The contractual trap

There is a practice so entrenched in Indian public administration that it has become almost invisible. A government body needs workers. Instead of following the constitutionally mandated process of open recruitment, it hires on contract, daily wages, or ad hoc terms. Years pass. Sometimes decades. The worker performs the same duties as a regular employee, sits at the same desk, reports to the same officer, and keeps the institution running. On paper, however, they remain ‘contractual’. No pension. No provident fund. No job security. No career progression.

Then, when the worker finally asks to be treated as what they functionally are, a regular employee, the employer reaches for a familiar weapon: the Supreme Court's 2006 judgment in Secretary, State of Karnataka v. Uma Devi, (2006) 4 SCC 1. The argument runs like clockwork: Uma Devi says there is no right to regularisation. Case closed.

Uma Devi was never what the government claimed it was. The Constitution Bench did hold that backdoor, surreptitious, or illegal appointments could not be regularised as a matter of course. But the very same judgment carved out a clear one-time exception that employees who had served for more than ten years in ‘irregular’, not illegal, appointments against duly sanctioned posts were to be considered for regularisation. The judgment also drew a sharp and important line between ‘illegal’ and ‘irregular’ appointments.

For nearly two decades, governments across India quoted Uma Devi’s restriction while quietly ignoring its command. In Sheo Narain Nagar v. State of Uttar Pradesh, (2018) 13 SCC 432, the Supreme Court took judicial notice of this wilful misapplication. State governments had been continuing to make appointments on contract and daily wages at paltry remuneration and then invoking Uma Devi to perpetuate the very exploitation the judgment sought to end.

The Court was unambiguous that Uma Devi’s judgment is a positive direction and a command, not a discretion. It had always been both a restriction on backdoor entry and an obligation to regularise those who qualified under it. Courts and Tribunals that had been reading only the restriction, while ignoring the command, had been getting the law wrong for eighteen years.

In Jaggo v. Union of India, 2024 SCC OnLine SC 3826, the Court went further than any previous judgment in formally cataloguing what was happening. The Court identified five recurring patterns of exploitation in government contractual employment. First, the misuse of ‘temporary’ labels on essentially permanent work. Second, arbitrary termination without notice or natural justice. Third, deliberate exclusion from career progression, no promotions, no increments, no path forward. Fourth, the use of outsourcing as a legal shield: replacing one set of exploited workers with another to evade the obligation of regular employment. And fifth, the denial of basic social security, no pension, no provident fund, no health coverage over entire working lifetimes.

The Court drew an explicit parallel with the gig economy, observing that public sector misuse of temporary contracts sets a troubling precedent and erodes public trust in governmental operations. It cited the United States Ninth Circuit's Vizcaino v. Microsoft for the proposition that the nature of work performed, not the label attached to the worker, determines employment status and entitlement.

The most constitutionally significant development in this body of law comes from Bhola Nath v. State of Jharkhand, 2026 INSC 99. Here, unlike in earlier cases, the appointment letters expressly stated that the State would not regularise the appointees and that no claim to that effect could be made. The workers were Junior Engineers recruited in 2012 against sanctioned posts, after a formal advertisement and selection process. They received yearly renewals for over a decade, were subjected to transfers and postings like regular employees, and maintained unblemished performance records. In 2023, the State simply declined to extend their contracts further.

The High Court dismissed their writ petitions, holding that the workers had contractually accepted the terms and could not now resile from them. The Supreme Court rejected this reasoning at its root.

Fundamental rights, the Court held, are incapable of waiver. An appointment letter cannot extinguish the right to challenge arbitrary State action under Article 14. Relying on Central Inland Water Transport Corporation v. Brojo Nath Ganguly, (1986) 3 SCC 156, the Court held that contracts between parties of grossly unequal bargaining power that impose unjust terms are unconscionable and unenforceable. The formulation it employed was memorable in its directness.

The State stands as a lion; the job-seeking employee stands as a lamb. Constitutional Courts cannot enforce a contract between the two on the lion's terms.

