The Delhi High Court has held that a worker engaged through a contractor does not automatically become an employee of the principal employer unless he or she proves a direct employment relationship with credible evidence.
Case Background
A workman claimed that he had been a direct employee of Indraprastha Gas Limited (IGL) since 2001 and alleged illegal termination in 2005, arguing that he should be treated as a regular employee under the Industrial Disputes Act. He had been engaged through a contractor and sought reinstatement and back wages before the Labour Court, which found an employer–employee relationship. The order was challenged in the High Court.
Court’s Reasoning
The Bench emphasised that the burden of proving an employer–employee relationship lies with the claimant.
The workman failed to produce reliable documentary evidence — such as an appointment letter, signed salary slips, or proof of compliance with the principal employer’s recruitment procedures — to establish that he worked directly for IGL.
Despite some informal indicators (like an identity card or gift record), the Court found these lacked authenticity and could not conclusively show direct employment.
Evidence showed that the worker was engaged, paid, and supervised by the contractor, and the principal employer’s established hiring procedure was not followed, reinforcing that no direct relationship existed.
Legal Principles Confirmed
Merely working at the principal employer’s premises or receiving informal perks (like gifts) does not by itself create an employer–employee relationship.
To establish such a relationship, the claimant must produce clear, authentic evidence, including adherence to the employer’s recruitment process.
Evidence of supervision, control, payment, and formal engagement are key factors in determining whether a principal employer–employee relationship exists — a test supported by settled legal principles on employer status.
Outcome
The High Court set aside the Labour Court’s award of reinstatement and back wages, holding that the worker was not a direct employee of IGL, but engaged through a contractor with no proven direct employment link.
