Fixed-Term Employment across Industries

Why in news?

The Union Ministry of Labour has reportedly urged States to issue orders permitting fixed-term employment (FTE) across industries.

What is fixed-term employment?

• In March 2018, the Centre notified on fixed-term employment (FTE) for all sectors. Click here to know more.
• Under this, a company or an enterprise hires an employee for a specific period of time.
• The contract can be renewed or terminated according to the performance of the worker.
• The notification does not permit conversion of permanent posts into FTE.
• Therefore, the move, for now, is aimed at turning contract workers into FTE ones.

What are the benefits?

• Entitlements - Under FTE, workers will be entitled to benefits available to permanent workers.
• Contract workers, if turned to FTE workers, stand to gain in terms of the statutory benefits.
• They can possibly be assured of a greater sense of accountability from the principal employer.
• Jobs - For the contract workforce, poor work environment has been a major trigger for unrest in industrial hubs.
• It is, therefore, in the industry’s interest to improve their working conditions.
• However, the industry had largely been reluctant to go ahead, in view of rising costs and obligations.
• The cost of capital had remained so low as to deter labour use.
• Notably, this is said to be a factor for the slowed down job growth in the last decade.
• But industries will now gain from FTEs category of the workforce, as it gives them the much-needed flexibility.
• Sectors - FTEs are particularly useful in executing specific projects, such as in the infra sector.
• They are prevalent in apparel, footwear and sections of the media.

What are the concerns and ways out?

• Rules - The present rules do not explicitly mention the minimum or maximum term of an FTE and the maximum permissible number of consecutive FTEs.
• The FTE conditions need to be defined clearly to make them acceptable to both employers and employees.
• E.g. In China, a worker employed without an FTE for a year is deemed to be on an open-ended contract
• She is considered a permanent employee after two successive renewals.
• While introducing FTEs to promote employment, these norms should be arrived at in a transparent, consensual manner.
• It is also important to ensure that new labour reforms have a better social safety net.
• Legal - FTE has been notified by an executive order, without Parliament having ratified it.
• So states are not really obliged to take it forward.
• This is because labour is a Concurrent List subject, and States are bound only by a central law (unless they choose to amend that).
• The Centre’s notification at present applies to central public sector undertakings.
• It also applies to activities governed by the Centre such as banking, civil aviation, finance, insurance, ports and mining.
• So for the FTE to function across regions and industries, the Centre must take the Parliament route.

Source: BusinessLine