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Fixed-Term Employment Rules Will Lead To Formal Job Creation

The Fixed-Term Employment Rules can have a tremendous positive impact on employment generation in the organized sector in India

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In the deafening noise on lack of job creation in the economy and how the government has not done anything about it, a very important initiative of the Central Government failed to receive adequate attention. Early 2018, the government had expanded the scope of hiring fixed-term employees to all Sectors, paving the way for an increase in the number of jobs with assured benefits hitherto available to permanent employees only.

The Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, better known as “Fixed-Term Employment Rules”, had the potential of raising the number of jobs by giving flexibility to companies to hire people for a fixed period, irrespective of the Sector. Till that time, this provision could only be used by companies operating in the Textiles Sector. 

The Rules were a win-win policy intervention by the Central Government. However, they could not be executed in true spirit as State Governments wanted Administrative clarity on how to go about it. It is important to note here that the Constitution of India has kept labour in ‘Concurrent List’ which means that the Centre and States both can enact Legislation on Labour. In this case, since the Rules were framed by the Centre, States pleaded ignorance. Last month, the Central Government asked all States to issue separate Notifications allowing Fixed-Term Employment in all Sectors and implement the same.

With this clarification, the Fixed-Term Employment Rules can now be implemented in letter and spirit; and it can have a tremendous positive impact on employment generation in the organized sector in India. According to the Labour Bureau’s Annual Survey on Employment and Unemployment 2015-16, the latest count of unemployment was 5 per cent. Of those employed, almost 33 per cent are casual workers and don’t have employment benefits like assured minimum wages, number of working hours, etc. More than 95 per cent of casual workers don’t even have a written job contract. The Fixed-Term Employment Rules will bring these workers in the fold of formal employment with all applicable benefits. This will also streamline hiring by industries that witness a seasonal spurt in demand for workmen. For example courier services, small manufacturing units etc.

As per the rules, a fixed-term worker is entitled to better working conditions as compared to a casual worker. He/she should be given all benefits like wages, hours of work, allowances and others statutory benefits, just like a permanent workman. The rules also made it difficult to fire temporary employees. If the worker has completed three months of continuous service, he/ she should be given a two-week notice before terminating his or her service if the termination is not in accordance with the terms of the contract. In case the employee has not completed three months of continuous service, the employer has to inform the reasons for termination in writing.

The amendment also mandates that services of a temporary worker shall not be terminated as punishment unless he or she has been given an opportunity to explain the charges of misconduct alleged against him or her. Moreover, no employer can convert the posts of permanent workmen to fixed-term employment.

While there are many positives, the Government could do well by ironing out the wrinkles as well. The Government needs to clearly specify the Pension and other Retirement Benefits and their Calculations otherwise disputes may arise between workers and employers.

The Rules also create scope for camouflaging of the fixed-term employment contract. From the cost point of view, the implementation may increase administrative cost and statutory workload if we compare it with CL(R&A) where more of compliances are taken care of by engaged Contractor(s). It seems to be a replica of The CL(R & A) with more scope to “Camouflage” Employment Contract and Unfair Labor Practices.

The notification, however, is silent about the Appellate Authority who can be approached for clarification, escalation and grievance handling. In fact, Labour Authority Officers are not aware of the implementation procedure.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
employment employees jobs job contract Minimum Wages

Vivek Misra

The author is Director, Mynd Solutions, an HR outsourcing company

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