Supreme Court Denies Age Relaxation for Outsourced Workers: Electronic Corporation of India Ltd. vs. M. Shivani (2019)

Date of the Judgment: 08 March 2019

Citation: 2019 INSC 217

Judges: Uday Umesh Lalit, J., Indu Malhotra, J.

Can a company deny age relaxation benefits to workers hired through outsourcing agencies? The Supreme Court of India addressed this question in a recent case, clarifying the distinction between direct employees and those employed through outsourcing. The core issue was whether individuals working for the Electronic Corporation of India Limited (ECIL) through an outsourcing agency were entitled to the same age relaxation benefits as direct employees during a recruitment drive. The bench, comprising Justices Uday Umesh Lalit and Indu Malhotra, delivered the judgment.

Case Background

The respondents, M. Shivani and another individual, had been working with the Electronic Corporation of India Limited (ECIL) through an outsourcing agency since 2010. They possessed ITI qualifications and had completed a National Apprenticeship Certificate within ECIL. In 2017, ECIL issued a recruitment notification for Tradesman-B (WG-III) posts, setting an upper age limit of 28 years as of November 30, 2017. However, the notification provided an age relaxation up to 40 years for those who had worked or were working with ECIL as Senior/Junior Artisans with specific qualifications or experience. The respondents sought a similar age relaxation, arguing that their work through an outsourcing agency should qualify them for the benefit.

Timeline:

Course of Proceedings

The respondents initially filed Writ Petition No. 382 of 2018 in the High Court of Judicature at Hyderabad, seeking age relaxation. The Single Judge dismissed the petition on January 4, 2018, noting that the online application system did not allow for age relaxation for those not directly employed by ECIL. The respondents appealed this decision, and the Division Bench of the High Court allowed their appeal on March 8, 2018, directing ECIL to permit the respondents to participate in the selection process with age relaxation. ECIL then appealed to the Supreme Court.

Legal Framework

The case revolves around the interpretation of the recruitment notification issued by ECIL. The notification specified an upper age limit of 28 years, with a relaxation up to 40 years for certain categories of employees. The relevant part of the notification stated that age relaxation was applicable to those who had worked or were working with ECIL as Senior/Junior Artisans with ITI qualification plus NAC, or ITI qualification plus experience of tenure-based contract. The key issue was whether this relaxation should be extended to individuals working through outsourcing agencies.

Arguments

Arguments of the Respondents:

• The respondents argued that they had been working with ECIL since 2010 through an outsourcing agency.
• They contended that they had completed their ITI and National Apprenticeship Certificate within ECIL itself.
• They submitted that they should be given the same age relaxation as those directly employed by ECIL, as they had similar work experience and qualifications.

Arguments of the Appellants (ECIL):

• ECIL submitted that there are two categories of contract employees: those directly employed by ECIL and those engaged through manpower supplying agencies.
• ECIL stated that the age relaxation was only meant for the first category, i.e., direct employees, who are given an employee code and a service certificate by ECIL.
• ECIL contended that employees engaged through manpower agencies do not have an employer-employee relationship with ECIL, and no employee code or service certificate is issued to them.
• ECIL argued that extending the age relaxation to outsourced employees would have a cascading effect, as many similarly situated candidates would also claim the same benefit, making it difficult for the Corporation to conduct the selection process.

Issues Framed by the Supreme Court:

• Whether the respondents, who were engaged through an outsourcing agency, were entitled to the same age relaxation as those directly employed by the Appellant-Corporation.

Treatment of the Issue by the Court:

Authorities

The court did not rely on any specific case laws or books. The decision was based on the interpretation of the terms of the advertisement issued by the Electronic Corporation of India Limited (ECIL). The court considered the following:

• The terms of the advertisement issued by ECIL on 19.12.2017.
• The distinction between employees directly employed by ECIL and those engaged through manpower supply agencies.

Judgment

The Supreme Court overturned the decision of the Division Bench of the High Court, stating that the Division Bench did not consider whether the Respondents could, as a matter of right, claim relaxation in age limit. The Court upheld the decision of the Single Judge, which had correctly interpreted the terms of the advertisement. The Court emphasized that the respondents, being engaged through an outsourcing agency, were not entitled to the age relaxation benefits offered to direct employees of ECIL.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the clear distinction made in the recruitment notification between direct employees and those hired through outsourcing agencies. The Court emphasized that the terms of the advertisement were unambiguous in specifying that age relaxation was applicable only to those directly employed by ECIL. The Court also took into account the potential cascading effect of extending the age relaxation to outsourced employees, which could lead to a large number of similar claims and complicate the selection process.

Logical Reasoning:

The Supreme Court considered the terms of the advertisement and the distinction between direct and outsourced employees. The court rejected the argument that outsourced workers should receive the same benefits as direct employees, emphasizing the contractual nature of the employment relationship. The court also considered the potential implications of extending the age relaxation to outsourced workers, which could lead to a flood of similar claims and make the recruitment process unmanageable.

The court’s reasoning was based on the principle that the terms of the advertisement must be followed strictly. The court noted that the advertisement clearly specified that the age relaxation was only for those who were directly employed by ECIL. The court also considered the fact that outsourced workers do not have the same employer-employee relationship with ECIL as direct employees, and therefore, they are not entitled to the same benefits. The Supreme Court quoted, “Going by the terms of the advertisement the Respondents were, therefore, not entitled to have any age relaxation.” The Court further quoted, “The Division Bench did not consider the submissions whether the Respondents could, as a matter of right, claim relaxation in age limit.” and “Having gone through the record, in our view, the assessment made by the Division Bench was completely incorrect.”

Key Takeaways

• Outsourced workers are not automatically entitled to the same benefits as direct employees.
• Recruitment notifications must be interpreted strictly.
• The terms and conditions of employment, including benefits, are determined by the nature of the employment relationship.
• Courts will generally uphold the terms of an advertisement or notification unless there is a clear legal basis to do otherwise.

Directions

The Supreme Court set aside the judgment and order of the Division Bench of the High Court and restored the order of the Single Judge, dismissing the writ petition filed by the respondents.

Development of Law

The ratio decidendi of this case is that outsourced workers are not entitled to the same age relaxation benefits as direct employees in recruitment processes. This judgment reinforces the principle that the terms of a recruitment notification must be strictly adhered to, and that the nature of the employment relationship determines the benefits an individual is entitled to. There is no change in the previous position of law.

Conclusion

The Supreme Court’s judgment in Electronic Corporation of India Ltd. vs. M. Shivani clarifies that outsourced workers cannot claim the same age relaxation benefits as direct employees in recruitment processes. The decision emphasizes the importance of adhering to the terms of recruitment notifications and recognizes the distinction between direct and outsourced employment. This ruling has significant implications for the employment landscape, particularly in sectors where outsourcing is prevalent.