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Govt may consider bringing back fixed term employment

Government may bring back the fixed-term employment amendment allowing employers to hire workers for short-term contracts, Business Standard reported following repeated demands from the industry.

December 27, 2017 / 11:22 AM IST

Government may bring back the fixed-term employment amendment allowing employers to hire workers for short-term contracts, Business Standard reported.

Earlier this year, the government allowed fixed-term employment in the textile sector, following which the other industries particularly food processing units have been demanding to allow them to hire workers for a fixed contract period.

“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,” a senior Labour and Employment Ministry official told the paper on condition of anonymity.

On December 15, the Union Cabinet had approved a Rs 2,600 crore special package for the leather and footwear sector, which included a provision to hire workers under fixed-term employment in these sectors. The government stated the move was taken “in order to attract large-scale investments at a global scale”.

Under fixed-term employment, industries can employ workers for short assignments and terminate their services once the projects are completed. Such a proposal is likely to allow industries to hire workers for seasonal or project-based works, for which companies refrain from hiring permanent workers due to the short-term projects and processes involved in their retrenchment.

In cases of termination of a permanent employee, companies are required to follow a process of retrenchment as per the Industrial Disputes Act, which includes giving notice, paying compensation, and intimating the government.

The proposal also entitles every employee to all the statutory benefits available to a permanent worker in the factory including a right to be a member of a trade union.

“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 earlier said in a statement.

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.

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

As per the amendment, employers are not required to give a notice to a fixed-term worker on non-renewal or expiry of his or her contract. It also allows industries to hire a worker for a fixed-term without mediation by a contractor.

The proposal guaranteeing fixed working hours, wages, and allowances to workers, however, has met with strong opposition from Central trade unions ever since it was introduced in 2003 by the previous NDA government. 

“We are demanding an 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 told the paper.

The amendment was scrapped in 2007 by the UPA government following the pressure from trade unions. In April 2015, the NDA government brought back the discussion on the same by issuing draft rules to amend the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2015.

In 2016, the then Labour and Employment Minister Bandaru Dattatreya shelved this proposal due to strong opposition from trade unions.