NEW DELHI. The Supreme Court has held that when a principal employer decides to replace contract labour with regular employees, first preference must be given to the erstwhile contract workers. A Bench of Justices Pankaj Mithal and S.V.N. Bhatti observed that employers cannot bypass displaced contract labourers and recruit fresh candidates from the open market. To make this preference effective, the Court said employers may relax age limits and academic qualifications, particularly for non-technical posts, so that experienced contract workers are not unfairly excluded from consideration.
The Court further clarified that where a contract is found to be a mere camouflage to conceal a real employer–employee relationship, such a contract would be disregarded as a legal fiction. In such cases, the workers must be treated as employees of the principal employer and their services regularised. These observations were made while hearing an appeal filed by the management against interim relief granted by the Industrial Court under Section 33(1) of the Industrial Disputes Act, which had extended regular employee-like benefits to contract workers. The Supreme Court rejected the argument that no interim relief could be granted merely because the master–servant relationship was disputed.
https://www.livelaw.in/supreme-court/contract-workers-get-preference-when-employer-replaces-contract-labourers-with-regular-workmen-supreme-court-520946
