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Fixed-Term Employment across Industries

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October 18, 2018

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

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