Employees Can't Be Regularized If Employment Was Based On Outsourcing Contracts, Not Intended To Create Permanent Employment: Karnataka High Court

Background Facts

The Employees are group of 27 workers who were employed as binders and later as printers starting from the year 2000 at the Government Printing Press in Tumkur. In 2016, the printing press at Tumkur was shut down, and the employees were subsequently employed at the printing press in Peenya on an outsourced basis through different contractors. A total of 96 workers were initially employed, with 50 being absorbed and the rest continued on a piece-rate basis. The employees were continuously employed through different contractors, thus masking the direct employment relationship with the government. On 07.02.2023, the Government (Respondent) ordered the closure of the printing press at Peenya and transferred all assets to the press on Mysore Road, deciding to dispense with the services of 40 outsourced employees. The employees rendered service for the period 2000 to 2010 and then again from 2016-17 to 2022-23.

The employees challenged the closure and termination in W.P.No.3718/2023. The Karnataka High Court disposed of this petition on 13.06.2023, directing the State to consider their regularization based on their long-term service. Despite the Court's directive, the employees' request for regularization was rejected by the respondents. Aggrieved by the same, the employees filed the writ petition.

The employees contended that they have been continuously employed at the Government Printing Press since 2000. They argued that despite the changes in employment contracts and the outsourcing arrangement, their work had remained consistent over the years, indicating a long-term employment relationship with the government. The employees claimed that their employment through various contractors was a means for the government to avoid direct employment obligations. They provided evidence from the Labour Department's inspection reports that supported their continuous employment claim.

On the other hand, it was contended by the State that the employees were never directly employed by the Government Printing Press. Instead, they were employed by various contractors who provided services to the printing press. As such, the employees were not government employees but employees of the contractors. The state maintained that the employment of the employees was governed by the terms of the outsourcing contracts between the government and the contractors. These contracts were time-bound and subject to renewal, indicating that the employees' employment was not continuous or permanent. They further asserted that there was no legal obligation to regularize the employment of workers engaged through outsourcing contracts.

Findings of the Court

The Court observed that the employees were engaged through contractors and were not directly employed by the Government Printing Press. The Court noted that the outsourcing of services was a policy decision by the government aimed at improving efficiency and reducing costs. The employees' employment was based on these contracts, which were not intended to create permanent employment relationships. It was found that there were no official records or documentation to prove that the employees were directly employed by the Government Printing Press.

The Court held that regularization of casual or temporary employees without following the recruitment procedures would contravene established legal principles. The Court referred to the judgment in Secretary, State of Karnataka vs. Umadevi and others, which emphasized the importance of proper recruitment procedures for public employment.

The Court noted that the High Court's order of 13.06.2023 had directed the consideration of the employees' regularization but did not mandate it. The government complied with the order by considering the employees' claims and subsequently rejecting them based on the legal and factual circumstances. The Court recognized that regularizing the employees would create inequity and unfairness to other workers engaged under similar outsourcing contracts.

The Court concluded that the employees were not entitled to regularization of their employment. However the court adopted the Principle of paying Monetary Compensation in lieu of Reinstatement, Regularisation and granted relief only in the form of monetary compensation in the range of Rs.5,00,000 - 6,25,000 to all 27 employees, calculated by providing a sum of Rs.25,000/- for every year of service rendered for the period 2000 to 2010 and also a sum of Rs.50,000/- per year for every year of service rendered from 2016-17 to 2022-23.

The court relied on the case of Ranbir Singh v. S. K. Roy, wherein the Supreme Court emphasized the resolution of long-standing employment disputes through monetary compensation rather than reinstatement, particularly when the dispute had persisted for an extended period.

With the aforesaid observations, the Writ Petition was disposed of.

Case No. : WP No. 19588 of 2023

Case Name : Uemsha T N and Ors vs. State of Karnataka

Counsel for the Petitioners : Bipin Hegde, Adv & Samarth Prakash, Adv

Counsel for the Respondents : Reuben Jacob, Aag & Mamatha Shetty, AGA