Workers appointed by a contractor cannot claim automatic absorption into the parent company as employees, even if they are paid provident fund and other benefits, unless it is proved that the contract is a camouflage to evade compliance with labour laws, the Supreme Court has held.

“On going through the entire material on record, no documentary evidence was produced by which it can be said that the contesting respondents were the employees of the appellant. There is no provision under Section 10 of the CLRA (Contract Labour Regulation and Abolition Act) that the workers/ employees employed by the contractor automatically become the employees of the appellant and/ or the employees of the contractor shall be entitled for automatic absorption and/ or they become the employees of the principal employer,” a bench of Justices M.R. Shah and Hima Kohli said in a written order.

“It is to be noted that even the direct control and supervision of the contesting respondents were always with the contractor. There is no evidence on record that any of the respondents were given any benefits, uniform or punching cards by the appellant,” the court added.

The bench allowed an appeal filed by Kirloskar Brothers Ltd challenging the concurrent findings of an industrial tribunal, a single judge and a division bench of Madhya Pradesh High Court which had taken a contrary view.

Ramcharan and five other contractual labourers had been hired by a contractor engaged by pump-maker Kirloskar Brothers on April 22, 1995. The contract was renewed from time to time and came to an end in 1996.