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Jan  13- 2026

WORKERS HIRED THROUGH CONTRACTORS NOT ENTITLED TO PARITY WITH REGULAR EMPLOYEES: SUPREME COURT

THE MUNICIPAL COUNCIL V. K. JAYARAM & OTHERS

Introduction

In a significant ruling clarifying the legal distinction between regular public employment and contractual engagement through intermediaries, the Supreme Court of India has held that workers hired through third-party contractors cannot claim equal status or employment benefits at par with regular government employees.

The judgment reinforces long-standing constitutional principles governing public employment, emphasizing transparency, equality of opportunity, and adherence to prescribed recruitment procedures.

Background of the Case

The dispute arose from the engagement of several workers, including sanitation staff, by the Nandyal Municipal Council in Kurnool District, Andhra Pradesh. These workers were hired through different manpower contractors from as early as 1994.

Although contractors changed over the years, the same set of workers continued rendering services to the municipality for nearly three decades. The workers contended that they performed duties identical to those of regular municipal employees but were paid substantially lower wages.

Aggrieved, the workers approached the Andhra Pradesh Administrative Tribunal seeking regularization and pay parity. While the Tribunal rejected their claim, the Andhra Pradesh High Court in 2018 ruled in their favour, directing the Municipal Council to grant them minimum time-scale pay along with annual increments.

Issues Before the Supreme Court

The principal issues before the Court were:

  1. Whether contractual workers engaged through third-party contractors are entitled to parity in pay and service benefits with regular employees of a State entity.
  2. Whether the absence of a direct employer–employee relationship disentitles such workers from invoking the doctrine of “equal pay for equal work”.

Arguments Advanced

Appellant’s Contentions

The Municipal Council argued that:

  • There was no direct employer-employee relationship between the Council and the workers.
  • Its obligation was limited to paying the agreed contractual amount to the contractor.
  • Any claim for parity would violate the constitutional framework governing public employment.

Reliance was placed on CBSE V. RAJ KUMAR MISHRA (2025) to submit that indirect engagement through contractors cannot create enforceable rights against the principal employer.

Respondent’s Contentions

The workers relied on STATE OF PUNJAB V. JAGJIT SINGH (2017) 1 SCC 148, contending that contractual employees performing identical duties as regular employees are entitled to equal pay and benefits.

Supreme Court’s Analysis and Findings

A Bench comprising Justice Ahsanuddin Amanullah and Justice Vipul M. Pancholi allowed the appeal and set aside the High Court’s order.

The Court categorically held that regular public employment is a “public asset”, access to which must be governed by transparent, fair, and merit-based recruitment processes. Granting parity to workers engaged through contractors would, in effect, legitimize an arbitrary hiring mechanism that bypasses constitutional safeguards.

The Court observed:

“If persons employed through contractors are granted equal status and benefits as regular employees, it would amount to sanctioning an arbitrary process, since contractors are not bound by any transparent or statutory recruitment mechanism.”

The judgment drew a clear legal distinction between:

  • Direct contractual employment by the State, and
  • Indirect engagement through intermediary contractors.

In the latter case, the choice of workers lies entirely at the discretion of the contractor, thereby severing any direct legal nexus with the State entity.

Distinguishing Jagjit Singh’s Case

The Court rejected the Respondent’s reliance on Jagjit Singh, holding that the precedent was inapplicable. In that case, contractual workers were directly engaged by the government, whereas in the present matter, the engagement was through an intermediary contractor, creating a fundamentally different legal relationship.

Limited Humanitarian Relief

Despite allowing the appeal, the Court adopted a balanced approach by granting limited relief. It directed the Municipal Council to explore the possibility of regularization, considering:

  • The uninterrupted service rendered by the workers for decades, and
  • The apparently perennial nature of the work performed.

However, the Court expressly clarified that this direction:

  • Is confined strictly to the facts of the present case, and
  • Shall not be treated as a precedent in any other matter.

Conclusion

This judgment decisively reinforces the constitutional distinction between regular public employment and contractual engagement through contractors. While the Supreme Court has protected the sanctity of transparent recruitment and equal opportunity in public service, it has also shown sensitivity to humanitarian considerations in exceptional circumstances.

For employers, especially State entities, the ruling provides clarity on liability boundaries. For workers, it underscores that claims for parity must rest on the existence of a direct employment relationship and cannot be extended by analogy where engagement is routed through intermediaries.

Final Thought

Equal pay for equal work cannot be claimed in the absence of a direct employer-employee relationship with the State. Public employment remains a constitutional privilege governed by transparency, merit, and fairnessnot long continuance alone.