges | **[Supreme | | the purpose of the | for rolling | Court:]** | | act - test- who | including cost of | | | exercises the control | thread and | - The SC also | | | remuneration paid | agreed with the | | | to bidi rollers. | view of the | | | | tribunal and | | | iv\. At no time, | observed that the | | | more than 9 bidi | so-called ICs | | | rollers should work | were merely | | | in the premises of | agents or branch | | | the intermediary. | managers of the | | | | appellants | | | v\. For every unit | (Similar to the | | | of 1000 bidis | Shivnandan Sharma | | | rolled and | case). | | | delivered by the | | | | intermediary to the | - so-called | | | proprietor, the | contractor having | | | latter should pay | no right to | | | the stipulated | insist upon the | | | amount, after | supply of raw | | | deducting the cost | materials to him. | | | of the tobacco and | | | | the bidi leaves | - The so-called | | | supplied by the | independent | | | proprietor. | contractor is | | | | even bound not to | | | vi\. Intermediary | employ more than | | | should not enter | nine persons in | | | into similar | his so-called | | | engagement with any | factory | | | other business.\` | | | | | - The sale of raw | | | vii\. Price of raw | materials to the | | | materials and price | so-called | | | to be paid for | independent | | | every unit of 1000 | contractor and | | | bidis rolled and | resale by him of | | | delivered were to | the manufactured | | | be fixed at the | bidis is also a | | | discretion of the | mere camouflage, | | | proprietor | the nature of | | | | which is apparent | | | | from the fact | | | | that the | | | | so-called | | | | contractor never | | | | paid for the | | | | materials- only | | | | amounts due for | | | | the so-called | | | | sale of raw | | | | materials is | | | | deducted from the | | | | so-called price | | | | fixed for the | | | | bidis. | | | | | | | | - is paid certain | | | | amounts for the | | | | wages of the | | | | workers employed | | | | and for his own | | | | trouble | | | | | | | | - [We can therefore | | | | see no difficulty | | | | in holding that | | | | the so-called | | | | contractor is | | | | merely an | | | | employee or an | | | | agent of the | | | | appellants | | | | ] | | | | | | | | - The workers | | | | engaged by the | | | | so-called | | | | contractors are | | | | also workmen of | | | | the appellant as | | | | control is | | | | exercised by the | | | | agents over the | | | | bidi workers. - | | | | work of rolling | | | | the bidis can | | | | only be done in | | | | the factory of | | | | the agent | | | | | | | | - Supervision:- | | | | there is absence | | | | of full terms of | | | | the agreement, | | | | and in such a | | | | case, the Court | | | | observed that it | | | | cannot be said | | | | that there was no | | | | supervision at | | | | all- Whenever | | | | there was any | | | | dispute or | | | | question | | | | regarding wages, | | | | the appellants | | | | made the | | | | decision. This | | | | negates the | | | | appellants | | | | argument that | | | | there was no | | | | privity between | | | | the appellants | | | | and workers. | | | | | | | | - Thus, | | | | intermediaries | | | | were merely | | | | branch managers | | | | appointed by the | | | | management and | | | | the relationship | | | | of | | | | employer-employee | | | | subsisted between | | | | the appellants | | | | and the bidi | | | | rollers. | +-----------------------+-----------------------+-----------------------+ | Shankar Balaji Waje v | The fact scenario is | **[Majority]{.underli | |. State of Maharashtr | similar to | ne}**- | | a, 1962 SC | Birdhichand with a | that he was not a | | --------------------- | slight distinction - | worker -- as workers | | --------------------- | the worker was free | could come and go as | | ---------- | to go to the factory | they wanted, they | | | at any time during | could take leave of | | Also, dissent is | working hours and | 10 days. Also, no | | important -- | leave the factory at | minimum number of | | **[economic | any time he liked; he | bidis had to be | | reality]* | could also be absent | rolled. Thus, | | * | from work any day he | applying the control | | is that person is | liked and 10 days | and supervision test, | | economically | without even | no control could be | | dependant on the | informing the | exercised. | | employer for work. | appellant. | Additionally, how the | | Even if the worker | | work Is to be done is | | does not come to work | Shankar is the | missing in the | | for a few days, he is | appellant and the | present case - its | | still economically | owner of the Bidi | not just the work | | dependent on the | manufacturing | that has to be done | | employer. | factory. A worker, | but the incidence | | | Pandurang, was | around it - | | eventually it does | working for him. An | | | not matter that u | inspector went to | **[Dissent (J. | | have multiple | visit the factory. He | Subbarao): ]{.underli | | employer what matters | found that the worker | ne}**He | | is are u under | took leave for 4 days | said that since the | | control and | but was not paid. | appellant had the | | supervision of that | Shankar claimed that | power to reject the | | person - just because | he was not entitled | bid, it did not | | u have two jobs that | to paid leave as he | conform to a certain | | does not take u out | was not a worker. | standard, | | of that ambit of the | | and**[ ]* | | act - the fact that I | Sir agreed to justice | *the | | work for 8-12 and 9-5 | subba rao to some | element of control | | at two diff place s- | extent - take | can be seen. Even | | does at 8-12/9-5 I am | permission to take | though the workers | | under the control and | something out of | were not required to | | supervision of | factory after the | work throughout the | | respective employer | permission - this | working | | | shows that there is | hours, practically, | | | some degree of | it was not possible | | | control and | for them to roll | | | supervision - the | bidis outside the | | | court says that is | factory. Also, they | | | something bcz of | had to roll bidis for | | | certain laws an | a considerable amount | | | regulation but | of time because their | | | contract have | wages depended on the | | | majority of things | number of bidis | | | with respect to diff | rolled by them. | | | legis for eg minimum | | | | wages- but u have to | - But at the same | | | go beyond it- the | time, as per | | | fact with respect to | Birdichand- | | | rejection of goods | the nature of | | | proves this point | control varies | | | | from industry to | | | Control and | industry. what is | | | supervision test is | important is that | | | breaking now | the employers | | | | retain the right | | | | to exercise | | | | control. | | | | | | | | - At the same time, | | | | the economic | | | | reality is faced | | | | by the workers -- | | | | they will have to | | | | roll bidis if | | | | they have to earn | | | | a livelihood. | | | | Although the | | | | economic reality | | | | is not per se | | | | looked at while | | | | determining the | | | | control aspect, | | | | it plays a | | | | crucial role in | | | | some cases in | | | | determining | | | | whether an | | | | employer-employee | | | | relationship | | | | exists. | +-----------------------+-----------------------+-----------------------+ | Silver Jubilee Tailor | It is a tailoring | [Points in favour of | | ing House & Ors. v. C | house. Tailors are | relationship of | | hief Inspector of Sho | working in the | employment:]{.underli | | ps and Establishments | premises of the | ne} | | & Ors., 1973 SC | proprietors and | | | --------------------- | tailoring machines | Control and | | --------------------- | also belong to | supervision test -- | | --------------------- | proprietors. Wages | it was present as | | --------------------- | depend on skill and | they could reject any | | ---------------- | kind of work, and are | work. As value of | | | not uniform. The work | tailoring house | | Exclusivity test | can be rejected if it | depends on the | | | is not up to the | standard of work, so | | Conclusion:- | standards. There is | work not meeting | | employer-employee | provision of leave. | quality standards | | relationship was | Tailors are required | could be rejected. | | established and | to work from their | | | appeal was rejected. | workplace, and if | As work is | | Ultimately, the court | they want to work at | stitching business, | | did rely on control | home, prior | which is skill based, | | and supervision test | permission is | no requirement is | | to form its decision. | required. | there to direct the | | However, we need to | | manner in which work | | look at the facts of | Issue:- whether they | is done. | | each case to | are employees of the | | | determine the test | proprietor. | [Points against | | applicable. | | relationship of | | | Diif between ESI and | employment]{.underlin | | Part and parcel, | this case - These | e}: | | economic reality, | employees are not | | | organisational test, | direct employees- | They have no | | integrality tes | present case - | obligation to inform | | | Contract of | the employer if the | | | employment coming by | tailors are going to | | | way of statute - in | be absent from work. | | | that case | While this is a | | | Organisation test | common requirement to | | | become useless - | inform the employer | | | because the wording | before taking leave. | | | of statute has | | | | allowed to be | Contract of work | | | employee and control | was not