Long Service Alone Does Not Create Employer-Employee Relationship; Outsourced Workers Cannot Be Regularised: P&H HC
The Division Bench held that such a relationship must be established on the basis of written documentary evidence, including an appointment order. In the present case, the advertisements and appointment orders had been issued by the private agency, not PRTC. The workers’ deployment was pursuant to a manpower-supply arrangement, and at no stage had PRTC issued an appointment order.
In a significant judgment that clarifies the contours of labour jurisprudence in the context of outsourcing arrangements, the Punjab and Haryana High Court has held that employees recruited and appointed by a private outsourcing agency cannot claim regularisation with the Pepsu Road Transport Corporation (PRTC) merely on account of long service. The Division Bench comprising Justice Harsimran Singh Sethi and Justice Minderjeet Yadav, in *Pepsu Road Transport Corporation v. Daljeet Singh and Others* (LPA Nos. 1549, 1410, 1556, and 1529 of 2026), delivered on August 31, 2026, allowed a batch of appeals filed by PRTC and set aside the order of a Single Judge which had directed regularisation of outsourced employees.
The ruling emphasis the principle that the existence of an employer-employee relationship must be established through documentary evidence, particularly an appointment order issued by the employer. Mere deployment, supervision, or long and continuous service does not, by itself, create such a relationship.
Case
The respondents had been working with PRTC as drivers, conductors, and other personnel. However, the record revealed that they were recruited from the outset through a private outsourcing agency, M/s S.S. Service Providers. The agency had advertised the posts, issued appointment orders, and managed the employment relationship. The workers were subsequently deployed at PRTC to perform their assigned duties.
Crucially, PRTC had not issued any appointment order conferring upon them the status of regular, temporary, ad hoc, or officiating employees. Their salaries were paid by the contractor, and their provident fund contributions were managed by the outsourcing agency.
Despite this, the employees approached the High Court seeking regularisation, contending that their continuous service with PRTC, the nature of their duties, and the supervisory control exercised by the Corporation demonstrated that PRTC was their real employer. On April 22, 2026, a Single Judge accepted their claim, directed regularisation, and extended consequential service benefits, including eligibility for the Old Pension Scheme where applicable.
Contentions and Legal Issues
The workers argued that their long service and the control exercised by PRTC over their duties established an employer-employee relationship. They relied on precedents concerning contractual employees who had been regularised after years of service.
PRTC, however, challenged the Single Judge’s order, asserting that the respondents were employees of the outsourcing agency and not of the Corporation. It emphasized that no appointment order had ever been issued by PRTC, and that the contractual arrangement was strictly between the Corporation and the outsourcing agency.
The central legal issue before the Division Bench was whether continuous service and supervisory control, absent documentary proof of appointment, could establish an employer-employee relationship sufficient to justify regularisation.
Court’s Hearing
The Division Bench held that such a relationship must be established on the basis of written documentary evidence, including an appointment order. In the present case, the advertisements and appointment orders had been issued by the private agency, not PRTC. The workers’ deployment was pursuant to a manpower-supply arrangement, and at no stage had PRTC issued an appointment order.
The Court relied upon the Supreme Court’s decision in *The Joint Secretary, CBSE v. Raj Kumar Mishra*, which emphasized that a direct master-servant relationship must be established on paper. Supervisory or jurisdictional control, by itself, does not suffice.
The Bench specifically rejected the proposition that merely because the workers performed duties at PRTC and were subject to its operational supervision, they automatically became employees of the Corporation. Continuous working with PRTC, the Court observed, could not by itself be sufficient to treat the respondents as PRTC employees for the purpose of regularisation.
Distinction Between Outsourced and Contractual Employees
The Court drew a clear distinction between workers directly appointed by a corporation on a temporary or contractual basis and those supplied by an independent outsourcing agency. A temporary employee under PRTC’s service regulations would have been appointed by the Corporation itself. In contrast, the respondents had never been appointed by PRTC in any capacity.
Therefore, an appointment made by a private contractor under an outsourcing arrangement could not be converted into a temporary appointment of PRTC merely because the workers had performed their duties at the Corporation for several years.
The Court also noted that the contractual arrangement between PRTC and the outsourcing agency did not confer upon PRTC the ordinary disciplinary authority over the outsourced workers in the manner applicable to its own employees. This absence of disciplinary control was considered significant in determining the actual employment relationship.
Conclusion
The Division Bench concluded that the Single Judge had erred in treating the respondents as PRTC employees merely because they had been continuously deployed with the Corporation. By setting aside the Single Judge’s order, the Court reaffirmed the principle that regularisation requires proof of direct appointment by the employer.
This judgment carries important implications for outsourced workers and public sector corporations alike. It clarifies that long service and supervisory control, without documentary evidence of appointment, cannot create an employer-employee relationship. Outsourced workers remain employees of the contractor unless there is clear proof of direct appointment by the principal employer.
The ruling thus reinforces the legal boundaries of outsourcing arrangements, ensuring that statutory protections and regularisation benefits are not extended beyond their intended scope. It also serves as a reminder to workers and employers that the substance of employment relationships must be established through documentary evidence, not merely inferred from long service or operational supervision. For further insights into the evolving workplace paradigm, visit
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