SC Clarifies Employer – Employee Relationship Test in Co-op Bank Canteen Case

General Manager Vs Achchey Lal & Anr (Supreme Court of India)

Background

The appellant, U.P. Cooperative Bank Ltd. (via its General Manager) challenged the judgment of the Allahabad High Court (or other lower forum) which had held that the bank was the employer of certain canteen workers engaged by a society operating within the bank premises. The respondents (workers) claimed employer–employee relationship with the bank for various labour-law purposes.
The matter was appealed to the Supreme Court as Civil Appeal No. 2974/2016 (along with companion appeals CA 3011/2016, 3012/2016, 3013/2016).

Key Issues

The core issue before the Court was: whether the bank could be regarded as the employer of the canteen workers (who were actually deployed by a separate society or entity) for the purposes of labour-law obligations (such as wages, benefits, liability under industrial/contract labour statutes).
Subsidiary issues included:

• What are the relevant factors to determine employer–employee status (contract, supervision/control, payment, disciplinary power, etc.).
• Whether mere physical location of services within the bank’s premises or benefit to the bank is sufficient to fix employer liability.
• The scope of vicarious liability or indirect engagement when an entity outsources or permits a third party to provide services on its premises.

Holding of the Supreme Court