The workers, who have been deployed in CGHS establishments since 2006, are challenging the Delhi High Court’s decision to curtail the monetary benefits flowing from findings that they were, in substance, employees of CGHS. | Photo Credit: SUSHIL KUMAR VERMA

A two-decades-long labour dispute involving 267 workers of the Central Government Health Scheme (CGHS) has put a wider question about government outsourcing before the Supreme Court: Can a government department avoid the obligations of a regular employer by repeatedly changing the contractors through whom the same workers are engaged?

The workers, who have been deployed in CGHS establishments since 2006, are challenging the Delhi High Court’s decision to curtail the monetary benefits flowing from findings that they were, in substance, employees of CGHS. Their case rests on the fact that their contractors changed, but the workers continued doing the same jobs under CGHS supervision.

“We have seen multiple cases where the government uses a layer of contractors to circumvent labour laws, including the contract law, to keep the employment terms ad-hoc and irregular. It is the principal employer but avoids shouldering any liability. This is one such case where the workers were employed for two decades by the CGHS. The contractors changed multiple times and the principal employer — who was the supervisory and the disciplinary authority and paid salary — was the CGHS. The courts at different levels have recognised this and regularised their employment. Our final challenge is to get them their due benefits,” said eminent labour lawyer and counsel for the workers Rajiv Agarwal.

The workers comprise Data Entry Operators and Operation Managers who say they were selected after interviews and technical tests conducted by CGHS officers. They were posted and transferred by the CGHS and performed functions, including patient registration, processing medical reimbursement claims, obtaining patient permissions and managing computer networks, at CGHS dispensaries.

The Labour Court, in its award, recorded evidence that approximately 12 vendors or contractors changed between 2006 and 2014 while the same workers continued performing the jobs. It also noted that there was nothing on record showing when the individual workers had actually been engaged or terminated by the vendors.

The Tribunal found that CGHS officials exercised supervisory control over the workers and dealt with matters including appointment, termination, transfers, disciplinary action, identity cards, experience certificates and user IDs and passwords. NICSI, which CGHS had cited as the intermediary/vendor between itself and the outsourced manpower, neither appointed nor terminated the workers or initiated disciplinary proceedings against them, according to the evidence recorded by the Tribunal.

The Labour Court consequently held that the contracts between CGHS/NICSI and the private vendors were a “sham and camouflage” and that an employer-employee relationship existed between CGHS and the workers. It directed their regularisation from their initial engagement, along with applicable pay scales and consequential benefits.

“It is evident that most of the claimants/workers, have been working with the management continuously and uninterruptedly since 2006, as Data Entry Operators/and/or Operation Managers, the nature of which is considered to be perennial... It emerges that the management has adopted an unfair labour practice in depriving the workmen herein of the status and benefits of permanent workment and such a practice is required to be curbed,” the labour court said.

The Delhi High Court’s Single Judge upheld the finding in July 2024. A division bench of the High Court, in December 2025, also rejected CGHS’s challenge to the finding of direct employment. The bench, however, curtailed the workers’ monetary relief. While retaining the finding that the 267 workers were CGHS employees and directing their regularisation, it restricted the financial benefit to the period beginning August 23, 2019, the date of the Labour Court award, rather than from the workers’ initial engagement.

That restriction is now before the Supreme Court. The workers say their challenge is confined to the curtailment of their monetary benefits and seek restoration of the Labour Court’s original relief, including wages and consequential benefits from the date of their initial engagement.

Published on September 18, 2026