Govt Institutions Should Not Mirror Gig Economy Trends By Misusing Temporary Employment Contracts: Supreme Court

The rise of the gig economy in the private sector has led to an increase in precarious employment arrangements, observed the Supreme Court in a recent judgment while advising the government departments from misusing the practice of engaging temporary workers.

A bench comprising Justice Vikram Nath and Justice Prasanna B Varale appealed to the Government departments from adopting the detrimental practices found in the gig economy. The bench made these remarks while allowing the regularization of certain temporary employees of the Central Water Commission, who had worked for nearly two decades.

The judgment authored by Justice Nath observed :

"The pervasive misuse of temporary employment contracts, as exemplified in this case, reflects a broader systemic issue that adversely affects workers' rights and job security. In the private sector, the rise of the gig economy has led to an increase in precarious employment arrangements, often characterized by lack of benefits, job security, and fair treatment. Such practices have been criticized for exploiting workers and undermining labour standards. Government institutions, entrusted with upholding the principles of fairness and justice, bear an even greater responsibility to avoid such exploitative employment practices. When public sector entities engage in misuse of temporary contracts, it not only mirrors the detrimental trends observed in the gig economy but also sets a concerning precedent that can erode public trust in governmental operations."

The Court reminded that the International Labour Organization (ILO), of which India is a founding member, has consistently advocated for employment stability and the fair treatment of workers. Reference was made to the US judgment in Vizcaino v. Microsoft Corporation which illustrated the the consequences of misclassifying employees to circumvent providing benefits. "This judgment underscores the principle that the nature of the work performed, rather than the label assigned to the worker, should determine employment status and the corresponding rights and benefits. It highlights the judiciary's role in rectifying such misclassifications and ensuring that workers receive fair treatment," the Court said.

The Court said that temporary employees, particularly in government institutions, often face multifaceted forms of exploitation. While the foundational purpose of temporary contracts may have been to address short-term or seasonal needs, they have increasingly become a mechanism to evade long-term obligations owed to employees.

The judgment highlighted the exploitative practises as follows :

Misuse of "Temporary" Labels:

Employees engaged for work that is essential, recurring, and integral to the functioning of an institution are often labeled as "temporary" or "contractual,"even when their roles mirror those of regular employees. Such misclassification deprives workers of the dignity, security, and benefits that regular employees are entitled to, despite performing identical tasks.

Arbitrary Termination:

Temporary employees are frequently dismissed without cause or notice, as seen in the present case. This practice undermines the principles of natural justice and subjects workers to a state of constant insecurity, regardless of the quality or duration of their service.

Lack of Career Progression:

Temporary employees often find themselves excluded from opportunities for skill development, promotions, or incremental pay raises.

They remain stagnant in their roles, creating a systemic disparity between them and their regular counterparts, despite their contributions being equally significant.

Using Outsourcing as a Shield:

Institutions increasingly resort to outsourcing roles performed by temporary employees, effectively replacing one set of exploited workers with another. This practice not only perpetuates exploitation but also demonstrates a deliberate effort to bypass the obligation to offer regular employment.

Denial of Basic Rights and Benefits:

Temporary employees are often denied fundamental benefits such as pension, provident fund, health insurance, and paid leave, even when their tenure spans decades. This lack of social security subjects them and their families to undue hardship, especially in cases of illness, retirement, or unforeseen circumstances.

The Court criticised the practice of government institutions engaging workers on a temporary basis for a prolonged period, which results in the infringement of various labour rights. The Court reminded that government entities must indulge in fair and just practices and refrain from exploitative employment practices.

"..it is imperative for government departments to lead by example in providing fair and stable employment. Engaging workers on a temporary basis for extended periods, especially when their roles are integral to the organization's functioning, not only contravenes international labour standards but also exposes the organization to legal challenges and undermines employee morale. By ensuring fair employment practices, government institutions can reduce the burden of unnecessary litigation, promote job security, and uphold the principles of justice and fairness that they are meant to embody."

Also from the judgment -Govts Engaging Temporary Workers For Long Periods Unfair; 'Uma Devi' Judgment Being Misapplied Against Long-Serving Workers : Supreme Court

Advocate Udian Sharma appeared for the appellants in the lead matter