The Union government has issued a draft notification to allow all businesses to offer fixed-term contracts to workers.
This will enable industries to hire workers for short-term assignments and terminate their services once the projects are completed. Business Standard had reported on December 27, 2017, that the Ministry of Labour and Employment is contemplating bringing back a proposal to allow flexibility in hiring workers after receiving demands from various quarters of the industry.
The government had allowed fixed-term employment only for the apparel manufacturing sector so far and had proposed to extend it to footwear, leather, and accessories sector workers in a decision taken by the Union Cabinet recently. The government had said that the move will help "attract large-scale investments at global scale".
Under fixed-term employment, workers are entitled to all statutory benefits available to a permanent worker in the same factory. The benefits include the same working hours, wages, and allowances. However, employers may not give notice to a fixed-term worker on non-renewal or expiry of his or her contract. In addition, employers can directly hire a worker for a fixed-term without mediation by a contractor.
"A fixed-term employment is a workman who has been engaged on the basis of contract of employment for a fixed-term," as per the proposed Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018.
It said that workers hired on fixed-term contract should be eligible for all statutory benefits "proportionately according to the period of service rendered" by the worker.
Industry cheered the move and said it will be a "win-win" for both employers and employees. "At present, contract labour has to be hired through contractors. Apart from the contract worker not being eligible for all the facilities that a permanent worker enjoys, they are also paid low as the contractor charges a fee," said M S Unnikrishnan, who co-chairs the Confederation of Indian Industry's (CII's) National Committee on Industrial Relations.
"The move will particularly benefit in boosting employment in seasonal jobs. For instance, the manufacturing of air conditioners takes place in the pre-summer season... that will go up now," Unnikrishnan added.
The National Democratic Alliance government had mooted allowing fixed-term employment in April 2015 by issuing draft rules to amend the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2015. However, Bandaru Dattatreya, who was then labour and employment minister, had shelved the proposal last year after strong opposition from trade unions.
The previous NDA government in 2003 had allowed hiring fixed-term workers but the United Progressive Alliance (UPA) government in 2007, following pressure from central trade unions, scrapped it. Central trade unions continue to oppose fixed-term employment.
At present, most countries of the Organisation for Economic Co-operation and Development and emerging nations allow using workers on fixed-term contracts with several conditions. The Indian Council for Research on International Economic Relations said in its working paper, titled 'Labour Regulations and Growth of Manufacturing and Employment in India: Balancing Protection and Flexibility', that giving fixed-term workers a minimum employment contract for six months and the right to be members of the trade union are important safeguards.