exclusive -- | | | and supervision | tailors could also | | | become relevant - | work for any other | | | Working under the | person while working | | | supervision of | for silver jubilee. | | | employee- royal | However, how the test | | | talkies- in the | of exclusivity plays | | | context of indutrial | out is questionable | | | dispute act - ESI (LM | as a person can have | | | case read )- u have | multiple employers. | | | to look at control | | | | | [Court said that we | | | In Dharangdhara case | have noticed a shift | | | -how the montreal | in Dharangadhara that | | | test is applied - | control and | | | Leave control and | supervision is not | | | supervision - I t is | the end all | | | already established - | test.] | | | tool required there - | | | | is simple - so | - [Cassidy v. | | | doesn't matter who is | Ministry of | | | brings - it is matter | Health]{.underlin | | | for consideration | e}:- | | | when there are | control test | | | technical tools ○ ○ | cannot be applied | | | labor law aman Page 9 | in all cases, in | | | tool required there - | some cases it | | | is simple - so | would be | | | doesn't matter who is | unrealistic. | | | brings - it is matter | | | | for consideration | - [Montreal v. | | | when there are | Montreal | | | technical tools | Locomotive | | | required - in a large | Works:]{.underlin | | | factory setup - | e} | | | pilots are not | in complex | | | bringings tool itself | situation, | | | - but in case of uber | control and | | | driver - who provides | supervision test | | | the cars is really | could not be | | | important -- | applied. We have | | | | to apply a mix of | | | \- Profit - it is | tests involving | | | applied here - for | -- control, | | | workers what maters | ownership of the | | | is piece rate what | tools, chance of | | | they are getting and | profit (it means | | | not the profits | that if there are | | | | such chances, | | | \- Organisational | person would not | | | test - clearly | be an employee, | | | performing the part | as if he is an | | | and parcel task of | employee, he will | | | the factory | get fixed wages- | | | | While in case of | | | These test are not by | IC, the profits | | | themselves new- | will accrue to | | | taking form of what | the IC), risk of | | | was already there | loss and the | | | Look these person can | control in itself | | | have multiple | is not | | | employer - even if u | conclusive. | | | look at the statute | | | | (principally employed | - Bank Voor | | | or fully employed)- u | Handel v. | | | can be principally | Slatford:- | | | employed- because | whether the | | | they are doing | person is part | | | integral task of org | and parcel of the | | |. - sir principaly | organization. It | | | employed means u are | means that it | | | specifically employed | needs to be seen | | | to that particular | whether the | | | person (but don't | services being | | | write this ) | provided are | | | | important and | | | | integral and | | | | essential to the | | | | business, or | | | | supplementary or | | | | incidental to the | | | | business. Thus, | | | | organization | | | | test. | | | | Additionally, in | | | | it For an IC, it | | | | is expected that | | | | they would | | | | themselves be | | | | bringing the | | | | tools, which an | | | | employee expects | | | | the employer to | | | | provide the | | | | tools. | | | | | | | | - US v. Silk - | | | | economic | | | | reality - it is | | | | broader than | | | | economic | | | | dependence - | | | | consider all the | | | | economic factor | | | | in addition to | | | | | | | | - economic | | | | dependence - | | | | looks at the | | | | relationship | | | | whether there is | | | | regularity in it | | | | and not just one | | | | incidence. Skill | | | | required | | | | | | | | - in claiming | | | | independent | | | | operations. - | | | | Economic | | | | dependency - u | | | | dependent on 2 or | | | | 3 people for | | | | wages - Economic | | | | reality far wider | | | | than it ○ Court | | | | says - to lear | | | | particular | | | | skill - u will | | | | have work under | | | | master - now the | | | | university is | | | | coming into | | | | place - so for | | | | job u | | | | | | | | - need to posses | | | | som skill - u | | | | cant go there and | | | | say I am here | | | | learn from like | | | | in masters - | | | | apprenticeship | | | | relationship and | | | | | | | | - hence control and | | | | supervision | | | | breaks down | | | | | | | | - After all these | | | | cases, the Court | | | | says that given | | | | how the industry | | | | has progressed, | | | | it is not correct | | | | to have a single | | | | test. The | | | | standard control | | | | test has broken | | | | down, and we have | | | | to look into the | | | | facts, and then | | | | consider