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18 January 2005
In India employees who can be categorized as workers are entitled to superior statutory protection to that enjoyed by non-workers. This superior protection of workmen includes protection against the termination of their employment and post-termination benefits. Consequently, the determination of an employee's legal status is critical for most Indian employers.
The Industrial Disputes Act 1947 defines a 'worker' as:
"any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied".
This definition excludes any person:
In the past the courts have interpreted this definition by holding that the designation of an employee is of little importance. Rather, what is important is the nature of duties being performed by the employee, particularly his primary or basic duties and the dominant purpose of his employment. This results in the possibility of highly paid professionals who are not in managerial, administrative or supervisory capacities (eg, software professionals) being categorized as workers. As a result, such employees enjoy superior statutory protection, resulting in an anomalous situation for employers, which do not expect highly paid professionals to enjoy the same statutory protection as low-paid employees. In this context the need to determine an employee's legal status has become increasingly important for employers.
The question of whether an employee is a worker or not is a question of both law and fact. Salespersons, marketing representatives and medical representatives have been held not to be workers on the basis that their duties require an imaginative and creative mind. However, pilots, who earn very high salaries, would be deemed to be workers as they are employed primarily to do manual skilled work and do not perform any supervisory or managerial functions.
In a recent interpretation of this definition, the Delhi High Court held that a highly qualified and specialized consultant in risk management was not a worker. The employee claimed that he:
However the court, on the basis of the evidence presented, concluded that the manual work was incidental to his primary duty as a risk management consultant. It also held that his predominant work involved a considerable amount of creative and imaginative input. Therefore, the employee could not be deemed to be a skilled worker doing manual or non-manual work.
The test of creativity and imagination in the nature of the work performed by the employee can, by this judgment, be said to be an important factor in determining whether an employee is a worker. This is an important ruling in the context of India's growing knowledge economy since it could set a precedent for the determination of a software professional's legal status.
For further information on this topic please contact Anand Prasad or Biraj Tiwari at Trilegal by telephone (+91 11 5163 9393) or by fax (+91 11 5163 9292) or by email (email@example.com or firstname.lastname@example.org).
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