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The good and bad side of 'fixed-term employment' amendment

This amendment is likely to help the industry in employing workers in sectors which are of seasonal nature

March 21, 2018 / 04:05 PM IST

In a move that could boost ease of doing business for employers intending to hire people for completing specific projects, tasks and orders, the government on Tuesday said it has extended the facility of hiring workers on fixed term employment to all sectors.

This amendment is likely to help the industry in employing workers in sectors which are of seasonal nature and witness fluctuation of demand and hence requires flexibility in employing workers.

This provision was earlier made available in October 2016 only for the apparel manufacturing sector, as per the Industrial Establishment (Standing Order) 1946.

The Labour Ministry issued a notification to amend the Industrial Establishment (Standing Order) 1946, be replacing the terminology, "fixed term employment in apparel manufacturing sector" with "fixed term employment".

The change in terminology allows the provision to be rolled out to all sectors.


Finance Minister Arun Jaitley, in his Budget speech this year, had announced that "the facility of fixed term employment will be extended to all sectors".


The concept of ‘fixed term employment’ clearly defines the tenure of employment as well as other related conditions of service and remunerations for the employees, which are otherwise provided to regular employees under various labour laws.

Hence, a worker employed even for a short term is eligible for better working and service, conditions as compared to a contract worker.

The fixed worker would be entitled to all benefits like wages, hours of work, allowances and others statutory benefits, not less than permanent workmen.

The amendment states that a temporary employee who has completed three months of continuous service, shall be given two weeks notice of the intention to terminate his or her employment, if the termination is not in accordance with the terms of the contract.

However, if the employee has not completed three months of continuous service, he or she shall be informed the reasons for termination in writing.

The amendment also stipulates 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.


According to the order, a notice of termination of employment is not necessary in case of temporary and badli workmen.

The order also states that a fixed term worker would not be entitled to any notice or pay if his or her services are terminated or in case of non-renewal of contract or expiry of term of employment.

Fixed-term employment has been defined as an employee who is employed on a contract basis for a fixed period. Thus, the services of the employee will be automatically terminated as a result of non-renewal of the contract.

If the employment of an employee ends as a result of non-renewal of the contract, he or she shall not be construed to be terminated from employment.

(With PTI inputs)
Moneycontrol News
first published: Mar 21, 2018 01:36 pm
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