Govt may bring back proposal to allow fixed-term employment

The National Democratic Alliance (NDA) government is exploring the possibility of bringing back a controversial proposal to allow industries to hire workers on fixed-term contracts.
The move, if given a go-ahead, will allow industries to employ workers for short assignments and terminate their services once the projects are completed.

“We have received representations from various industries to allow flexibility in hiring workers in seasonal jobs. The latest demand has come from the food-processing industry. Instead of giving sector-wise relaxation, we may look at allowing fixed-term employment for all the industries,” said a senior labour and employment ministry official, requesting anonymity.

The Union Cabinet had approved a special package for the footwear, leather, and accessories sector on December 15. The package included allowing fixed-term employment in these sectors “in order to attract large scale investments at global scale”.

In October last year, the Ministry of Labour and Employment had notified changes to the Industrial Employment (Standing Orders) Central Rules, 1946, allowing the apparel manufacturing sector to hire workers on fixed-term contracts. 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.

“It is a ‘win win’ situation for both worker and employer as on one hand, it provides flexibility for employing workers as per the demands of the market and on the other hand, it ensures worker hired gets equal benefits and working condition at par with the permanent employee,” the ministry of labour and employment had said in a statement in October last year, while announcing fixed-term employment in the apparel sector. Companies in seasonal work usually refrain from hiring permanent workers for project-based jobs because termination requires going through the process of retrenchment under the Industrial Disputes Act. This includes giving notice, paying compensation, and intimating the government.

The NDA 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. “We are demanding increase in permanent employment. Contractors terminate the employment of workers at a time when they get skilled while doing the job. So, instead of bringing fixed-term employment, the government should fix the issues related to dealing with contractors in hiring workers,” Bharatiya Mazdoor Sangh (BMS) General-Secretary Virjesh Upadhyay said.

At present, most countries of the Organisation for Economic Co-operation and Development (OECD) and emerging nations allow using workers on fixed-term contracts with several conditions. The Indian Council for Research on International Economic Relations (Icrier) 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 for fixed-term workers.

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