“Contract Workers” in Government and Public Sector Undertaking: A Need to Unite to Seize Their Rights
According to the Periodic Labour Force Survey 2017–18 carried out by the National Sample Survey Organisation (NSSO), of the 92 million workers working in the formal sector - more than half of them are employed as informal workers. These workers are variously termed as contract temporary, casual or daily wage workers. Despite working for decades, they are forced to work with no security of tenure, with employers denying them the most basic employer- employee relationship rights.
Workers compelled to work as contract workers and other forms of forced labour are those from historically oppressed communities, including Dalits and women. The industry and the government treat these workers under contract and other informal forms of employment as untouchables.
It is important to recognize that the workers that are termed as “contract workers”, are not in fact contract workers. They are permanent workers, who are termed as “contract workers” with the sole intent to deny them their rights.
Contractualisation of Public Sector Employment
Informalization of the workforce plagues the public sector. According to the Public Enterprises Survey for 2019-2020, the number of contractual workers in Central Public Sector Enterprises rose from 2,67,929 in March 2016 to 4,98,807 in March 2020. The data shows that the share of daily-wage workers rose by 178% and that for contractual workers rose by 86% from 2015-16 to 2019-20 in Central Public Sector Enterprises. In the same period, the number of permanent employees reduced by 25%!
Contractualization of the workforce rose quickly with the implementation of the liberalization policies of the country in the 1990s. This reason given for employing workers in a way that denied them job security was that it was necessary for “efficiency”. The lack of job security severely affected their right to organize and unionize thereby affecting all other rights including denying them the basic right of statutory compliance by the organization. They are denied statutory benefits, are forced to work overtime without payment of overtime wages and are not eligible for any paid holidays. The situation is so dire that the Union Government has failed to fulfill its obligation of revising minimum wages every five years, leaving workers without an update for over eight years. The last revision took place in 2017, with the next due in 2022. Yet, as we enter 2025, there is still no indication of a revision of minimum wages. As a result, workers continue to receive wages labeled as "minimum wages," which, in reality, fall far short of meeting even the most basic standards.
Workers who organize and unionize are targeted and victimized. The fundamental right of association is under serious assault. Workers are targeted and false criminal cases are filed not only against workers, but also against those who stand with the working class.
Caste-Based Occupational Segregation and Contract Labour
A look at the type of the works primarily contracted out would show that this work is manual labour and very often caste-ordained work performed by historically oppressed communities.
The National Commission for Enterprises in the Un-organised Sector(NCEUS) and the Periodic Labour Force Survey (PLFS) has noted that the socially deprived groups (SC, ST, women etc.) predominate in the most vulnerable occupations. Large number of workers working under insecure conditions are from historically oppressed communities. The Periodic Labour Force Survey found that the magnitude of informal workers was highest among those from the Dalit Community at about 84%. About 94% of women workers are in the unorganized sector/unorganized workers.
One of the forms of works most contractualized is referred to in Government parlance as D-Group work. Steadily over the years, recruitment to D-group was stopped, with the work being performed by workers termed as “casual workers” (irrespective of the number of decades of service) or as “contract workers”. In fact, the Union Government has abolished all D-group posts ensuring that this work can only be contracted out – the work continues to exist but the government will only contract it out.
Contract Labour as a Form of Bonded Labour
Judicial Rulings have spoken against the baneful contract labour system especially in the public sector and the need to ensure equal pay for equal work. However, the exploitative system of contract labour continues even in the public sector, which is required to act as a model employer. Workers have no job, wage or social security.
The Supreme Court way back in 1960 in the case of Standard Vacuum Refinery Company Vs. their Workmen [AIR 1960 SC 948], was of the opinion that “industrial adjudication generally does not encourage the employment of contract labour in modern times…”. Similarly, in Catering Cleaners of Southern Railway and Ors. vs. Union of India and Ors., the Supreme Court noted the 'primitive' and ‘baneful’ nature of the system of contract labour, and noted that it has been termed as “an archaic system and a relic of the early phase of, capitalist production, which is now showing signs of revival in the more recent period.”
In Sankar Mukherjee and Ors. vs. Union of India (UOI) and Ors, the Supreme Court noted that the contract labour system was nothing “but an improved version of bonded-labour”, and again expressed its surprise at the employment of workers through contract by public sector employees and held that “There is no security of service to the workmen and their wages are far below than that of the regular workmen of the company.”
Again, in 2011, the Supreme Court in Bhilwara Dugdh Utpadak Sahakari S. Ltd. Vs. Vinod Kumar Sharma Dead by L.Rs. and Ors. held that showing workers as employees of the contract is “a new technique of subterfuge” to “to deny the rights of the workmen under various labour statutes” and categorically held that the “Court cannot countenance such practices any more. Globalization/liberalization in the name of growth cannot be at the human cost of exploitation of workers.”
More recently on December 20, 2024, the Supreme Court in Jaggo vs. Union of India and Ors. addressed the pervasive issue of “temporary employment” arrangements, which facilitate the large-scale exploitation of workers within the public sector. The Supreme Court notes how institutions are increasingly resorting to outsourcing roles performed by temporary employees, effectively replacing one set of exploited workers with another. It notes how this “practice not only perpetuates exploitation but also demonstrates a deliberate effort to bypass the obligation to offer regular employment.” The Court has held that it is essential that the Government ensure fair employment practices, promote job security, and uphold the principles of justice and fairness that they are meant to embody. This would also work as a positive precedent for the private sector to follow, “thereby contributing to the overall betterment of labour practices in the country”.
Yet, the situation continues.
The continuation of the contract labour system is a deliberate attack on the fundamental rights of workers. It is a system that perpetuates inequality, reinforces caste-based labour division, and strips workers of their dignity and security. The time has come for collective action.
It is in this light that it is important for contract workers across all sectors—particularly those in public sector undertakings and government employment—to join hands. Through united struggle, we can break the chains, reclaim our rights, and ensure a future where workers are treated with dignity, fairness, and justice.