Gratuity Authority Can’t Fasten Contract Workers’ Liability On Principal Employer: SC
What Happened
The Supreme Court, in ONGC vs Suryakand D. Lad, set aside a Bombay High Court ruling that had made ONGC liable for gratuity claimed by workers engaged through contractors. It held that the Gratuity Controlling Authority could not adjudicate a disputed employer-employee relationship and then impose gratuity liability on the principal employer. The Court also accepted that the principal employer’s fallback liability for “wages” under Section 21(4) of the Contract Labour Act does not automatically extend to gratuity.
Key Takeaways
The ruling limits automatic gratuity exposure for companies using contract labour. However, it does not create a blanket exemption for every principal employer. The key question remains whether the workers are legally employees of the principal employer and which forum has jurisdiction to decide that relationship.