12/3/23, 5:51 PM Temporary Employees - Courts Evaluate Parties’ Intent, Not Nomenclature - Lexology

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Temporary Employees - Courts Evaluate Parties’ Intent, Not

Nomenclature
Bharucha & Partners

India July 21 2022

This article analyses the Bombay High Court’s recent decision in a dispute between Tata Motors and certain
temporary workmen with particular emphasis on the Court’s analysis of unfair labour practices involving
temporary workmen.
At Indian law, permanent workmen are entitled to greater employment benefits than temporary workmen.
Illustratively, retrenchment compensation is only payable to workmen who have been in continuous service at
any industry other than a mine for at least 240 days in a year. Continuous service is also a pre-requisite for
gratuity.
The disparity in the benefits to which various classes of workers are entitled has often led to disputes between
employers and the workforce with employers being accused of creating sham contracts with the sole intention of
avoiding the provision of employment benefits, etc., and, or, temporary workmen seeking the regularisation of
their employment. A similar dispute arose between Tata Motors Limited (TML) and certain workers in Shankar
Bhimrao Kadam & Ors v. Tata Motors Limited.
Facts of the Dispute
Certain individuals (Petitioners) had been appointed by TML as ‘temporary employees’ for limited periods
ranging between 5 and 7 months – their employment was terminated on the expiry of these periods. Some of the
Petitioners were then reappointed by TML after a gap of 1 or 2 years. This re-appointment was again for a limited
period of 5 to 7 months. None of the Petitioners was employed with TML for a continuous period of 240 days or
more. The Petitioners – as ‘temporary employees’ – were paid significantly lower wages than TML’s permanent
employees who undertook similar work.
The Petitioners contended that: (i) TML had appointed (and reappointed) them on a temporary basis to ensure
that none of them completed 240 days of continuous service; (ii) the breaks in their employment were artificial;
and (iii) this had become “…a source of profit for the management and, at the same time, it extracted the same
amount of work, in comparison to the work performed by the permanent workers…”. The Petitioners sought a
declaration from the Bombay High Court (Court) to the effect that TML had engaged in unfair labour practices,
and an order for reinstatement with continuity of service and back wages.
TML argued that the temporary employees were only engaged when there was a temporary increase in work and
that their period of engagement was dependent on this temporary increase. TML also claimed that none of the
Petitioners was entitled to permanent employment as none of them had completed 240 days of continuous
service, and that it could not be compelled to create jobs for the Petitioners.

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12/3/23, 5:51 PM Temporary Employees - Courts Evaluate Parties’ Intent, Not Nomenclature - Lexology

The Court's Analysis and Decision

When making its decision, the Court observed that: (i) there was no apparent distinction between the work
performed by the Petitioners and that performed by TML’s permanent employees; and (ii) TML had not
submitted any evidence of the temporary increase in work or cessation of that increase. The Court analysed the
tenure of appointment of each Petitioner and the gaps between appointment and reappointment, and concluded
that there was a clear and consistent, rotational pattern of employing the Petitioners as temporary workers for less
than 240 days, disengaging them for a brief period, and then reappointing them for a 5-to-7-month period. The
fact that TML had a dedicated team to monitor the tenure of its temporary workforce was considered evidence of
this pattern.
The Court relied on its decision in Sunil Pralhad Khomane & Ors. v. Bajaj Auto Ltd., where an employer had
hired temporaries on a rotational basis for a 7-month period, and terminated their services for a brief period
during which they were replaced by other temporary workmen. Although the management had contended that the
termination of the workmen did not amount to retrenchment as it was simply on account of non-renewal of
expired contracts, the Court noted there was no evidence of the work being temporary in nature, and held that the
employer’s claim of non-applicability of ‘retrenchment’ was unjustified. The Court also observed that the pattern
of termination and re-appointment appeared to be designed specifically to circumvent legitimate claims of
permanency by workmen. As TML had followed a similar pattern, the Court held that TML had engaged in unfair
labour practices.
The Court, in granting relief to the Petitioners, considered whether they should be reinstated with continuity of
service, or be compensated with back wages in lieu of reinstatement by payment of back wages.
Ordinarily, courts may grant reinstatement with full back wages where an employee’s termination is proved to
have been wrongful or illegal. However, a slew of judicial decisions on the subject indicate that courts have the
discretion to determine the appropriate relief based on the facts and circumstances of the relevant case. In the
past, courts have considered factors such as the time that has elapsed since the date of termination, the
management’s loss of trust and confidence in the employee, the conflicting interests of the employer and the
employee, the feasibility of reinstatement, hardship to the concerned parties, and financial implications.
In the present case, the Court did not order the reinstatement of the Petitioners. However, based on its
observations and the fact that the Petitioners had not worked elsewhere during the period between engagements
with TML, the Court ordered TML to pay back wages to the Petitioners in accordance with the compensation
slab prepared by the Court. When determining the compensation slab, the Court factored in the mandatory breaks
in service foisted on the Petitioners by TML.
Although the Court could, at its discretion, award interest, it elected not to do so.
Concluding Comments
When temporary workmen have challenged their employment arrangements and sought benefits at par with
permanent workmen, Indian courts have generally, in the first instance, examined the nature of work performed
by the temporary workmen and analysed whether such work was similar or identical to the work performed by
the permanent workmen. The Court’s decision in Shankar Bhimrao Kadam and Ors. v. Tata Motors Ltd.
reaffirms the position at Indian law that the mere classification of employees as ‘temporary’ is inadequate, and
that the courts will examine the nature of work performed by such employees and the intention of the employer
to determine whether an employer has engaged in unfair labour practices. This analysis is crucial given that the
considerable disparity in the bargaining power of workers and their employers would likely enable employers to
assign any nomenclature they see fit.

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12/3/23, 5:51 PM Temporary Employees - Courts Evaluate Parties’ Intent, Not Nomenclature - Lexology

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contact: sr.partner@bharucha.in

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