In line with an announcement made by finance minister Arun Jaitley in his latest Budget speech, the labour ministry has extended full-benefit, fixed-term jobs — already a feature in the labour-intensive garment and leather industries — to all sectors of the economy.
A notification to this effect, amending the relevant rules under the Industrial Employment (Standing Orders) Act, 1946, has been issued by the ministry of labour and employment.
The move would have multiple benefits: It would boost creation of ‘formal jobs’, reduce instances of informal hiring, which continues to be the norm in the unorganised sector, and spare businesses the undue burden of keeping regularised contract employment, even as their labour requirements are seasonal. The labour market flexibility will help the manufacturing sector, on the cusp of a revival after a prolonged slump.
The facility was introduced in the garment sector in June 2016 and later, the cabinet decided to extend it to leather and footwear sectors.
Fixed term workmen will be entitled to benefits similar to the permanent workforce like EPF, ESIC, defined working hours, minimum wages, allowances and other statutory dues. “He (fixed-term workman) shall be 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 statue,” according to the notification.
Defining 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 government added: “No employer of an industrial establishment shall convert the posts of the permanent workmen existing in his industrial establishment on the date of the commencement of the (notification)” to that of fixed term workman. This gives protection to existing permanent employees. Henceforth, “no notice of termination shall be necessary in the case of temporary workman whether monthly rated, weekly rated or piece rated and probationers or badli workmen”.
Of the country’s estimated 50 million workforce, hardly 10% is in the organised sector are entitled to social security benefits such as provident fund and benefits like defined working hours, minimum wages, allowances and other statutory dues. Unorganised sector workers are mostly deprived of these benefits.
Legitimising fixed-term employment with all these benefits across industries is important to avoid unproductive disputes and litigation and could encourage formal employment over informal employment, analysts said. The move would positively impact influence the economy as it would create more formal jobs while also allaying concerns of the employers of the risk of costly permanency of workforce even while employing workers for project-based, limited-duration requirements.
According to the notification, a temporary workman, who have completed three months of continuous service, “shall be given two weeks notice of intention to terminate his employment if such termination is not in accordance with the terms of the contract of his employment”.
