EMPLOYER

 A person who employs someone to work or to do something for him is referred as ‘employer’ in
context of industrial law. The expression ‘employer’ indicates a social position, both from a
sociological as well as a legal perspective. A fortiori, there can be no employer without an
employee any more than there can be a parent without a ward or a husband without a wife.
Further, employer-employee relationship presupposes a contract, express or implied, and
consideration which flows from the employer in the form of wage or remuneration to the person
so employed. In a broad sense, an employer is a person who has ultimate control and
responsibility in respect of a workman. In the case of Workmen v. Food Corporation of India,
the Supreme Court noted that ‘Employed’ means where Employee renders service and Employer
pay them in cash or in kind as agreed or statutorily prescribed. An employer may be any person
who has the authority in terms of (a) Power to give directions; (b) Power to enforce them and (c)
Take Policy decision.

The Industrial Disputes Act, 1947 The Code on Industrial Relations, 2020
Section 2(m) Section 2(m)
"employer" means: "employer" means a person who employs,
(i) in relation to an industry carried on by or whether directly or through any person, or
under the authority of any department of the on his behalf or on behalf of any person,
Central Government or a State Government, one or more employee or worker in his
the authority prescribed in this behalf, or establishment and where the establishment
where no authority is prescribed, the head of is carried on by any department of the
the department; Central Government or the State

(ii) in relation to an industry carried on by Government, the authority specified by the

or on behalf of a local authority, the chief head of the department in this behalf or
where no authority is so specified, the head
executive officer of that authority;
of the department, and in relation to an
establishment carried on by a local
authority, the chief executive of that
authority, and includes,—
(i) in relation to an establishment which is a
 factory, the occupier of the factory as
defined in clause (n) of section 2 of the
Factories Act, 1948 and, where a person has
been named as a manager of the factory
under clause (f) of sub-section (1) of section
7 of the said Act, the person so named;
(ii) in relation to any other establishment,
the person who, or the authority which has
ultimate control over the affairs of the
establishment and where the said affairs are
entrusted to a manager or managing
director, such manager or managing
director;
(iii) contractor; and
(iv) legal representative of a deceased
employer;

 Hussainbhai v. Alath Factory Workers’ Union (1978) Where a worker or group of workers
labours to produce goods or services for the business of another, that other is, in fact the
employer. A person who has economic control over workers’ subsistence, skill and continued
employment is the employer in the true sense of the term. Dependant Entrepreneur. The
presence of intermediate contractors with whom alone the workers have immediate or direct
relationship ex contract is of no consequence when, on lifting the veil or looking at the
conspectus of factors governing employment, it is found that through draped in different paper
arrangement, that the real employer is the management not the immediate contractor. If the
livelihood of the workmen substantially depends on labour rendered to produce goods and
services for the benefits and satisfaction of an enterprise, the absence of direct relationship or the
presence of dubious intermediaries or the make-believe trappings of detachment from the
Management cannot snap the real-life bond.

Note: What is the sole determinant of the nature of employer-employee relationship? Is it the
mere fact of ‘labouring’ by people to produce goods and services for ‘another’ exclusively, or
 should the inquiry span such other relevant factors as (i) who has engaged them; (ii) who pays
their wages and allowances; (iii) who has administrative and disciplinary control over them; and
(iv) do they have a right to enter into the factory and work on their own without being
employed/sponsored by the contractor with whom the principal employer has entered into a job
contract or labour supply contract? These alone, and nothing else, are the relevant issues for
consideration while attempting to determine the party to whom liability could be fastened.
 Punjab National Bank v. Ghulam Dastagir (1978) Bank Manager was receiving Driver
Allowance for driving Car/Jeep from the Bank as part of his salary. Bank is Employer of the
Driver? The Court noted: “This Court, in many such cases discovered that there was a common
practice of using deceptive devices and the so called independent contractors were really agents
or workers of the management posing as independent contractors for the purpose of
circumventing the Factories Act and like statute which compel managements to meet certain
economic and social obligations towards the workers. We have no doubt that if in this case there
was evidence to show any colourable device recerted to by the Bank, our conclusion would have
been adverse to the Management . On the other hand, the evidence adduced before the Tribunal
oral and documentary, lead only to one conclusion that the Bank made available ascertain
allowance to facilitate the Area Manager, Shri Sharma privately to engage a driver, Of course,
the Jeep which he was to drive, its petrol and oil requirements and maintenance, all fell within
the financial responsibility of the Bank. So far as the driver was concerned, his salary was paid
By Shri Sharma as his employer who draw the same granted to him by way of allowance from
the Bank. There is nothing on record to make out a nexus between the Bank and the driver. There
is nothing on record to indicate that the control and direction of the driver vested in the Bank.
After all, the evidence is clearly to the contrary. In the absence of material to make out that the
driver was employed by the Bank, was under its direction and control, was paid his salary by the
Bank and otherwise was included in the army of employees in the establishment of the Bank, we
cannot assume the crucial point which remains to be proved. We must remember that there is no
case of camouflage or circumvention of any statute. It is not unusual for public sector industry or
a nationalised banking institution to give allowances to if. high-level officers leaving it to them to
engage the services of drivers or others for fulfilling the needs for which the allowances are
meant.”
 Ram Singh v. Chandigarh Industrial Tribunal (2004) The contention advanced by the
contract employees before the High Court was that although they were employed on various jobs
by the Contractor for maintaining supply of electricity to the College and Hospital the
Engineering Department of the Chandigarh Administration exercises complete control over their
work. According to them the real employer is the Engineering Department of the Chandigarh
Administration and the Contractor has been introduced only to pay them salary or wages. It was
argued that in order to deny the employees benefits of regular employment under Chandigarh
Administration, the agency of Contractor has been resorted to. The employees sought annulment
of the order of the Tribunal and in the alternative sought issuance of directions for consideration
of their cases for regularization of their services under the Chandigarh Administration.

