The government has been promoting Ease of Doing Business in India and labour reforms have been one of its tall promises.

Employers have been seeking the flexibility to offer fixed term employment for long. Their objective was to ensure flexibility to adjust the workforce in view of changing market conditions from time to time. Particularly, apparel manufacturing and exports sectors have very seasonal and cyclical character and these sectors engage their workforce on a fixed-term employment and their demand for such arrangements was allowed. 

Now, an amendment has been made to the Industrial Employment (Standing Orders) Rules, 1946. This amendment introduces a new category of fixed-term employees in addition to the earlier six classifications of workers under Schedule 1-A of these Rules. For these categories of works, an employer may prescribe separate conditions of service. The amendment also mandates that such fixed-term workers would enjoy the same emoluments and allowances as permanent workers – however their benefits will be pro-rated for the period of their employment.

The government has extended the concept of fixed-term employment across all industries. This should provide more job opportunities and better working conditions for fixed-term employees. Otherwise, many employers were hesitant in engaging labour (if it was needed for a limited term) due to draconian nature of termination provisions for workers. This situation was bad both for the employers as well as labour.  

Critics of the move, however, argue that fixed-term employment will promote contract labour culture among employers. No solution can be perfect nor ideally suited to all concerned, there has to be some give and take. In bargain for employers’ flexibility, the fixed-term workers would get greater protection and benefits than workers so far supplied by contractors. 

This amendment distinguishes fixed-term workers from casual contract workers who are generally paid less nor do they get any statutory allowances and benefits which are mandatorily applicable in respect of regular workers. 

Therefore, the government seems to be trying to balance the rights and obligations of the employers and employees through this new dispensation. Wish has tried to balance the wages, social security and welfare of fixed-term employees, but because their term is fixed, their termination with notice is inherent in their employment contract. I feel the intent is good. The efficacy of this mechanism, though, can be gauged only post implementation.