Govt plugs gap to allow firms to benefit from fixed-term employment rules

The government has asked states to issue separate notifications allowing fixed-term employment at all private sector companies, seeking to plug a gap that prevented most firms from taking the benefits of one of the biggest labour law reforms in recent years.

In March, the government notified the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, allowing industries to hire fixed-term employment workers – a form of contract system with a fixed tenure. Such workers are entitled to all statutory benefits available to a permanent worker in the same establishment. 
 

However, industry bodies soon sought clarity from the Union labour and employment ministry on the implementation of the notification, as the central government can frame rules for industries belonging to the central sphere under the Industrial Employment (Standing Orders) Act, 1946. This includes all central public sector units and private sector units in the civil aviation, banking and finance, telecommunications, insurance, ports, dock, and mines sectors.
 

So, all the private sector firms not belonging to the central sphere were left clueless about the Centre’s new rules concerning contract workers, an industry association executive said requesting anonymity. Industries such as steel, gems and jewellery, construction, and automobiles have, therefore, not benefitted from the Centre’s fixed-term employment notification.
 

“The Union labour secretary has written a letter to the chief secretaries of all states earlier this month, urging them to issue notification allowing fixed-term employment for private sector workers in the states’ sphere. The secretary said it is a positive move for both industry and workers,” a source said. An industry executive said private sector firms felt a disconnect with regard to the central government’s March notification as many states were unsure about the course of action — whether they were supposed to issue a separate notification or not.

“The states’ sphere is much larger than the central sphere. The fixed-term employment notification issued by the Union labour ministry will be applicable to industries in the central sphere. So, every state will have to issue its own orders to implement the fixed-term employment rules,” said K R Shyam Sundar, professor of human resource management at XLRI. He added that industries in Maharashtra, Tamil Nadu and Jharkhand were awaiting the state government’s notification.
 

Another industry executive said the fear of getting into legal troubles at the time of factory inspection was one big reason why the industry was hesitant to implement the central government’s order till states issued a similar notification.
 

In an interview in August, Prime Minister Narendra Modi had termed the introduction of fixed-term employment as a “major reform”. However, all central trade unions, including the RSS-affiliated Bharatiya Mazdoor Sangh (BMS), are up in arms against the government’s move. While the BMS organised protests across the country in August against fixed-term contracts, other unions have announced a two-day nationwide strike in January 2019. 

EASING THE WAY

| In March, the Union labour and employment ministry issued a notification allowing fixed-term employment for workers in all industries

| Notification is, however, only applicable to industries under the Centre's ambit

| Central public sector units and private firms in civil aviation, banking and finance, telecom, insurance, ports, dock and mines come under this category

| Centre has urged states to issue similar notifications for allowing fixed-term employment in all other sectors, including jewellery, automobiles, construction, and health care