India – Employment Update

by | Aug 9, 2022

Under the Industrial Disputes Act, 1947, normally, the termination of a fixed term contract does not elicit payment of retrenchment compensation to the contractual worker, unlike the termination of an open-ended employment agreement. In the recent case of Jamnagar Municipal Corporation v. Advesh Kishorbhai Solanki (C/SCA/10126/2018), the Gujarat High Court has reiterated this well-established principle of Indian law and affirmed prior Supreme Court and High Court rulings in holding that, if a fixed term contract is periodically renewed without a break, the contractual worker will be akin to an employee and be entitled to retrenchment compensation on termination of the contract. In these cases, courts deem it to be an unfair labour practice if workers are employed by way of fixed term contracts to avoid providing them statutory benefits which a regular/permanent employee is entitled to.

The new labour codes (which are yet to be implemented) also have a similar exemption from payment of retrenchment compensation to contractual workers under a fixed term contract. That said, the labour codes also provide that a fixed term contractual worker will be eligible for all benefits under any law for the time being in force, available to a permanent employee. While there seems to be an apparent discrepancy pertaining to the payment of retrenchment compensation for fixed term contracts, in all likelihood, retrenchment compensation will continue to be payable to contractual workers in instances where such contracts are renewed without a break.

More News

ITR World Tax Leaders 2023

Akil Hirani, Managing Partner (tax controversy), and Ravi S. Raghavan, Partner - Tax (indirect tax, tax controversy), have been ranked as 'Highly Regarded' lawyers in the ITR World Tax Leaders rankings for 2023. Congratulations.

read more

Majmudar & Partners IFLR Rankings 32nd Edition

Majmudar & Partners has been recognized among the IFLR1000 for its 32nd Edition in various fields of practice and across sectors. The firm has been ranked for its excellence in practice areas such as M&A, private equity, banking, project finance, capital...

read more

Akil Hirani quoted by The Economic Times on the NDTV takeover

The Adani Group recently announced that its media unit was set to buy a majority stake in NDTV. Akil Hirani, Managing Partner and Head of Transactions Practice, was quoted by The Economic Times on the topic. "NDTV can adopt the classic takeover defence of bringing in...

read more

India – Insolvency Update

In the case of Somesh Choudhary v. Knight Riders Sports Private Limited & Ors, the National Company Law Appellate Tribunal (NCLAT) has held that claims arising from the grant of an exclusive right and license to use intellectual property rights falls...

read more

Withdrawal of Personal Data Protection Bill

On August 3, 2022, the Indian government withdrew the Personal Data Protection Bill (the “Bill”), which was first introduced in Parliament on December 11, 2019, and had been thoroughly analysed by a Joint Committee of Parliament (“JCP”). To a Bill which had 99...

read more