Calcutta High Court directs HDFC Bank to pay allowances to contract workers, dismisses writ challenging Industrial Tribunal award

In a dispute intertwining the rights of contract labour, the obligations of a principal employer, and the procedural safeguards of the Industrial Disputes Act, the Calcutta High Court on August 12, 2025 upheld an award directing HDFC Bank Ltd. to ensure payment of certain allowances to security personnel and other contractual staff engaged through multiple service contractors. The case arose from a 2015 reference by the Ministry of Labour questioning the legality of stopping (i) Gun Allowance, (ii) Special Allowance, and (iii) Conveyance Allowance previously paid to such workers deployed exclusively in the Bank’s operations.

The Central Government Industrial Tribunal, by its award dated 20 August 2024, held that these allowances though not part of “wages had been unilaterally withdrawn without compliance with Section 9A of the Industrial Disputes Act, 1947, amounting to an illegal change in service conditions. The Tribunal directed that both the contractors and the principal employer, HDFC Bank, were liable to make good the arrears from the date of stoppage until the workers’ service ended, with the Bank empowered to recover the sums from contractors under Section 21(4) of the Contract Labour (Regulation & Abolition) Act, 1970. Payment was to be made within three months, failing which legal recovery proceedings could be initiated.

Challenging the award, the Bank argued that no employer–employee relationship existed between it and the contractors’ staff, that Section 9A could not apply to a principal employer in such circumstances, and that restructuring of wage components by service providers could not form the subject matter of an industrial dispute with the Bank. It further contended that Section 21(4) of the CLRA Act was inapplicable and that the Tribunal’s relief exceeded the scope of the reference.

The submissions made were rejected by the Court. Observing that the service conditions of the workers were shaped by the Bank’s requirements and that they performed duties solely for the Bank, the Court held that the Bank was squarely within the ambit of “employer” in the reference. As such, any change in service conditions effected through the contractors was attributable to the Bank, triggering obligations under Section 9A. The Court also upheld the Tribunal’s reliance on Section 21(4) of the CLRA Act to fasten liability on the principal employer for unpaid allowances.

Noting that the dispute had lingered for a decade, the Court dismissed the writ petition and directed immediate implementation of the award within six weeks, with payment of all dues along with 10% interest per annum. The decision highlights that principal employers cannot evade liability for statutory compliance in relation to contract workers engaged exclusively for their operations, particularly when unilateral changes in service conditions are involved.