In a bid to provide flexibility in hiring and firing, the government has introduced “fixed-term employment” across the sectors. According to the notification, The Union Labour Ministry has allowed fixed-term employment across industries and has also approved moves by some states to amend the Industrial Disputes Act so that factories employing up to 300 workers can close or retrench labor without seeking government approval. 

The draft notification on fixed-term contracts is part of the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, and enables companies to hire workers for short-term assignments and terminate their services when projects are completed. Under the fixed-term employment, workers are granted statutory benefits available to a permanent worker in the same factory, including work hours, wages, and allowances. However, employers need not give notice to fixed-term workers on non-renewal or expiry of contracts. Under the notification, the employers can directly hire a worker for a fixed term without mediation by a contractor. 

Anshul Prakash (Partner), Khaitan & Co. shares, “The draft notification is a bold step of the Central Government making it aptly clear that it means business and that the interest of the industry and employees must be balanced. In the backdrop of the Davos meeting, it does seem an effort of the CG to showcase its reform-oriented strategy for the key sectors and areas, employment and labor having attained a significant status. Notwithstanding the resistance from the stakeholders coming from the labor union background, it does seem that the CG intends to make business easier for the industry by liberalizing the steps for the closure of undertakings and recognizing fixed-term employment contracts for industries across the board. What needs to be seen is whether the CG springs a surprise by making the notification a reality or this effort would again get stuck in the stakeholders' debating conundrum.”