Recognition for Contract Workers

I was recently advising a large global company with local manufacturing facilities in India on various Recognition programs they could adopt for their Sales, Support and Manufacturing organizations. I learnt that over 20% of the total number of employees in the company were contractors employed through a third party staffing company. The contractors were at the lowest levels in the organization – field sales, factory workers etc. A number of supervisors/managers were including these contractors in their Reward and Recognition programs and wanted my advice how they could do more for them. To some extent, they considered them equivalent to full time employees when it came to recognition and wanted to integrate them into every program we would design for them.

This poses some legal questions. Can you include contract workers in your Recognition programs? The answer varies by geography and the legal/labour rules applicable locally. I decided to speak to a labour lawyer to get his opinion on this. I managed to find a good lawyer who would give me some quick advice without sending me an invoice.

The lawyer’s advice was exceptionally clear – For contract workers, the company should NOT provide any benefit outside of the fees payable to their employer (i.e. the contract staffing firm). Ideally, you should exclude contractors even from company celebrations to the extent possible. Individual rewards and recognition are an absolute “NO-NO”. Why? Because anything done for contractors outside of the contract fees is tantamount to “Pseudo Employment”. Such practices done over a period of time coupled with a few tenured contractors, could put the company at risk – essentially, the company can face legal action and be forced to employ the contractors as full-time employees and extend all employee benefits to them, retro-actively. This would pose a short term financial burden, longer term HR implications and impact long term benefit plans. So his answer in short was "IF you employ contractors, treat them as contractors and stick to the contract document on what you can do and what you cannot do – do not try to integrate them into the company and extend any employee benefits to them”.