The Supreme Court noted that Control is not the sole test to ascertain the relationship of
employer-workman as we have to see other factors also. Like- Existence of some smoke-
screen or camaflouge, features of engagement, terms of contract, nature of work etc. The other
factors which may be relevant are - who has the power to select and dismiss, to pay
remuneration, deduct insurance contributions, organise the work, supply tools and materials and
what are the 'mutual obligations' between them. It is necessary to take a multiple pragmatic
approach weighing up all the factors for and against an employment instead of going by the sole
'test of control'. Further, Normally, the relationship of employer and employee does not exist
between an employer and Contractor and servant of an independent Contractor. Where, however,
an employer retains or assumes control over the means and method by which the work of a
Contractor is to be done it may be said that the relationship between employer and the employee
exists between him and the servants of such a Contractor. In such a situation the mere fact of
formal employment by an independent Contractor will not relieve the master of liability where
the servant is, in fact, in his employment. In that event, it may be held that an independent
Contractor is created or is operating as a subterfuge and the employee will be regarded as the
servant of the principal employer. Where a particular relationship between employer and
employee is genuine or a camouflage through the mode of Contractor is essentially a question of
fact to be determined on the basis of features of relationship, the written terms of employment, if
any, and the actual nature of the employment. The actual nature of relationship concerning a
particular employment being essentially a question of fact, it has to be raised and proved before
an industrial adjudicator.
 The expression `control and supervision' in the context of contract labour was explained by the
Supreme Court in the case of International Airport Authority of India v. International Air
Cargo Workers Union (2009) thus: "If the contract is for supply of labour, necessarily, the
labour supplied by the contractor will work under the directions, supervision and control of the
principal employer but that would not make the worker a direct employee of the principal
employer, if the salary is paid by contractor, if the right to regulate employment is with the
contractor, and the ultimate supervision and control lies with the contractor. Further, The
principal employer only controls and directs the work to be done by a contract labour, when such
labour is assigned/allotted/sent to him. But it is the contractor as employer, who chooses whether
the worker is to be assigned/allotted to the principal employer or used otherwise. In short, worker
being the employee of the contractor, the ultimate supervision and control lies with the
contractor as he decides where the employee will work and how long he will work and subject to
what conditions. Only when the contractor assigns/sends the worker to work under the principal
employer, the worker works under the supervision and control of the principal employer but that
is secondary control. The primary control is with the contractor."

 GM Bengal Nagpur Cotton Mills v. Bharat Lal (2011) It is now well-settled that if the
industrial adjudicator finds that contract between the principal employer and contractor to be
sham, nominal or merely a camouflage to deny employment benefits to the employee and that
there was in fact a direct employment, it can grant relief to the employee by holding that the
workman is the direct employee of the principal employer. Two of the well-recognized tests to
find out whether the contract labour are the direct employees or the principal employer are (i)
whether the principal employer pays the salary instead of the contractor; and (ii) whether the
principal employer controls and supervises the work of the employee.

 The transfer of a business ipso facto, does not terminate the services of the workmen employed
in such business and a purchaser of a going concern, with all its assets and liabilities, is bound to
continue the old employees on the same emoluments and with a continuity of service.