While presenting the Union Budget earlier this year, Finance Minister Arun Jaitley had said that fixed-term employment would be allowed in all industrial sectors. Following up on the announcement, the union government this month extended the facility to all sectors through the amended Industrial Employment (Standing Orders) Central Rules, 2018.
The move is expected to promote ‘ease of doing business’, as it reduces the role of middlemen and allows companies to hire workers based on seasonal trends. Trade unions across the country, however, say the government took the step without consulting them. They argue that such Rules would lead to a situation where only fixed-term jobs are created, leading to the elimination of permanent jobs.
The Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, notified by the Ministry of Labour and Employment, defines a fixed-term employment workman as one who has been “engaged on the basis of a written contract of employment for a fixed period”. The Rules state that no employer of an industrial establishment shall convert the position of the permanent workmen existing in his industrial establishment on the date of commencement of the amended Rules, that is, March 16, as fixed-term employment thereafter.
The move towards fixed-term employment will make it easier for companies to lay off workers, thus impacting job creation. As per the International Labour Organisation’s World Employment and Social Outlook: Trends 2018 Report, India’s unemployment rate for 2018 is expected to be 3.5%, more than the estimated 3.4%. In absolute terms, unemployment is estimated to have risen to 18.3 million in 2017 from 17.8 million projected earlier; for 2018, the ILO estimates unemployment to increase to 18.6 million from the 18 million estimated in its previous employment outlook Report.
Start, stop, start, stop
The central government had notified fixed-term employment for the apparel manufacturing sector in October 2016. In December 2017, the union cabinet approved the proposed extension of fixed-term employment to the leather, footwear and accessories industries. In January 2018, the Labour Ministry issued a draft notification for extension of fixed-term employment to all industrial sectors through an amendment of the Industrial Employment (Standing Orders) Central Rules, 1946.
Fixed-term employment was earlier introduced by the NDA government in 2003. Following protests by trade unions, the UPA government withdrew it in 2007. In 2015, then Labour and Employment Minister Bandaru Dattatreya brought the proposal of fixed-term employment to the table again, but had to withdraw it after stiff opposition from trade unions.
Terms of engagement
The notified Rules for fixed-term employment provide for equal work hours, wages, allowances, and other benefits along with all statutory benefits available to a permanent workman in proportion to the period of service rendered by an individual, even if the period of employment does not extend to the qualifying period of employment required in the statute.
However, no fixed-term workman shall be entitled to any notice or pay in lieu, if his services are terminated as a result of non-renewal of contract or employment.
Also, as per the Rules framed by the government, no notice of termination of employment shall be necessary in the case of temporary workmen, whether monthly- rated, weekly-rated or piece-rated, and probationers or badli workmen (workmen appointed in the position of permanent workmen or temporarily absent probationers).
Views of industry and unions
Trade unions across the board have opposed the extension of fixed-term employment to all sectors. The Rashtriya Swayamsevak Sangh-affiliated Bharatiya Mazdoor Sangh (BMS) has asked for the notification to be withdrawn, saying that none of its demands were accepted by the government. It said that permanent employment will vanish from the industrial sector, all jobs will be converted into temporary contract works for a fixed period only, and hire-and-fire will become the legalised rule in the labour sector. The Communist Party of India (Marxist)-affiliated Centre of Indian Trade Unions (CITU) has called for a nationwide strike on April 2 to protest against fixed-term employment.
The industry has, however, welcomed the decision. Ficci has said that the government’s move to extend the facility of hiring workers on a fixed-term basis to all sectors will trigger employment generation. The body has added that the Rules will help companies to employ people for a fixed duration for which they have orders or assignments, and there will be no burden of carrying extra labour force during the lean season.