TESTS FOR DETERMINING THE RELATIONSHIP OF EMPLOYER-EMPLOYEEDue-Control testThe initial case in which Supreme Court considered whether the person is an employee or independent contractor was Shivanandan Sharma v. Punjab National Bank Ltd. The Court referred to English decisions and held that the test for determining relationship was the control and supervision test.The Court in Dhangadhara Chemical Works Ltd. v.
State of Saurashtra held that the prima facie test to determine the existence of an employer-employee relationship was the existence of the master’s right to supervise and control the servant’s work; not only in directing that work but directing the way to do it. The greater the due control over the person rendering service, the stronger the ground for holding it a contract of service.However, the real difficulty in application of the test arose in cases relating to beedi industry viz.; Chintamani Roa v. State of M.P; Birdichand Sharma v.
First Civil Judge Nagpur; Shankar Balaji v. State of Maharashtra, and Mohideen Sahib v. Industrial Tribunal. In all beedi cases, the court has advocated the supervision and control test, while being mindful of the limitations of this test in its application to the concrete fact- situations. The court devised different conclusions by emphasizing the difference in facts while applying the control test.Organisational TestIn the Silver Jubilee Tailoring House case, the court noted that other factors like an organizational test, working in premises of the employer, working on the machines in employers premises, the power to remove if the work is not in conformity with standards prescribed, are relevant factors for determining the relationship. The court here realized that control and supervision test is one of the tests and not the sole decisive test.Economic control testLater in Hussainbhai case, the court applied both the ‘control test’ and ‘integral business test’.
The court here held that since livelihood of the workmen substantially depends on labour rendered to produce goods and services for the benefit and satisfaction of an enterprise, the absence of direct relationship or presence of dubious intermediaries from the Management cannot snap the real-life bond. The court also extended the corporate law principle of lifting the corporate veil to employment law jurisprudence. The observed that since the employer has economic control over worker’s subsistence, skill and continued employment, hence there exists a relationship of employer-employee.The actual test for determining whether a person employed under a contract of service is workman or not is a matter of debate. Three-judge bench decision of the Court in May & Baker case, WIMCO. case; Burmah Shell case, took the view that to be qualified as a workman, a person must be doing the work which falls under any of the four categories- manual, clerical, supervisory or technical.
As against this, in a set of cases viz. S.K Verma v. Mahesh Chandra, Ved Prakash Gupta v. Delton Cable India Ltd., and Arkal Govind Rao v. Ciba Geigy India Ltd., all three-judge bench decision which without referring to the decision in the former set of cases, took the view that if a person does not fall within the four exceptions to the said definition, he is a workman within the meaning of the Act.
Following this, in Adyanthaya v. Sandoz (India) Ltd., a five-judge bench decided on (i) how to determine whether a person employed in an industry is a workman and (ii) what is the status of medical/sales representative under the said definition.
For a person to be a workman he must be employed to do any of the categories of work envisaged in sec 2(s) and, he should not be excluded by the excluding part of the definition. The court reaffirmed the ratio laid down in May & Baker, WIMCO and Burmah Shell, thereby clearing the two different stands taken by the court. The Court held that a person is a workman under the Act if he is employed to do the work of any of the categories, viz., manual, unskilled, skilled, technical, operational, clerical or supervisory. It is not enough that he is not covered by either of the four exceptions to the definition. On the second issue whether the medical representative is ‘workman’, the court held that they did not perform duties of ‘skilled’ and technical nature and therefore are not ‘workman under Industrial Disputes Act. It said that the word “skilled” in this context, will not include the work of sales representative, and it has to be construed ejusdem generis.
The technical nature of the work done by Medical Representatives has been expressly rejected in Burma Shell case.Recently, the court in Ram Singh v. Union Territory, Chandigarh, held that while ‘control’ is an important test in determining the employer-employee relationship, it is not the sole test. All relevant facts and circumstances must be considered, including the terms and conditions of the contract. Accentuating the importance of an integrated approach, the court observed that it is necessary to take multi-faceted approach weighing up all the factors for and against an employment instead of going by the sole ‘test of control’. “Integration test” is one of the relevant tests.
The control and supervision test is no longer considered sufficient, especially in case of employment in case of highly skilled individuals. There is no single test to determine if a person is an employee. The relevant factors in a particular case may include, besides control and integration- “payment method, obligation to work only for that employer, stipulation of work hours, overtime, holidays etc. how contract may be terminated, can individuals delegate work; who provides tools and equipment, who bears risk of loss and chance of profit, “mutual obligations” between them.