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In a significant judgment, Punjab and Haryana High Court noted that an employer can dispense with services of a contractual employee upon certain circumstances including financial constraints and reduced workload.

The High Court bench made it clear that the employer was well within his rights not to engage contractual employees if chooses not to go ahead with work due to budgetary/financial constraints.

“A contractual arrangement in favour of an employee would always be subject to the right of the employer to resort to a method of regular appointment. It would also be open for the employer to dispense with the services of a contractual employee if his work and conduct is found wanting,” Justice Tejinder Singh Dhindsa said.

He also stated that it would again be open for the employer to disengage the contractual appointee in case of non-requirement or reduction in workload.

“Yet again even if there be work, and on account of budgetary/financial constraints, the employer chooses not to carry out the work or implement the project in question, it would always be open for the employer not to engage any contractual employee,” Justice Dhindsa said.

A canal patwari who was working on contractual basis since February 2020 had moved Punjab and Haryana High Court against the state of Haryana and other respondents. He had sought directions to let him continue his services on the contractual basis until the filling up of the posts on a regular basis.

The counsel appearing for the petitioner submitted that his client’s conduct and work had been exemplary. “He was a matriculate and “patwar pass”. He had even gained sufficient experience on the canal patwari post. As such, he was vested with the right to continue on the post on a contractual basis,” he further added.

However, Justice Dhindsa dismissed the petition while asserting, “Such decision would be taken by the competent authority on an objective basis keeping in view the relevant parameters of workload, past work and conduct of the contractual employee in question etc.”


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