employer employee relationship –Union Bank Of India vs Rakesh Kumar Vaid on 4 December, 2020

Clipped from: https://indiankanoon.org/docfragment/150063073/?formInput=employer%20employee%20relationship%20supreme%20court

11. Mr. Arora, has cited two sets of judgments dealing with – firstly, the test to determine the relationship between employer and employee and secondly, as to under what circumstances the regularization of employees can be done. He relies upon the judgment of Workmen of Nilgiri Cooperative Market Society Ltd. v. State of Tamil Nadu & Ors. [AIR 2004 SC 1639] to argue that there is no hard and fast rule to determine as to whether there is an employeremployee relationship between the parties and the same would be adjudicated in each case. Mr. Arora submits that the various factors that have been set out in paragraph 38 of the judgment are merely illustrative. Further, reliance is also placed by ld. Counsel on Ram Singh and Ors. v. Union W.P.(C) 3269/2018 & connected matters Page 5 of 30 Signature Not Verified Digitally Signed By:PRATHIBA M SINGH Signing Date:04.12.2020 16:12 Signature Not Verified Digitally Signed By:DINESH SINGH NAYAL Signing Date:04.12.2020 17:02:00 Territory, Chandigarh & Ors. [(2004) 1 SCC 126], Balwant Rai Saluja v Air India Ltd. [AIR 2015 SC 375], and the recent judgment in Sushilaben Indravadan Gandhi & Anr. v. The New India Assurance Company Ltd. & Ors. [Civil Appeal No. 2235 of 2020, Decided on 15th April, 2020]. The submission of Mr. Arora on the basis of these three judgments is that ‘control’ is not the sole test to determine the existence of an employeremployee relationship. He submits that the Court ought to adopt a pragmatic approach and various factors would have to be considered – for example as stated in Balwant Rai Saluja (supra), whether the employee was in effect under the direct control of the employer, after lifting of the corporate veil. Ld. counsel submits that the question as to whether there is a contract for service or contract of service would have to be determined, depending upon the nature of service. He submits that if the service, that is provided by the employees, is integral to the business of the employer, then it would be considered a contract of service and if the service is not integral to business, and is only an accessory, then it would be a contract for service. According to the Supreme Court‘s judgment in Sushilaben Indravadan Gandhi (supra), the economic reality of the relationship has to be considered, while determining the nature of employment.

21. Ms. Jain further relies upon various case laws. In the first place, Ms. Jain relies upon Hussain Bhai v. Alath Factory Employees Union, AIR 1978 SC 1410, to canvass the proposition that the employeremployee relationship can be established by various facts. The test of economic control as well as the integration test can be applied to the facts of this case. She submits that as held in Hussain (supra), if the employer has economic control over the employee, that would be a good indication of the fact, to determine that the employee is a direct employee of the employer, and not of the contractor. She submits that any camouflage or make-believe methodology, that may be adopted, ought not to be accepted by the Court.

45. In Hussainbhai, Calicut v. The Alath Factory Thezhilali Union, Kozhikode and Ors., (1978) 4 SCC 257, the Supreme Court observed that the enquiry is meant to discern the naked truth, though the arrangement on paper maybe different.

46. In the recent decision in Sushilaben Indravadan Gandhi & Anr. v. The New India Assurance Company Limited (SLP (Civil) No. 1170 of 2019), the difference between an independent teacher and a regular teacher was discussed in the context of the control test, however, the Supreme Court held that the control test itself may not be sufficient to establish employer– employee relationship. The Supreme Court observed:

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