Contract Workers Performing Same Duties As Regular Staff Entitled To Minimum Regular Pay Scale Under CLRA Rules: Bombay High Court

"Thus, there is a statutory duty to pay equal wages to the contract workers... if the contractor fails to pay wages... it becomes the responsibility of the principal employer to pay the same." Bombay High Court, in a significant ruling dated July 21, 2026, held that contract workers engaged to perform the exact same duties as permanent employees are statutorily entitled to wages at the minimum of the regular pay scale.

A single-judge bench of Justice Sandeep V. Marne observed that this obligation stems directly from the Maharashtra Contract Labour (Regulation and Abolition) Rules, 1971, which cast a non-negotiable statutory duty on the principal employer to ensure equal pay for equal work.

The Maharashtra State Electricity Distribution Company Limited (MSEDCL) engaged nearly ninety contract workers through third-party agencies to manage day-to-day operations due to a state government ban on new recruitment. These contract workers assisted regular staff in various technical and non-technical capacities, effectively manning posts vacated by retired or promoted permanent employees. The respondent-union raised a dispute demanding equal wages, which the Industrial Tribunal answered in the affirmative by directing MSEDCL to pay the difference in arrears. MSEDCL subsequently challenged these awards before the High Court.

The primary question before the court was whether workers engaged through a contractor are entitled to receive wages at the minimum of the pay scale payable to permanent employees of the principal employer. The court was also called upon to determine whether the absence of a direct employer-employee relationship defeats the application of the 'equal pay for equal work' principle.

Statutory Duty Under Contract Labour Rules

The High Court rigorously analyzed the framework of the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA Act) and the corresponding state rules. Justice Marne noted that under Rule 25(2)(iv)(b) of the Maharashtra Rules, 1971, a mandatory condition is attached to the contractor's license regarding wage parity. The bench observed that when a contract worker performs the same kind of work as a permanent workman directly employed by the principal employer, their wage rates must be strictly identical.

"Thus, it is a statutory duty imposed under Rule 25(2)(iv)(b) of the Maharashtra Rules on the contractor to pay same wages to its workers as payable to the workmen of principal employer if both perform same kind of work."

Principal Employer's Ultimate Liability

The court further clarified the ambit of Section 21 of the CLRA Act, asserting that the legislative intent was to protect workers from exploitation by intermediaries. While acknowledging that the primary responsibility to disburse wages lies with the contractor, the court held that the principal employer cannot evade liability. The bench ruled that in the event of any failure by the contractor to pay the statutory equal wages, the financial burden automatically shifts to the principal employer.

Equal Pay Principle Applicable to Contract Staff

Relying heavily on the Supreme Court's landmark constitutional mandate in State of Punjab v. Jagjit Singh, the court affirmed that artificial parameters cannot be deployed to deny laborers their rightful wages. The bench underscored that the legal doctrine of 'equal pay for equal work' extends to temporary employees, irrespective of their nomenclature, provided they discharge duties similar to those of regular employees holding corresponding posts.

"The minimum that needs to be paid to the contract workers performing duties of regular employees is the wages in the minimum of the pay scale."

Distinguishing the Nandyal Municipality Precedent

Addressing the petitioner’s reliance on the Supreme Court's ruling in Municipal Council, Nandyal Municipality, which suggested that equal pay cannot apply without a direct employer-employee relationship, the High Court carved out a crucial exception. The bench explained that the Nandyal Municipality case was rendered in the specific context of regularization demands and, crucially, did not involve an evaluation of the statutory mandates under the CLRA Act.

Factual Finding of Identical Work Upheld

The court placed significant weight on MSEDCL’s own admission that contract workers were brought in precisely to overcome a recruitment ban and to ensure uninterrupted public service. Because these workers effectively substituted for regular employees in roles like Drivers, Office Assistants, and Peons, the court found ample material to support the Industrial Tribunal’s finding of similarity in work. The bench firmly declined to interfere with this factual inquiry, noting a complete absence of perversity in the Tribunal's assessment.

Arrears Restricted Due to Limitation Principles

While upholding the core declaration of the Tribunal, the High Court modified the relief regarding the historical payment of arrears. Citing the Supreme Court's ruling in Union of India v. Tarsem Singh, the bench observed that directing the payment of wage differences from 2016 would impose an unjustified and immense financial burden on the state entity. Consequently, the court restricted the calculation of arrears to the exact dates the respective references were made to the Industrial Tribunal in 2018 and 2020.

The High Court partly allowed the petitions by upholding the Industrial Tribunal's substantive declaration granting contract workers wages at the minimum of the regular pay scale. However, the impugned awards were modified strictly to limit the payment of arrears, which will now be calculated from the respective dates the industrial disputes were referred to the Tribunal rather than from the dates initially demanded by the union.

Date of Decision: 21 July 2026