Overview and Applicability:

Fixed-Term Employment (FTE) was introduced in India in 2018 to offer employers greater flexibility and control over their workforce. Under FTE, workers are hired for a specific period through a written contract. Although the duration is fixed, they receive the same wages, allowances, and benefits as permanent employees, but proportionally adjusted based on their service period. This provision applies to all industries, promoting ease of doing business.

Benefits for Employers:

FTE presents significant advantages for employers by:

• Reducing long-term financial commitments associated with permanent employment.
• Offering greater cost flexibility and workforce control.
• Facilitating direct hiring without intermediary contractors, especially beneficial for MSMEs facing labor market rigidities.

Potential Risks and Concerns:

Despite its benefits, FTE also harbors potential risks:

• Exploitation of unskilled workers: Unskilled workers may face wage inequality and exploitation due to the lack of long-term job security.
• Termination flexibility concerns: The absence of notice protection during termination is a major concern.
• Unionization and benefit denial: FTE may hinder unionization efforts and limit access to certain benefits.
• Precarious employment for female workers: FTE may exacerbate existing challenges faced by female workers in the workforce.
• Shift towards precarious employment: Shifting from contractors to FTE arrangements might introduce precarious employment conditions.

Balancing Flexibility with Worker Protections:

While FTE provides flexibility for employers, its success hinges on:

1. Clear regulations: Clarity on key aspects like duration, renewals, and termination legality is crucial to prevent worker exploitation.

2. Stakeholder consultation: Careful consideration and ongoing initiatives within the labor framework are necessary to ensure FTE doesn’t become a tool for worker exploitation.

3. Balancing worker rights: The narrative around FTE should emphasize its role as an experimental approach, cautiously implemented within the existing labor framework to protect worker rights.

Conclusion:

Fixed-Term Employment in India presents both opportunities and challenges. Careful implementation, balancing employer flexibility with robust worker protections, is crucial to ensure FTE fosters sustainable employment growth without compromising worker rights.

Read Further

• The future of fixed-term employment in India
• Fixed Term Employment: Whether to bite the bullet
• Fixed term employment contract – Explained