The government is in the process of changing the labor rules. In a report by People Matters, it was outlined that the new rules will allow organizations to hire workers on contractual basis which would be categorized as ‘fixed-term employee’. The move is amid the criticism of jobless growth being faced by the government. The move would enable the organizations to hire more employees, consequently leading to the boost in hiring. Considering, that the law is counter to red-tapism culture in India, it might also help further improve India’s ranking in the World Bank’s Ease of Doing Business.

Similarities and differences between the permanent and fixed-term employees

As per the gazetted notification which has been carried out by the government on March 16, organizations cannot convert the permanent employees into ‘fixed-term employees’. Some benefits though will be the same that are offered to the permanent employees of the organization like pay parity and statutory benefits. The employees who have served for consecutive three months will be entitled to a two weeks’ notice while those who have been employed for less than two months won’t receive any warning. 

Probable misuse of amended rules

This change in rules in an amendment to Industrial Employment (Standing Orders) Central Rules, 1946. The draft for the amendment was prepared in the month of January 2018 by the government and had been forwarded to the standing committee for their reflection on the same. The feedback received by the government was the concern expressed with regards to the probable misuse of the amendment, and which is why the government has included the provision which prevents organizations from converting permanent employees into ‘fixed-term employees’.