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Contract Labor in Regency Hospital: Legal and HR Dynamics

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This case brings to the fore different complexities of contract labor employment by principal employers (PE) in the Indian context, including sensitivities involved in handling contract workers' union.

Regency Hospital (RH), a corporate Hospital chain in India, acquired Gedex Hospital (GH) in 2005, along with contract workers employed in the latter. In the year 1983, GH's management decided to employ contract workers for operating its support services like House Keeping, etc. Two years later, some contract workers of GH became members of the All Gedex Employees' Union. Apprehending industrial relations (IR) problems, GH decided to take them on its permanent rolls. Later on, more contract workers of GH formally became members of this Union, but GH did not concede their demand for permanency. These workers continued to work at GH and later at RH under different contractors; for they were well-trained hospital workforce.

When RH acquired GH in 2005, some of the contract workers were doing the same work as was done by RH's core workers, and continued to work that way. In October 2015 all contract workers of RH went on strike. Their demands included increase in wages and absorbing them in RH's core workforce. RH argued that all that was the obligation of the contractor concerned through whom they were employed. RH's HR manager contacted the local police, which eventually helped in pacifying these contract workers leading to withdrawal of their agitation. In the meantime, the management enhanced some minor welfare benefits for them through the contractor, but no substantive relief was given. RH was pondering on action it should take, and how to prevent reoccurrence of similar complex situations. It was also considering the working environment that should be made available to contract workers so as to promote their engagement, and also avoiding any possible legal lapses on its part in handling contract labor issues.

To understand the legal framework of employing contract workers as envisaged by the Contract Labor (Regulation & Abolition) Act 1970. 2. To understand the mistakes that principal employers (PE) may commit in employing contract workers and the consequences of such mistakes, including sham contract situations. 3. To discuss the collateral IR and HR issues that impact employing and managing contract workers. 4. To know how the PE can safeguard its interest in case contract workers go on strike causing it damages. 5 To appropriately draft a contract labor employment agreement and thus avoid any possible unintended liability.

Learning Objective:

1. To understand the legal framework of employing contract workers as envisaged by the Contract Labor (Regulation & Abolition) Act 1970.
2. To understand the mistakes that principal employers (PE) may commit in employing contract workers and the consequences of such mistakes, including sham contract situations.
3. To discuss the collateral IR and HR issues that impact employing and managing contract workers.
4. To know how the PE can safeguard its interest in case contract workers go on strike causing it damages.
5. To appropriately draft a contract labor employment agreement and thus avoid any possible unintended liability.

Year of Publication: 2016
Ref. No.: 16/581C
Discipline: Knowledge and Human Resource Management
Industry: Healthcare Services & Facilities
Country: India
Company: Regency Hospital
Languages: English
Pages of Text: 11