Fixed-term employment: House panel for defining job tenures, adding safeguards

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April 25, 2020 5:48 AM

FTE workers/employees are entitled for all the benefits (except retrenchment compensation as termination of service as a result of completion of the tenure of FTE would not be considered as retrenchment) which are available to permanent employees.

It is not clear at this stage whether the panel’s views would impel the government to make the necessary changes in the Code and address its concerns. (Representative image)It is not clear at this stage whether the panel’s views would impel the government to make the necessary changes in the Code and address its concerns. (Representative image)

The facility of fixed-term employment (FTE) – which was first introduced in the garment sector driven by the seasonality of export orders in October 2016, and extended to all sectors in the ‘central sphere’ including the labour-intensive agriculture, mining and ports in March 2018 – could “lead to exploitation of workers and promote (an undesirable) ‘hire and fire’ policy”, the parliamentary standing committee on labour has warned. The FTE policy, as defined in the Code on Industrial Relations (IR Code) to which it is proposed to be subsumed, implies that it can be used (by employers) to replace the present and future permanent vacancies into a flexible contract on a regular basis, the panel said, and called the move “highly inappropriate and inapposite”.

Basically, the panel, headed by Biju Janata Dal MP Bhartruhari Mahtab, is concerned about two aspects of the FTE policy. First, the lack of a minimum tenure for FTE so as to guarantee a certain degree of job security to the workers concerned; secondly, the absence of an explicit clause mentioning the conditions under which and the areas where the employers can secure nod for FTEs from a designated authority.

It is not clear at this stage whether the panel’s views would impel the government to make the necessary changes in the Code and address its concerns. Governments have been less than enthusiastic in responding to serious policy shifts proposed by House panels vetting draft Bills which were prepared in the first place by the executive in concurrence with those in the highest echelons of power.

“The Committee express serious apprehensions at the flexibility provided to employers under the FTE to engage workers/employees on a fixed term period as per their requirement. Such flexibility has been envisaged without lucidity and coherence in the definition of Fixed Term Employment…The Committee, therefore, impress upon the ministry to incorporate protective and pre-emptive provisions in (the Code) explicitly mentioning the conditions under which and the areas where the employers can secure FTE from a designated authority. In short, the Code must specify that FTE shall be strictly based on objective situation so as to dispel and allay any sort of misgivings and misinterpretation,” the parliamentary panel said. It added : “…with a view to avoiding the manipulation of the concept, a maximum tenure, say not (more than) than two terms, as has been adopted by some countries like China, be incorporated unequivocally in the Code. In view of the fact that repeated renewals (of contracts) would make it easier for the employers to retrench a worker on the expiry of the contract, it becomes imperative to put a cap on the number of renewals of contracts under FTE so as to make it foolproof and immune to manipulation.”

FTE became part of the Industrial Employment (Standing Orders) Act, 1946 in March 2018. The Act is also set to be subsumed in the proposed IR Code along with the Trade Unions Act, 1926 and the Industrial Disputes Act, 1947.

Of course, the panel appreciated that workers/employees engaged under the FTE would get, unlike the contract labours, wages, allowances and other benefits including statutory benefits on par with the permanent employees and that there would be no discrimination between a fixed-term employee and a regular employee. It also welcomed the policy that persons appointed under the FTE can raise industrial disputes.

During the consultation stage, the labour ministry said that the FTE provision was introduced keeping in mind the interest of both workers and employers since FTE provides the employers flexibility to engage workers on a fixed-term period as per the requirement, while at the same time, such workers would get all benefits equivalent to a permanent workers. FTE workers/employees are entitled for all the benefits (except retrenchment compensation as termination of service as a result of completion of the tenure of FTE would not be considered as retrenchment) which are available to permanent employees.

In his deposition before the panel, the labour secretary said that prescribing minimum and maximum number of years as well as terms/tenure for FTE is “not desirable as it would defeat the very purpose of introducing FTE”.

When the panel asked whether FTE workers would get permanent placement after the contract period was over, the secretary said,

“Even the Supreme Court has ordered that where there is a perennial nature of job, it should not be filled up by the contract workers. That provision is already there. So, we should insist that where there is permanent nature of job, the vacancy should be filled up only by a regular employee.” The ministry, however, made it clear that the intention of FTE was not to do away with or discourage permanent jobs.

The committee, however, recommended to the labour ministry to reintroduce a proposal it withdrew from the IR Code to allow factories, mines and plantations employing up to 300 people ― against 100 now ― to retrench/lay off workers and/or shut shop without government approval. In the final draft, the labour ministry retained the number at 100, but left to the states to decide on raising the cap.

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