Indian Auto Union Allows Independent Contractors to be Members, Causing Legal Questions

An employee union of an auto parts company in Haryana, India’s auto hub, was recently found that they granted membership to an independent contractor. The move reignited the debate over contract workers’ right to join unions. Labour Commissioner of Haryana considers the action “illegal” under the union’s constitution, while the union argued that the right to form a union was guaranteed to all workers under the Constitution. 

Currently, Indian laws do not allow independent contractors to join employee unions. Contractors are usually hired for temporary assignments and are not covered by benefits such as pension, education, and health insurance. The union, who could lose its registration due to this move, argued that they would hope to improve working conditions for independent contractors. Depending on that outcome, the move to induct a contract worker into a company’s employees’ union could set a new trend.

Importantly, the upcoming Social Security Code changes include independent contractors into its scope of ‘workers’. Once the new changes are implemented, companies in India should be more cautious about distinctions between temporary contractors and permanent employees and how should they be applied.