Monday, September 1, 2014

Test of sufficient control vs Test of effective and absolute control - Which would be relevant ?

BALWANT RAI SALUJA & ANR vs AIR INDIA LTD. & ORS CA No 10264-10266 of 2013

http://judis.nic.in/supremecourt/imgst.aspx?filename=41843

Controversy regarding liability  of  the  principal employer running statutory canteens and further regarding the status of  the workmen engaged thereof. S. 46  of Factories Act, 1948 statutory obligation toprovide and maintain canteen in  the  factory where more than two  hundred  and  fifty  workers  are  employed.

49.         To ascertain whether  the  workers  of  the  Contractor  can  be treated as the employees of the factory or company on  whose  premises  they run the said statutory canteen, this Court must apply the test  of  complete administrative control. Furthermore, it would  be  necessary  to  show  that there exists an employer-employee relationship between the factory  and  the workmen working in the canteen. 

55.         In Ram Singh v. Union Territory, Chandigarh, (2004) 1  SCC  126, as regards the concept of  control  in  an  employer-employee  relationship, observed as follows:
“15. In determining the relationship of employer  and  employee,  no  doubt, “control” is one of the important tests but is not to be taken as  the  sole test. In determining the relationship of employer and  employee,  all  other relevant facts and circumstances are required  to  be  considered  including the terms and conditions  of  the  contract.  It  is  necessary  to  take  a
multiple pragmatic approach weighing up all the factors for and  against  an employment instead of going by the sole “test  of  control”.  An  integrated approach is needed. “Integration” test is one of the relevant tests.  It  is applied by examining whether  the  person  was  fully  integrated  into  the employer’s concern or remained apart from and independent of it.  The  other factors which may be relevant  are  —  who  has  the  power  to  select  and dismiss, to pay remuneration, deduct insurance contributions,  organize  the work, supply tools and materials  and  what  are  the  “mutual  obligations” between them. (See Industrial Law, 3rd Edn., by I.T. Smith  and  J.C.  Wood, at pp. 8 to 10.)”

56.         In the case of Bengal Nagpur Cotton  Mills  case  (supra),  this Court observed that:

"......Two of the  well-recognized  tests  to  find  out whether the contract labourers are the direct  employees  of  the  principal employer are: (i) whether the principal employer pays the salary instead  of the contractor;  and  (ii)  whether  the  principal  employer  controls  and supervises the work of the employee."

Apex Court also placedreliance on Workmen of Nilgiri Coop. Mkt. Society Ltd. v. State of T.N.,  (2004)  3  SCC 514, wherein this Court had observed as follows:
“37. The control test and the organization  test,  therefore,  are  not  the only factors which can be said to be decisive. With a  view  to  elicit  the answer, the Court is required to consider several factors which  would  have a bearing on the result: (a) who is the appointing  authority;  (b)  who  is the paymaster; (c) who can dismiss; (d) how long alternative service  lasts;
(e) the extent of control and supervision; (f) the nature of  the  job  e.g. whether it is professional or skilled work;  (g)  nature  of  establishment; (h) the right to reject.

38. With a view to find out reasonable solution in  a  problematic  case  of this nature, what is  needed  is  an  integrated  approach  meaning  thereby integration of the relevant tests wherefor it may be  necessary  to  examine as  to  whether  the  workman  concerned  was  fully  integrated  into   the employer’s concern meaning  thereby  independent  of  the  concern  although attached therewith to some extent.”

Decision : At Para 61 Apex Court concluded that "the relevant factors to be  taken into consideration to  establish  an  employer-employee  relationship  would include, inter alia, (i)  who  appoints  the  workers;  (ii)  who  pays  the salary/remuneration; (iii) who has the authority to dismiss;  (iv)  who  can take disciplinary action; (v) whether there is continuity  of  service;  and (vi) extent of control and supervision, i.e. whether there  exists  complete control and supervision."


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