This principle, that structural inequality in bargaining power attracts special judicial protection, has now been formally established as a constitutional discipline in Indian employment law. A worker who signs an exploitative clause at the time of appointment, desperate for employment and possessing no real negotiating power, cannot be held to have permanently surrendered their constitutional rights. The appellants, who had served for over a decade against sanctioned posts after a formal selection process, were directed to be regularised forthwith.

Running through all six judgments is an important evidentiary thread. In Vinod Kumar v. Union of India, 2024 INSC 332, the Court held that where an employer has subjected workers to the same promotion processes as regular employees and incrementally increased their pay, it cannot then be heard to say the engagement was always temporary. The employer's own conduct is the most powerful evidence against it. Rights arising from an employment relationship cannot be determined merely by the initial terms of appointment when the actual course of employment has evolved significantly over time.

This principle, combined with the adverse inference rule applied in Shripal v. Nagar Nigam, Ghaziabad, 2025 SCC OnLine SC 221, creates a robust evidentiary framework. When the employer claimed the workers were contractor employees, the Court noted the complete absence of any contract documents, tender notices, or contractor payment records. That absence, the Court held, allows an adverse inference. The employer's inability to produce its own records is treated as confirmation of the worker's account.

In Dharam Singh v. State of U.P., 2025 SCC OnLine SC 1735, the Commission itself had repeatedly recommended their regularisation. The State refused each time, citing ‘financial constraints’ and a ban on the creation of new posts. This continued for over three decades. The Court was unsparing. The State is a constitutional employer, not a market participant balancing a budget. A non-speaking refusal citing generic financial grounds without engaging with the demonstrated perennial need for the work, or explaining why similarly placed workers in the same establishment had been selectively regularised does not meet any standard of reasonableness.

The Court's reasoning on the 'no vacancy' plea deserves particular attention: if the work is perennial and the State has been extracting it for decades, the absence of sanctioned posts is the State's own unconstitutional failure. It cannot be turned into a bar against the workers' rights.

Taken together, these six judgments constitute a coherent and powerful framework. Their propositions can be stated clearly.

The nature of work, not the label on a contract, determines entitlement. Paragraph 53 of Uma Devi is a command to regularise, not merely a permission to consider. Contractual bars on regularisation written into appointment letters are constitutionally void. The employer's own long-term conduct generates legitimate expectations that cannot be arbitrarily frustrated. Financial constraints and recruitment bans do not override constitutional obligations or statutory retrenchment requirements. Outsourcing perennial functions to evade regularisation is an impermissible labour practice.

And throughout, Articles 14, 16, and 21 of the Constitution operate not as abstract aspirations but as enforceable constitutional disciplines, disciplines that apply with equal force whether the worker arrives carrying a permanent appointment letter or a one-year renewable contract.

What the Supreme Court has done across these six judgments is not merely adjudicate individual service disputes. It has conducted a constitutional reckoning with a practice that has persisted, at enormous scale, across every level of Indian government for decades.

The government had, in effect, created a parallel workforce: people doing public work, performing public functions, keeping public institutions operational, but standing permanently outside the protections that public employment is supposed to provide. The mechanism was simple and cynical. Call them contractual. Invoke Uma Devi when they complain. Replace them with outsourced workers if necessary. Repeat indefinitely.

The Court has now said, in terms that cannot be misread, that this mechanism is unconstitutional. The label does not determine the entitlement. The command in Uma Devi must be honoured. The contract cannot extinguish fundamental rights. The employer's own conduct cannot be disowned. And financial constraint is not an answer to a constitutional obligation.

For the millions of workers in irregular public employment across India, these judgments represent not just favourable precedent but a shift in the terms of the constitutional conversation. The State can no longer hide behind a label. It must answer for what it has done and for what, for decades, it chose not to do.

About the author: Alankriti Dwivedi is Senior Associate at Foresight Law Offices India.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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