If media reports are anything to go by, then the government may soon give companies greater flexibility in hiring by introducing fixed-term employments in various sectors. Indian laws provide for various kinds of employments such as regular, fixed term, outsourced, daily wagers, casual, temporary, etc. Fixed-term contracts allow employers to specify a duration after which the worker can be let go according to the terms of contract. By contrast, permanent contracts have an indefinite duration, and firing such workers mandates following procedures, which are cumbersome and expensive.
Fixed-term jobs can be a pathway from unemployment to employment. Though it can’t be a long-term solution for our economy. The danger of engaging too many such contracts is that it may lead to lower employment stability as young workers will have to re-market themselves from one fixed-term contract to another. Companies too lose a worker who has been trained over the years. Excessive use of such contracts can also hurt the earning capacity of individuals and negatively impact the productivity.
With the current economic structure and provisions, it is more desirable that the legislature focuses more on amending the archaic labour laws rather than introducing merely fugitive alternatives. Fixed-term contracts are generally resorted to for seasonal and project-based employments, and sometimes to meet the fluctuations of demand, temporary pressure of work, etc. At times, however, companies are forced to enter fixed-term employments owing to complex termination laws. For instance, retrenchment and closure laws according to the Industrial Disputes Act, 1947 require payment of retrenchment compensation, notice pay as well as a nod from the government if the industrial unit has more than 100 workers. The permission is granted in the rarest of rare cases. Fixed-term contracts are an exception to retrenchment. In other words, if the contract of employment is fixed term, provisions of retrenchment need not be complied with and termination can be done according to the terms of the contract. When there aren’t any such permissions required for setting up a unit or hiring workers, then why should there be one needed for closing it?
Fixed-term contracts are to be tailored according to requirements. The date of commencement and termination must be mentioned, and the number of times it is renewed should be reasonable. A clause may be included that even during the contract period, it can be terminated by either party, upon serving the required notice/notice period. In case the contracts are continued for years or are renewed several times, even with artificial breaks in between, courts have the power to term them camouflage or sham. Provisions such as Minimum Wages, Provident Fund, Employees’ State Insurance, etc. need to be complied with for fixed-term employees, according to applicability.
Fixed-term and casual employees are a good option for companies when they need to stay flexible. But such contracts cannot replace the need of permanent workers in the industries. Changes in labour laws are essential to make the country an industrial hub. There should be more flexibility given to businesses in hiring and letting go workers by amending complex provisions and making them facile. At the same time, job security and satisfaction of employees, preventing misuse of contracts such as fixed term, compliance of benefits should also be maintained.
The writer is an advocate, Supreme Court of India
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