Industrialization has affected different countries in different ways. However, what has remained constant in almost every nation that has experienced industrialization in one form or the other is the growing need for protocols that could benefit both employers and workers. The type of employment contract that exists between employers and workers is amongst the most important protocol that ensures the smooth coexistence of both the entities as well as the streamlined functioning of businesses. Indian companies and workers have always been inclined towards permanent employment contracts but things have drastically changed in the past few years. Everyone now seems to be moving towards fixed-term employment.
The pandemic has also played a huge role in accelerating this shift from permanent employment contract to the fixed-term employment contract. It is still early days to say whether or not this concept of employment will work in India or not. What can be done though is seeing how it could work out considering the employment laws and future of work in the country.
The nature of work of some industries like food, leather, and textile amongst others make them viable to be running during a certain period of the year. They don’t work the entire year as many other industries do. So the demand for goods related to these industries surges higher in a specific period during the year and goes down significantly in the remaining months. So these industries need workers only for a limited time. This is where fixed-term employment contracts could fit in very well.
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The best thing about fixed-term contracts is that they are beneficial for both employers and employees. In addition, fixed-term employees are protected under the amendments made to employment laws in 2018. The benefits that employees are offered under fixed-term employment are directly related to the term of their service.
How is fixed-term employment defined? It is a mode of employment that can be used to employ workers for a fixed period of time. The terms of employment are written in a contract that needs to be mutually agreed to by both parties. There are two very important conditions fixed-term contracts need to fulfil. The wages, work hours, and other benefits of a fixed-term worker should be equal to that of workers. Workers under fixed-term employment are entitled to all the statutory benefits that their permanent counterparts are. And these benefits are offered according to their period of service even if it doesn’t match the period necessary to qualify for those benefits.
At the time this idea of fixed-term employment was introduced, not many trade unions were in support of it. They didn’t find it too different from contract employment. However, after understanding how it works, what benefits it can offer in the long-term, and how it can help them in the post-pandemic era, many of those unions have now extended their support.
Benefits of fixed-term employment
Fixed-term employment can be a boon for both employers and employees in India, especially in the current situation. It brings along several benefits that other forms of employment contracts don’t.
The biggest benefit of being a fixed-term employee is having the rights and privileges that permanent employees have. A fixed-term worker is entitled to similar working conditions, salary, and bonuses. According to the law, there should be no difference in the benefits offered to permanent employees and fixed-term employees.
It has been seen in a few instances that fixed-term employees with a better skillset get a better salary than their permanent counterparts. Also, companies hiring fixed-term workers can either extend their term of service or turn the fixed-term contracts into permanent ones based on the performance of those workers and their requirements. So fixed-term workers always have a chance of getting permanent subject to how well they perform during the time they are with a particular company.
Companies looking for a candidate with a specific skillset for a particular project can make the most of fixed-term employment to hire a specialized candidate for a specific time. This form of employment also gives employers a chance to hire better employees by hiring them for a fixed-term and evaluating their performance before offering them a permanent contract.
Fixed-term employment can also help companies to predict budgets and resources more effectively. In addition, employers can expect their fixed-term employees to be more committed not only because of all the benefits offered to them but also because they want their fixed-term contracts turned into permanent ones.
How does fixed-term employment affect hiring practices in India? This is not a new concept. It has been around in different forms and names, such as temporary employment, contractual employment, and others. The new amendments in the employment laws propose to legalize employment forms that are already being practiced. What this will do is formalize those contracts and clearly state the state of service. People employed under the contracts will now enjoy benefits that permanent employees were entitled to.
Fixed-term contracts also ensure job security throughout the term of service along with several other benefits. What it also does is get contractors out of the picture. The contract will only engage two parties – employers and employees. There is another side to it as well. Fixed-term employment can do permanent or regular employment much harm in the long run. Permanent employment was already on the way down even before the pandemic hit. Things have turned even worse in the past six months or so.
This means only one thing – the future of employment is more inclined towards fixed-term employment. Several experts have already said that the employment landscape of India will completely change in the next decade or so. Permanent employment will no longer be there. In addition to self-employment, the only two employment forms left will be contractual and fixed-term employment.
- “All that you must know about Fixed Term Employment in India” | Indian Legal | 12 October 2020
- “Fixed Term Employment Contracts in India” | Asgar Ali | 20 March 2019
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