India: High Court’s position on the employer-employee relationship

Authors: Avik Biswas, Ivana Chatterjee and Vinduja Menon

In the case of Kaushal Kishor Singh v/s M/S Sita Kouni World Travel India Limited (Writ Petition (c) 11631 of 2008), a dispute arose between the petitioner and the respondent (employer) with respect to the termination of the petitioner’s engagement with the respondent. The petitioner challenged the termination of services by the respondent in the jurisdictional Labour Court. The Labour Court rejected the claim of unlawful termination by way of an order dated 07 June 2018 (“Order”) on the grounds that the petitioner has failed to establish the existence of an employer-employee relationship. Thereafter, the petitioner moved the High Court, challenging the legality and validity of this Order.

The petitioner asserted that he joined the services of the respondent as an “Approved Part Time Foreign Language Linguist Guide” in the year 2011. He was not issued any appointment letter and his services were terminated vide an email dated 25 March 2014, without giving any notice, holding any inquiry, or assigning any valid reason. The petitioner then sent a demand notice to the respondent, and he did not receive any response. The respondent released all pending payments, but his services were not reinstated. The petitioner’s contention was that the act of termination was against the provisions of the Industrial Disputes Act, 1947 (“IDA”), and without following the due process of law.

Given the foregoing, the issue that was determined in this case was whether there was any employer-employee relationship between the petitioner and the respondent. The respondent contended that the assignments given to the petitioner were intermittent and not regular in nature. The petitioner was a freelancer, as he was handling assignments for other travel agencies as well. The petitioner was not paid any regular amounts by way of salary or provided any statutory benefits such as provident fund or statutory bonus.

The High Court dismissed the petition and confirmed the Order. The Court held that the petitioner has failed to establish an employer-employee relationship. The burden of proving the relationship of employment lies on the petitioner and he failed to do so. The Court took into consideration that the petitioner worked on an assignment basis and was not given any promotion or bonus and he was not covered under the applicable statutory enactments.  The petitioner was not paid a salary and was paid only on an assignment basis. Moreover, the work experience of the petitioner clearly indicates that he was working as a freelancer on an assignment basis. Therefore, he would not qualify as a ‘workman’ under the IDA. In India, the service conditions of ‘workmen’ employees are subject to far greater statutory protection.

Further, the term freelancer was interpreted by the Court in detail. The Court observed that ‘freelance’ implies a person who acts independently without being affiliated with an organization and is distinguishable from a part-time, full-time, or contractual employee. Freelancing means a person who is self-employed or who is an independent contractor in the business of selling their services and skills to different employers for a specified time period. In freelance, there is no master-servant relationship as the servant is his own master and has the ability to pick and choose assignments.

Key Action Points for Human Resources and In-house Counsel:

There is a clear distinction between employees and freelancers under the law. A freelancer can very well work for multiple organizations. Having said that, employers are not required to pay salaries or make other statutory contributions with respect to a freelancer.