Supreme Court: Outsourced workers entitled to PF

July 26, 2019


The Apex Court of the county viz. Hon’ble Supreme Court of India in an appeal filed against M/s Godavari Garments Ltd. (hereinafter referred to as the “Respondent Company”) has directed the Respondent Company to deposit Provident Fund dues with retrospective effect for women engaged by the Respondent Company for outsourcing of stitching, tailoring and allied activities.

Brief Background

The Respondent Company is a subsidiary of Marathwada Development Corporation (an undertaking of Maharashtra Government) and covered under the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “EPF Act”) with effect from January 1, 1979. As per the Memorandum of Association, the main objective of the Respondent Company was to encourage, promote, develop, set-up ready made garments industry with a view to provide gainful employment to people especially women possessing skills in stitching, tailoring and allied activities. In line with the said objective, the Respondent Company engaged women workers and provided the cut fabric, thread, buttons, etc. to be made into garments at their own homes using own sewing machines.

Contentions of the Respondent Company

It was submitted on behalf of the Respondent Company that:

  • There was no employer-employee relationship between the Respondent Company and the women workers

  • The said women workers were independent contractors and not employees under Section 2 (f) of the EPF Act.

  • The sewing machines used by the women workers were owned by them and not provided by the Respondent Company.

  • The women workers worked from their homes and not from the production centers of the Respondent Company.

  • The women workers were not bound to report or work at the production centers.

  • The Respondent Company exercised no supervisory control over the women workers.

Reliance was also placed by the Respondent Company on C.E.S.C. Limited and Ors. v. Subhash Chandra
Bose and Ors.

Observations of the Supreme Court

Relying on the orders of the various Courts viz. Shining Tailors v. Industrial Tribunal II, U.P, Lucknow & Ors.; M/s P. M. Patel & Sons and Ors. V. Union of India & Ors.; the Supreme Court of India observed that:

  • The women worker were directly engaged by the Respondent Company in connection with the work of the Respondent company which was set up as a ready made garments industry

  • The women workers were paid on per piece basis for the services rendered

  • Merely because the women workers were permitted to do the work off site would not take away their status as employees of the Respondent Company

  • The decision of the case – CESC Limited and Ors. v. Subhash Chandra Bose and Ors. is not applicable to the present case as the meaning of the term ‘supervision’ is nowhere used in the definition of ‘employee’ under Section 2(f) of the EPF Act.

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