Even as its ambitious labour reform agenda is facing delays for political reasons, the Narendra Modi government is moving fast on bringing in industry-friendly labour-market changes that don’t require legislative approval.
Even as its ambitious labour reform agenda is facing delays for political reasons, the Narendra Modi government is moving fast on bringing in industry-friendly labour-market changes that don’t require legislative approval. Fixed-term employment, introduced in the garment sector in September 2016 and replicated in the leather industry recently, is all set to be extended to all sectors. The fixed-term employment makes it easier for the industry to hire more in times of need to cater for the seasonal nature of order flows, but people employed under such contracts for fixed periods enjoy all benefits akin to the “permanent workers”, including work hours, wages, allowances, statutory benefits like employees’ provident fund, etc. According to a draft notification put up by the labour ministry on its website, “No notice of termination of employment shall be necessary in the case of temporary and badli workmen and no workmen employed on fixed-term employment basis as a result of non-renewal of contract or employment or on its expiry, shall be entitled to any notice or pay in lieu thereof, if his services are terminated.”
The draft notification seeks to modify the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018. Fixed-term employment was introduced in apparel manufacturing units as part of a Rs 6,000-crore package, a crucial component of which is that the government bears the entire 12% employer’s contribution to the employees provident fund for the first three years (against 8.33% earlier under a scheme). Chief economic adviser Arvind Subramanian was the proponent of the scheme. As FE has recently reported, just about 660 units have availed themselves of the benefits of the package so far and the number of beneficiaries stood at 1.6 lakh, not all of them “new employees.” Legitimising fixed-term employment across industries is important to avoid unproductive disputes and litigation and could encourage “formal employment” over “informal employment,” analysts said.They added that the move would positively influence the economy and help create more formal jobs, even while allaying fears of the employers of the risk of permanency of staff. According to the Industrial Relations Code drafted by the Modi government, units employing up to 300 people — as against 100 at present– can close down and retrench workers without prior approval of the government and ousiders can’t be office beares of trade unions in the organised sector. However, as reported by FE recently, these reform proposals have been put in aveyance due to opposition by trade unions, including the RSS-affiliated BMS.