The Rajasthan High Court has delivered a significant ruling on the rights of contractual employees affected by policy changes. While refusing to interfere with termination orders, the Court directed that employees willing to continue under the new scheme must be retained with pay protection, ensuring that policy modifications do not result in arbitrary deprivation of livelihood.
Background & Facts
The Dispute
The petitioners, Rishav Pal and Rahul Saini, were employed as Lab Technicians under a government scheme where infrastructure was provided by the state and manpower services were outsourced through agencies. Their services were terminated following a policy change where the government decided to merge infrastructure and manpower services under a single private lab, discontinuing the outsourcing model.
Key Facts
- The petitioners were engaged through M/s Kiran Enterprises, an outsourcing agency, under a scheme where the government provided lab infrastructure
- The government modified the scheme, requiring a single private entity to provide both infrastructure and manpower services
- The petitioners' services were terminated by the outsourcing agency following this policy change
- The petitioners sought continuation of their services under the new scheme, citing experience and benefits under the Rajasthan Contractual Hiring to Civil Posts Rules, 2022
Procedural History
- 30.04.2026: Writ petition filed before the Rajasthan High Court challenging the termination orders
- The petitioners argued that the policy change should not result in termination of their services, which were against sanctioned posts
Relief Sought
The petitioners sought:
- Quashing of the termination orders
- Direction to continue their services under the new scheme
- Pay protection equivalent to that extended to employees sponsored by outsourcing agencies
The Legal Issue
The central question was whether contractual employees can be arbitrarily terminated due to a change in government policy, particularly when the change involves transitioning from an outsourcing model to a consolidated service model without providing alternative employment opportunities.
Arguments Presented
For the Petitioners
- The petitioners contended that their termination was arbitrary and violated principles of natural justice
- They argued that their services should continue under the new scheme as they were recruited against sanctioned posts
- Reliance was placed on the Rajasthan Contractual Hiring to Civil Posts Rules, 2022, which provided certain benefits to contractual employees
- It was submitted that the policy change should not deprive them of their livelihood, especially since they had sufficient experience
For the Respondents
- The respondents argued that the old scheme involved separate provision of infrastructure and manpower services, while the new scheme required a single entity to provide both
- It was submitted that the petitioners could not compel the government to continue the old scheme, as it would frustrate the purpose of the new policy
- The government counsel, however, stated that the selected lab had been directed to absorb employees willing to continue under the new scheme
The Court's Analysis
The Court examined the distinction between the old and new schemes. Under the old scheme, the government provided infrastructure while manpower was outsourced through agencies. The new scheme required a single private lab to provide both infrastructure and manpower services, eliminating the outsourcing model.
The Court noted its previous rulings where it had protected employees from termination due to changes in outsourcing agencies. However, it distinguished the present case on the ground that there was no continuation of any manpower supplier under the new scheme. The policy change was not merely a change in agency but a fundamental shift in the execution model.
"Now the facts in the present case are different. There is no continuation of any manpower supplier distinctly. Now the previous procedure of execution of the scheme has been changed. The old scheme used to have infrastructure provided at the cost of the Government and the services of manpower were obtained from outsourcing agency, however, in the new scheme, the infrastructure and the manpower services are required to be provided by one entity."
The Court observed that compelling the government to continue the old scheme would frustrate the object of the new policy and force the state to create its own infrastructure instead of relying on private entities. However, it emphasized that employees willing to work under the new scheme must be accommodated to prevent arbitrary deprivation of employment.
The Verdict
The writ petition was disposed of with the following directions:
- The Court declined to interfere with the termination orders
- The respondents were directed to ensure that the petitioners, if willing to work, are continued under the new scheme
- The respondents were obligated to extend pay protection equivalent to that provided to employees sponsored by outsourcing agencies
- The selected lab was directed to adopt the same pay protection standards for the petitioners
What This Means For Similar Cases
Policy Changes Cannot Justify Arbitrary Termination
- The judgment reinforces that government policy changes cannot be used as a pretext for arbitrary termination of contractual employees
- While the Court recognized the government's right to modify policies, it emphasized that employees willing to continue must be accommodated under the new scheme
- Practitioners should argue that pay protection and continuity of service must be ensured even when schemes are restructured
Pay Protection Is a Non-Negotiable Right
- The Court directed that pay protection must be extended to employees transitioning from old to new schemes
- This sets a precedent that contractual employees cannot be subjected to unilateral reductions in benefits due to policy changes
- Employers and government agencies must ensure parity in remuneration for employees performing similar duties, regardless of the scheme under which they are engaged
The Limits of Judicial Intervention in Policy Matters
- The Court refrained from interfering with the policy decision itself, recognizing the government's discretion in scheme execution
- However, it protected the rights of employees by ensuring their absorption under the new scheme
- This highlights that while courts may not strike down policy changes, they will intervene to prevent arbitrary deprivation of livelihood
