Introduction

The Ministry of Labour and Employment has released a draft notification dated 8 January 2018 (“Notification”) for stakeholder comments. The Notification, once published, aims to amend the Industrial Employment (Standing Orders) Central Rules, 1946 (“Rules”), to introduce a significant labour reform – allowing fixed term employment across all sectors. Subsequently, the states are expected to amend their rules accordingly. This move comes closely after Niti Aayog, the policy think-tank of the Government, recommended to extend the fixed-term employment to all sectors in its three-year action plan that was unveiled last year.

Highlights of the Notification:

  • Currently, fixed term employment is allowed only in the apparel manufacturing sector. However, the Notification proposes an amendment to the Industrial Employment (Standing Orders) Act, 1946 to include fixed term employment across all sectors.
  • The Notification inserts the definition of a ‘fixed term employment’ workman in the Schedule of the Rules. This is defined as a workman who has been engaged on the basis of a contract of employment for a fixed period: provided that, (a) hours of work, wages, allowances, and other benefits shall not be less than that of a permanent workman; (b) is eligible for all statutory benefits available to a permanent workman proportionately according to the period of service rendered by him, even if his period of employment does not extend to the qualifying period of employment required in the statute.
  • The Notification amends the termination provisions in the Rules to include the termination provisions for workman employed on a fixed term employment basis. This would mean that the fixed term employment workman shall not be entitled to any notice or pay in lieu of such notice, as a result of non-renewal of contract or employment, or on its expiry.

Comment

This move will enable industries across all sectors, whether seasonal or not, to hire workers for assignments that are of a short duration. Additionally, this will also provide flexibility to terminate such workers post the completion of such assignment.

Under fixed-term employment, workers will be eligible for all statutory benefits available to a permanent worker proportionately according to the period of service rendered by him, even though his period of employment does not extend to the qualifying period of employment required in the statute. Further, the work conditions in terms of work hours, wages, allowances, and other statutory dues of a fixed term employee would be at par with the permanent workmen. The employer can directly hire a worker for a fixed term without mediation of any contractor. The employer need not give notice or pay in lieu of such notice to a fixed-term worker on non-renewal or expiry of his or her contract.

The Notification is a bold step by the Central Government and signals its intent of retaining India on the manufacturing world map, without, however, compromising labour interests. In the backdrop of the upcoming general elections, it does seem like an effort of the Central Government to showcase its reform oriented strategy for the key sectors and areas, given that employment and labour has attained a significant status.

What needs to be seen is whether the Central Government springs a surprise by making the notification a reality, or whether this effort would again be hindered by the stakeholders' debating conundrum.