MCD eyes one-time regularisation of contractual staff; Punjab clears plan to absorb 65,000 workers. The moves could reshape municipal finances and set a precedent for other states.
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The Municipal Corporation of Delhi is weighing a one-time regularisation of contractual employees, along with extending entry-pay, dearness allowance, leave and other benefits, according to a PTI report.
Mayor Pravesh Wahi issued directions on Friday, 31 July, asking Municipal Commissioner Sanjeev Khirwar to examine the move. The review covers contractual staff directly recruited by the MCD who have worked for several years against vacant sanctioned posts in Group A, B and C.
Eligibility will be scrutinised against the recruitment rules for the corresponding posts. The assessment is expected to consider whether the initial appointments were made through a regular process and did not involve irregularity or illegality, the report added. Appointments that do not meet those criteria would not qualify.
Punjab has taken a similar step. In May, the state government said it had approved a process to dismantle a decades-old contractual employment system and regularise more than 65,000 workers across 51 government departments.
Under that plan, Punjab repealed the Adhoc, Contractual, Daily Wage, Temporary, Work Charged and Outsourced Employees' Welfare Act, 2016 and cleared two new pieces of legislation: the Punjab State Outsourced Personnel (Transition to Contractual Engagement) Bill, 2026 and the Punjab Contractual Personnel (Absorption Against Sanctioned Vacancies) Bill, 2026. One bill creates a route for outsourced personnel to shift to contractual engagement; the other allows contractual staff to be absorbed against sanctioned vacancies.
Implementation is to begin within 45 days of Cabinet approval. Eligible categories will be notified in phases by the Departments of Personnel and Finance, the Chief Minister's Office said in a release.
The Punjab Cabinet will also consider payment of dearness allowance and dearness relief dues for all categories of state government employees and pensioners for the period from 1 July 2021 to 31 March 2024, the report said. A sub-committee will separately discuss arrears based on revised salary and pension benefits for the period between 1 January 2016 and 30 June 2021.
The moves reflect a broader push by state and local governments to address the status of contractual workers, a category that has grown across India's public sector. For the MCD, regularising thousands of staff would add to its salary bill and pension obligations, potentially straining a municipal budget already under pressure. For Punjab, absorbing 65,000 workers into regular payrolls could free up hiring processes but also commit the state to long-term pension liabilities.
Litigation risk is another factor. Any decision to exclude certain contractual employees from regularisation could trigger legal challenges from unions or affected workers. The MCD's eligibility criteria, which require a regular process at the time of initial appointment, may face scrutiny in court.
Other states are watching. The Delhi and Punjab cases could become templates for similar moves in Uttar Pradesh, Maharashtra and elsewhere, where large contractual workforces exist. Municipal bond holders and credit rating agencies will be tracking the fiscal impact of such regularisation drives.
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