Can a principal employer dismiss a contract worker?

No. The contractor is the worker's employer under section 2(m) of the IR Code 2020, so dismissal is the contractor's decision. A site can ask for a worker to be replaced on its premises, and can keep someone off the floor for immediate safety, but a site that dismisses a contractor's worker itself is acting as that worker's employer.

Is a contract worker paid while suspended?

Yes, where suspended pending an enquiry into misconduct. Section 38 of the IR Code 2020 sets subsistence allowance at 50% of wages for the first ninety days of suspension and 75% after that, unless the delay is the worker's own doing. The enquiry should ordinarily finish within ninety days, and the employer who pays is the contractor.

Does a contract worker get notice if the contractor ends the job?

Where the termination is a retrenchment and the worker has a year's continuous service, section 70 of the IR Code requires one month's notice or pay in lieu, and fifteen days' average pay for each completed year of service. A dismissal for proved misconduct is a disciplinary punishment and is not a retrenchment.

Can a dismissed contract worker challenge the decision?

Yes. Section 4(9) of the IR Code treats a dispute over one worker's discharge or dismissal as an industrial dispute, even with no union involved. The worker can seek conciliation and, after forty-five days, apply directly to the Tribunal, within two years of the dismissal. The dispute is with the employer, which for a contract worker is the contractor.

Can a site remove a contract worker?

A site can ask for a contract worker to be taken off its floor, but it does not discipline or dismiss them. The contractor is the worker's employer under the Industrial Relations Code 2020, so suspension, enquiry and any penalty are the contractor's to carry out. A replacement request ends the worker's place on that site, not necessarily the job. Keeping those two apart protects both the worker and the site.

Who can do what

The site controls its premises; the contractor controls the employment. Section 2(m) of the IR Code lists the contractor among those who count as an employer, and section 38 speaks of a worker "suspended by the employer". The appointment letter comes from the contractor too (OSH Code s.6(1)(f)). In practice the line usually falls here:

Step	Who does it	Basis
Stop an unsafe act, or keep someone off the floor for immediate safety	The site	Its duty for everyone on the premises (OSH Code s.6(1)(h))
Record what happened and tell the contractor	The site	The contract; good practice
Ask for the worker to be replaced on this site	The site	A term of the commercial contract
Suspend pending enquiry	The contractor	IR Code s.38
Hold the enquiry and decide a penalty	The contractor	Its standing orders, where they apply
Dismiss, or end the employment	The contractor	IR Code s.2(m)(iii)

A site that suspends, fines or dismisses a contractor's worker itself is acting as that worker's employer, which is the fact pattern behind claims that a contract arrangement is not genuine. How that plays out on particular facts is a question for the site's own counsel.

If the contractor takes disciplinary action

It follows a process, not a phone call. Standing orders are compulsory from 300 workers (IR Code s.28), and the Model Standing Orders 2026 for manufacturing set out the steps in paragraph 23 of Schedule B. A smaller contractor without standing orders still needs a fair process, because a dismissal can be challenged either way.

The charge. Misconduct is listed, and includes theft, wilful insubordination, habitual absence or lateness, fighting or disorderly behaviour on duty, wilful damage, sleeping on duty, and refusing to wear the protective equipment provided.
Suspension. In writing, with a statement of reasons within a week of the suspension.
The enquiry. The worker can appear in person, or be represented by a union office-bearer or a co-worker, and the proceedings are recorded in Hindi, English or the State's language, as the worker prefers. It should ordinarily finish within ninety days (s.38(1)).
Subsistence allowance. 50% of wages for the first ninety days of suspension, and 75% after that unless the delay is the worker's own doing (s.38(3)).
The penalty. Decided after giving the worker a chance to make a representation on the penalty proposed, weighing the gravity of the misconduct and the worker's record.

Moving a worker is not the same as ending the job

A replacement request is about one site. The contractor can redeploy the worker elsewhere, and the employment carries on. If it instead ends the employment without any finding of misconduct, the termination may be a retrenchment. Section 2(zh) defines that as termination "for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action", with listed exceptions such as a fixed-term contract running out.

For a worker with at least a year's continuous service, section 70 then requires one month's written notice or pay in lieu, compensation of fifteen days' average pay for each completed year, and notice to the government. Whatever the route, wages due are paid within two working days of the worker's removal, dismissal, retrenchment or resignation (Code on Wages 2019, s.17(2)).

Where it goes wrong

When the reason is not the real reason, or the process is skipped. Part I of the Second Schedule to the IR Code makes it an unfair labour practice to discharge a worker for union activity, or by way of victimisation, on false reasons, on trumped-up allegations of absence, or in disregard of natural justice in a domestic enquiry (items 4 and 5). The fine is ₹10,000 to ₹2 lakh (s.86(5)).

A worker can also take a dismissal further alone. Section 4(9) treats a dispute over a single worker's discharge or dismissal as an industrial dispute, even with no union involved. The worker can apply for conciliation and, after forty-five days, go directly to the Tribunal, within two years of the dismissal (s.4(10)–(11)).

What a site should do

Deal with immediate safety first, then write down what happened, when, and who saw it, while it is fresh.
Send it to the contractor, and ask for the worker to be replaced on this site, in writing, stating the reason.
Do not fine, suspend or dismiss a contractor's worker, or tell them they are dismissed. That is the contractor's decision.
Make witnesses and records available if the contractor holds an enquiry, including gate logs and CCTV where they are lawfully held.
Check the contract provides for replacement on request, and says who covers the shift in the meantime.

How Velura Services helps

When a site asks us to take a worker off its floor, we do, and we handle what follows as their employer: a written record of the complaint, a fair hearing, and any suspension or penalty under our own procedure, not the site's. We send a replacement from our bench so the shift is covered, and tell the site the outcome.

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Sources

The Industrial Relations Code, 2020 (Act 35 of 2020), Gazette text hosted by the Ministry of Labour and Employment. Sections cited: s.2(m) (employer, including a contractor), s.2(zh) (retrenchment), s.4(9)–(11) (individual disputes; direct application to the Tribunal), s.28 (standing orders at 300 workers), s.38 (ninety days; subsistence allowance), s.70 (conditions for retrenchment), s.86(5) (penalty), Second Schedule Part I items 4 and 5. Opened and read.
Model Standing Orders, 2026, S.O. 2312(E) dated 8 May 2026. Schedule B (manufacturing sector), paragraph 23 (disciplinary action for misconduct). Opened and read [VERIFY: against the e-Gazette original].
Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI. Sections cited: s.6(1)(f) (appointment letter), s.6(1)(h) (factory employer responsible for persons on the premises). Opened and read.
The Code on Wages, 2019 (Act 29 of 2019), Gazette text hosted by the Ministry of Labour and Employment. Section 17(2) (wages within two working days of removal, dismissal, retrenchment or resignation). Opened and read.