which | | | | elements are to | | | | be given primacy. | | | | The Courts have | | | | to do a | | | | balancing. | | | | Although test is | | | | slipping away | | | | from control and | | | | supervision, it | | | | still remains an | | | | important factor | | | | in determining | | | | employment | | | | relationship. | | | | | | | | - Application of | | | | the tests: | | | | | | | | - As part of | | | | organization test | | | | of Denning -- In | | | | the present case, | | | | the tools i.e., | | | | the sewing | | | | machines are | | | | provided by the | | | | employer. The | | | | tailors had to | | | | work in the | | | | premises, and | | | | could take the | | | | cloth with them | | | | only if they take | | | | permission of the | | | | employer. Thus, | | | | organization test | | | | was fulfilled. | | | | | | | | - Also, as the | | | | employer has the | | | | right to reject | | | | the end product | | | | if it did not | | | | conform to the | | | | instruction of | | | | the employer, the | | | | element of | | | | control and | | | | supervision is | | | | also present. | | | | | | | | - A person can be a | | | | servant of more | | | | than one | | | | employer. A | | | | servant need not | | | | be under the | | | | exclusive control | | | | of one master. He | | | | can be employed | | | | under more than | | | | one employer. | | | | What we have to | | | | see is when the | | | | person is doing | | | | the work given by | | | | a particular | | | | person, at that | | | | point, does a | | | | relation of | | | | employer-employee | | | | relationship | | | | exists between | | | | those two | | | | parties. Their | | | | relation with | | | | other parties | | | | would not matter. | | | | | | | | - According to the | | | | definition in | | | | Section 2(14) of | | | | the Act, even if | | | | a person is not | | | | wholly employed, | | | | if he is | | | | principally | | | | employed in | | | | connection with | | | | the business of | | | | the shop, he will | | | | be a "person | | | | employed" within | | | | the meaning of | | | | the sub-section | +-----------------------+-----------------------+-----------------------+ | Hussainbhai, Calicut | The petitioner was a | The Court said that | | v. The Alath Factory | factory owner. He | in industrial | | Thenzhilali Union, Ko | engaged a number of | jurisprudence, we | | zhikode, 1978 SC | workmen for making | have to not just see | | --------------------- | ropes. The petitioner | the text of the | | --------------------- | claimed that those | contract and the raw | | --------------------- | workmen were hired by | social realities have | | ---------------- | contractors who had | to be taken into | | | executed agreements | consideration. The | | Economic reality, | with the petitioner | argument regarding | | lifting of the veil | to get such work | existence of contract | | of the contract | done. As regards | is based on laissez | | | conditions of work, | faire. However, in | | | the raw materials | labour law, we have | | | were supplied by | to lift the veil of | | | management, workers | the contract, and see | | | worked in factory | the actual conditions | | | premises. The | and relations between | | | equipment also | the proprietors and | | | belonged to the | the workmen. When we | | | management. If | look at the reality, | | | defective articles | this relationship is | | | were produced, then | actually a | | | management required | relationship of | | | them to rectify the | employer and | | | articles. | employee, not just | | | | because of control | | | This seems like a | and supervision, but | | | simple case. However, | also because of the | | | the problem is the | economic dependence | | | existence of an | of the workers on the | | | intermediary with | employer | | | whom the petitioner | | | | has signed a | Where a worker or | | | contract. | group of workers | | | | labours to produce | | | | goods or services and | | | | these goods or | | | | services are for the | | | | business of another, | | | | that other is, in | | | | fact, the employer. | | | | He has economic | | | | control over the | | | | workers\' | | | | subsistence, skill, | | | | and continued | | | | employment. | | | | | | | | The presence of | | | | intermediate | | | | contractors with whom | | | | alone the workers | | | | have immediate or | | | | direct relationship | | | | ex contractu is of no | | | | consequence when, on | | | | lifting the veil or | | | | looking at the | | | | conspectus of factors | | | | governing employment, | | | | we discern the naked | | | | truth, though sniped | | | | in different perfect | | | | paper arrangement, | | | | that the real | | | | employer is the | | | | Management, not the | | | | immediate contractor. | | | | | | | | Krishna iyer - While | | | | the contract of | | | | employment is | | | | sacrosanct in other | | | | juris but in india it | | | | has to be read in | | | | terms of | | | | constitutional | | | | | | | | principles - | | | | | | | | In case of a sham | | | | contract- u have to | | | | lift the veil and see | | | | the actual | | | | relationship between | | | | the parties u cant | | | | just rely on the | | | | terms of the contract | | | | - when u lift the | | | | veil and find that | | | | these employees are | | | | very well dependent | | | | on the principal | | | | the contract, then u | | | | can say that it's a | | | | sham contract if not | | | | truly reliant on | | | | the principal | | | | employer - if the | | | | principal employer | | | | work has been shut | | | | down, and | | | | the contractor take | | | | them to other org the | | | | it's a genuine | | | | contract- here it's | | | | an economic | | | | | | | | dependency - narrower | | | | interpretation of | | | | economic reality | +-----------------------+-----------------------+-----------------------+ | Workmen of Nilgiri Co | The Nilgiri | **[HC | | operative Market Soci | Cooperative Society | :-]** | | ety Ltd. v. State of | was created to | Court observed that | | Tamil Nadu, 2004 SC | protect the small | the control and | | --------------------- | vegetable growers and | organization tests | | --------------------- | farmers from | are not the only | | --------------------- | exploitation by the | decisive factors, | | ------------------- | merchants. The | what is needed is an | | | membership consists | integration of | | Integration test | of two categories -- | various tests. | | | class A members | | | | having right to vote, | [\'integration\' | | | which consist of | test- whether the | | | growers and | person was fully | | | agricultural | integrated into | | | societies, and class | the] | | | B members, having | | | | only the right to | [employer\'s concern, | | | take part in | or remained apart | | | auctions, consisting | from and independent | | | of merchants and | of it.] | | | traders. The society | | | | facilitates the sale | Factors which are | | | of produce of the | usually of importance | | | growers by the | are as follows - the | | | establishment of two | power to select and | | | marketing yards where | dismiss, the direct | | | the growers and | payment of some form | | | merchants can | of remuneration, | | | interact, and | deduction of PAYE and | | | auctions are held. | national insurance | | | | contributions, the | | | Different jobs are | organisation of the | | | carried out at the | workplace, the supply | | | yard including | of tools and | | | unloading of bags | materials (though | | | from lorries, | there can still be a | | | unpacking of bags, | labour - only sub- | | | grading of | contract) and the | | | vegetables, weighing | economic realities | | | the auctioned | (in particular who | | | vegetables in 45 kgs | bears the risk of | | | packs, stitching the | loss and has the | | | gunny bags and | chance of profit and | | | loading them into | whether the employee | | | lorries of merchants. | could be said to be | | | | \'in business on his | | | For these jobs, a | own | | | number of workers | | | | working as graders | account\') | | | and porters are | | | | present in the yards. | [\'mutuality of | | | Also, the services of | obligations\' as a | | | third parties are | possible factor, i.e. | | | made available to | whether the course of | | | members. The | dealings between the | | | third-party | parties demonstrates | | | contractors would | sufficient such | | | engage workers from | \'mutuality for there | | | the yard, and would | to be an overall | | | be remunerated by the | employment | | | growers or merchants | relationship. | | | engaging them. In | \"] | | | case the growers are | | | | unable to pay the | Looking at the facts, | | | workers, the society | the society is a | | | makes payment on | service-oriented | | | their behalf to the | society for the | | | contractors. | benefit of growers, | | | | and is not a trading | | | Regarding conditions | concern. Also, it is | | | of work of the | clear that the | | | workers, society does | society does not | | | not maintain any | exercise any control | | | attendance or wages | over the workers, and | | | register. There are | neither does it | | | no fixed working | provide remuneration | | | hours and third | to them. The third | | | parties are free to | parties employ and | | | engage workers of | pay them their salary | | | their choice. The | or wages invariably. | | | workers can take up | They have the right | | | any other jobs and | to appoint or not to | | | are not obligated to | appoint and the | | | report for work | little amount of | | | everyday. The society | supervision made by | | | only exercises | the officers of the | | | supervision to ensure | Society are for the | | | smooth working of | purpose of overseeing | | | transactions in the | the smooth | | | yard. The workers | transactions and not | | | work under the | for its own benefit. | | | supervision of | The contract is | | | members and | entered into by | | | merchants, and | different parties for | | | society is not | different purposes. | | | concerned with the | The services of the | | | number of workers | workmen by the | | | engaged and amounts | farmers or traders | | | distributed to them. | may or may not be | | | | taken. Employment of | | | No attendance | the workmen for doing | | | register or wage | a particular piece of | | | register is | work is at the | | | maintained, and | instance of the | | | workers are not given | producer or the | | | any fixed working | merchants on an ad | | | hours and are not | hoc basis or job to | | | required to come | job basis and, thus, | | | daily. | the same may not lead | | | | to the conclusion | | | Para 62 summarizes | that relationship of | | | the points. | employer and employee | | | | has come into being. | | | The workmen's union, | | | | in 1982, claimed | [Hence, the workmen | | | permanency in service | are not the employees | | | and other benefits | of the society, and | | | like drinking water, | the appeals are | | | maternity benefits, | dismissed]{.underline | | | etc. from the society | } | | | on the ground that | | | | they are employees of | Main tests to be | | | the society. The | applied: | | | society filed a suit | | | | before the Tribunal. | Control | | | The Tribunal held | | | | that no relationship | Integration | | | of employment existed | | | | between the society | Economic dependence | | | and the workmen. This | | | | was upheld by the | Tools provided | | | Madras HC. | | | | | Freedom in terms of | | | | what they can do with | | | | raw materials. | | | | | | | | In reality, most of | | | | the cases end up | | | | applying control and | | | | supervision test | | | | | | | | [Supreme court:- | | | | ] | | | | | | | | - The control and | | | | organization | | | | tests are not the | | | | only decisive | | | | factors. A number | | | | of other factors | | | | like -- who is | | | | the appointing | | | | authority, who is | | | | the pay master, | | | | who can dismiss, | | | | how long | | | | alternative | | | | service lasts, | | | | the extent of | | | | control and | | | | supervision, the | | | | nature of the | | | | job, nature of | | | | establishment, | | | | the right to | | | | reject. | | | | | | | | - Thus, an | | | | integrated | | | | approach is | | | | required to see | | | | whether employee | | | | was fully | | | | integrated into | | | | the employer's | | | | concern, or | | | | remained apart | | | | from and | | | | independent of | | | | it. | | | | | | | | - The court then | | | | looks at the | | | | by-laws of the | | | | society. It comes | | | | to a conclusion | | | | that it is not a | | | | trading society, | | | | and does not buy | | | | or sell goods | | | | except in | | | | exceptional | | | | circumstances. It | | | | is a service | | | | society aimed to | | | | protect interests | | | | of growers. | | | | | | | | - Regarding burden | | | | of proof, it lies | | | | on the workmen to | | | | prove that they | | | | are the employees | | | | of the society. | | | | | | | | - In a situation of | | | | this nature and | | | | particularly | | | | having regard to | | | | the fact that the | | | | respondent is a | | | | cooperative | | | | society which | | | | only renders | | | | services to its | | | | own members and | | | | despite the fact | | | | that in relation | | | | thereto it | | | | receives | | | | commission at the | | | | rate of one per | | | | cent both from | | | | the farmers as | | | | also the traders; | | | | it does not | | | | involve in any | | | | trading activity. | | | | | | | | **[Applying the | | | | law:]** | | | | | | | | - The activity of | | | | buying and | | | | selling between | | | | growers and | | | | traders can be | | | | done without the | | | | workers also. | | | | Thus, their work | | | | is not integral | | | | to the society. | | | | As the members | | | | can bring own | | | | workers or can do | | | | it themselves. | | | | | | | | - Regarding control | | | | and supervision | | | | test, there were | | | | two memos -- one | | | | regarding | | | | improper care | | | | taking in | | | | grading, weighing | | | | and stacking of | | | | vegetables, and | | | | another regarding | | | | underage workers | | | | being engaged. | | | | The Court agrees | | | | with the finding | | | | of tribunal that | | | | simply asking the | | | | workers to work | | | | properly, and not | | | |