State Can't Keep Workers In Perpetual Contractual Limbo: P&H High Court Calls Out 'Exploitation' Of NHM Staff, Orders Regularisation

The Punjab & Haryana High Court has held that the State cannot continue to extract work of a permanent nature while denying employees the security of regular service, observing that such arrangements amount to “exploitation camouflaged as contractual engagement.”Justice Sandeep Moudgil said, "This Court cannot shut its eyes to the fact that the State, which is expected to be a model employer, has itself indulged in a manner of dealing with its employees which bears the clear imprint of exploitation. When such conduct emanates from the State, it does not remain confined to the narrow compass of a service dispute. It assumes a larger constitutional significance. For if the State itself legitimises or tolerates unfair treatment of its employees, it sends out an unfortunate signal that such conduct is acceptable in the place of employment."The Court highlighted that, "the ripple effect is inevitable and dangerous. Private employers, quick to draw comfort from State practice, may feel emboldened to adopt similar methods, thereby normalising what ought never to be normalised. What begins as an aberration in State conduct may thus silently harden into a pattern of exploitation in the wider employment landscape."Disposing of a batch of petitions, the Court addressed a common question of law concerning the regularisation of employees engaged under the National Health Mission (NHM), many of whom have served continuously for over a decade.“Temporary In Form, Permanent In Substance”The petitioners, including Auxiliary Nurse Midwives (ANMs), staff nurses, lab technicians and other health workers, were appointed through a due selection process under NHM guidelines. Though initially engaged on contractual terms, their services were repeatedly renewed without interruption for more than 10 years.The Court noted that their work, ranging from clinical services to field-level healthcare delivery—was neither casual nor project-specific but formed an integral and continuing part of the State's public health system.Rejecting the State's argument that the employment was purely contractual and scheme-based, the Court held that the “substance of employment must prevail over its label.”The State argued that there was no legal right to regularisation, The posts were not sanctioned, NHM is a scheme-based programme with financial constraints.However, the Court found these submissions unpersuasive, emphasizing that, Public health is a constitutional obligation under Article 21, not a temporary scheme; The State exercises full control over appointments, supervision, and service conditions and funding patterns cannot dilute the employer-employee relationship.In a strongly worded observation, the Court said the State cannot “wear two faces”—one as employer when extracting labour, and another as a disowning authority when asked to confer benefits.Contractual Clauses Cannot Override Fundamental RightsThe Court underscored that merely because employees accepted contractual terms, they do not waive their constitutional protections under Articles 14 and 16.“A welfare State cannot justify arrangements that keep individuals in a state of prolonged uncertainty where the need for work is continuous,” the Court observed, adding that contractual stipulations cannot be used as a device to perpetuate insecurity.Doctrine of 'Model Employer' InvokedInvoking the principle that the State must act as a “model employer,” the Court held that ;long, uninterrupted service indicates a permanent need;Repeated renewals without regularisation reflect administrative arbitrariness;Employees develop a legitimate expectation of regularisation over time.The Court also cautioned against the growing trend of “gig-like” precarious employment within government structures, stating that such practices erode fairness and dignity in public employment.Regularisation Not Automatic, But Cannot Be Denied ArbitrarilyWhile reiterating that regularisation cannot be claimed as a matter of right in violation of constitutional recruitment norms, the Court clarified that prolonged contractual engagement against permanent work cannot be ignored.Relying on Supreme Court rulings, the Court held that the State cannot exploit workers by continuing them indefinitely without security, absence of sanctioned posts or financial constraints cannot be the sole grounds to deny relief, where work is perennial, the State must take steps to regularise or create appropriate posts.Title: NEERAJ RANI AND OTHERS v. STATE OF HARYANA AND OTHERSCitation: 2026 LiveLaw (PH) 173Click here to read order

State Can't Keep Workers In Perpetual Contractual Limbo: P&H High Court Calls Out 'Exploitation' Of NHM Staff, Orders Regularisation

Aiman J. Chishti

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State Can't Keep Workers In Perpetual Contractual Limbo: P&H High Court Calls Out 'Exploitation' Of NHM Staff, Orders Regularisation

Aiman J. Chishti

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