Contract Employees Regularisation-A major relief has come for lakhs of contract employees across the country, as the Supreme Court of India has delivered encouraging remarks in their favour. The Hon’ble Court addressed the long-pending issue of regularisation of employees who have been working on contract for several years. Through this post, we are presenting the complete details of this important development.
Contract Employees Regularisation Supreme Court Judgement
On Friday (January 30), while hearing an important matter involving contract employees, the Supreme Court observed that the State, being an ideal employer, cannot refuse regularisation solely on the ground that the employees were initially appointed on a contractual basis.
The Court clarified that employees who have been retained for several years through continuous annual extensions have the right to seek regularisation under the principle of “legitimate expectation.”
The Bench stated that it cannot agree with the State’s argument that merely calling an appointment “contractual” places employees outside the scope of constitutional protection. It further noted that when the State appoints individuals through a proper selection process and continues to take work from them on sanctioned posts for more than a decade with satisfactory performance, their services cannot be terminated without valid justification simply by citing contractual terms.
Such action, the Court said, would be arbitrary and inconsistent with the responsibilities of the State as a model employer, failing the test of Article 14 of the Constitution.
Long-Term Permanent Nature of Work
The Court allowed the appeals of contract employees whose tenure had been continuously extended for nearly ten years. It strongly criticised the tendency of authorities to engage workers for permanent roles under labels such as “part-time,” “temporary,” or “contract,” while avoiding regularisation and thereby leading to exploitation.
The Court acknowledged that the appellants had been retained against sanctioned vacant posts for more than a decade without any valid reason for denial of permanency. Based on this, it directed the State government to regularise their services immediately. The employees were also declared entitled to consequential service benefits from the date of the judgement.
Background of the Case
The appellants were appointed in 2012 as Junior Engineers (Agriculture) in the State’s Land Conservation Directorate. These appointments were made against 22 sanctioned posts through a public advertisement and a formal selection process.
Although the appointments were termed contractual and initially limited to one year, the engineers continued to receive repeated extensions. Over ten years of service, their performance remained consistently satisfactory.
Their appointment letters described them as “temporary” and “contract-based,” clearly stating that regularisation was not guaranteed. Despite this, they discharged full responsibilities similar to regular staff and were granted periodic extensions based on performance.
In 2023, however, the State terminated their services after announcing the final extension.
Earlier, the High Court had dismissed their plea, stating that contract employees had no legal right to regularisation. The matter was then taken to the Supreme Court.
Setting aside the disputed order, the Court criticised the State’s conduct, noting that it had benefited from the employees’ services for over ten years but eventually removed them by relying on contractual terms alone. The Court termed this approach unjust and subsequently directed their regularisation.
Court’s Key Observations
The Court emphasised that when employees serve continuously in contractual roles for extended periods, it naturally creates a legitimate expectation that the State will eventually recognise their sustained contribution.
Repeated extensions further strengthen this expectation. Acting on this belief, such employees continue their service despite its contractual nature and often refrain from seeking alternative employment.
The Court clarified that earlier legal principles stating that legitimate expectation generally does not apply to temporary or contract employees are relevant only where appointments were made without following proper procedures.
Where recruitment has been conducted through a lawful and transparent selection process, there is no absolute legal bar preventing employees from invoking legitimate expectation.
The Court also rejected the State’s reliance on contractual clauses that deny regularisation. It stated that accepting such clauses cannot be interpreted as a waiver of fundamental rights.
Referring to past rulings, the Court observed that unfair contractual terms imposed in situations of unequal bargaining power cannot shield arbitrary State actions from constitutional scrutiny.
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