The Government is considering a proposal to allow
fixed term employment to empower the employers of all sectors to recruit the
employees on fixed term basis for short term projects.

The underlying reason for this
development is that government allowed textile industry to retain employees on
fixed term basis following which it received demands from various sectors to
allow such sectors to engage employees on short term basis for fixed
projects. 

In 2003 the then UPA government’s
efforts to make such move were scrapped due to protests by trade unions. Again
in 2016, NDA government attempted to put into effect the proposal and the
proposal again got shelved due to strong opposition from trade unions.

The apparent intent of said proposal
is to accord equilibrium amid the interests of employers and employees by
facilitating employers to employ workers as per the demands of the market and
ensure that such workers acquire equal pay and eligible to all benefits that
are bestowed on the permanent workers.

Companies are restraining themselves
from engaging permanent employees for short term assignments (related to a
particular projects or seasonal projects) as they are burdened to comply with
the procedure commanded by law on the termination of the permanent employees.

Under the Industrial Disputes Act,
upon the termination of the permanent employees, industries are obliged to meet
the terms of retrenchment (including giving prior notice of termination, paying
arrears of compensation to the terminated employee, and intimating the
government of the employee termination).

Enforcement of fixed term employment
may encourage companies to employ workers for short span projects and terminate
the workers at the end of the projects without ensuing the gist of formalities
they have to adhere to for permanent employees under the existing laws.

This could certainly benefit
industries to execute their projects comprehensively with fixed term employees
without much hassle.

On the other hand, employees engaged
on fixed term will be qualified to adore each and every benefit conferred on
the permanent employees including the right to be a member of a trade union.

This proposal is opposed by the trade
unions and they demand to focus on enhancement of permanent employment rather
than enforcing the fixed term employment.

Despite of the opposition by the trade
unions, from a practical point of view one should understand that with the
enforcement of fixed term employment will certainly result in providing
employment to unemployed and enhance the productive of all the designated
sectors – impeding the enforcement of fixed term employment is nothing but
obstructing the development of nation economy and contribute to upsurge in
unemployment – as most of the companies are not profound  on fetching permanent
employees for short term assignments.

It may be a good to test the fixed
term employment mechanism to generate jobs enhancing the production of all
revenue generating sectors – ultimately boosting the economic development of
the nation.

Research and inputs by Paruchuri
Baswanth Mohan

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About the author :

Bhumesh Verma is a lawyer with over 2 decades of experience in advising domestic and international clients on corporate transactions (M&A, Venture Capital, Private Equity, Startups, corporate advisory, etc.) and features in “The A-List – India’s Top 100 Lawyers” by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters and is a guest faculty as well. He can be reached at [email protected].