Incorporation of Fixed Term Employment in Industrial Employment (Standing Orders) Act, 1946

Concept  – The concept fixed term employment define the tenure of employment as well as other associated conditions of service and remunerations, which are provided to regular employees under various labour laws. Fixed term employment was defined as a workman who is employed on a contract basis for a fixed period. Thus the services of workman will be automatically terminated as a result of non renewal of the contract between the employer and the workman concerned. Separation of service of a workman as a result of non renewal of the contract of employment between the employer and workman concerned shall not be construed as termination of employment.

Objectives of Inclusion of the term Fixed Term Employment –

  • To provide flexibility to the employers in order to meet the challenges of globalization, new practices and methods of doing businesses. The demand is from those sectors where there is fluctuation in demand and hence variation in demand of the labour accordingly. These seasonal demands have to be met with the flexibility in operation to meet the dynamics of the market and hence inclusion of the category of fixed term employment.
  • Presently, as per Section 2 (bb)(oo) of the ID Act, the workers could be employed on contract basis for some fixed time period and the removal of such workers on termination of contract is not considered as retrenchment. Hence they are not eligible for any notice period or retrenchment compensation as per the ID Act. This indicates that there is an indirect provision of employment of workers for a fixed term, however the service conditions of workers engaged for definite period is not stipulated leading to different treatment for workers on fixed term employment.
  • Impact of inclusion of the term – On the termination of fixed term employment of the workman the workman is not entitled to any notice or pay in lieu thereof. However, by proposed inclusion of the Fixed Term Workman as one of the category of workman in the classification of workman in theIndustrial Employment (Standing Orders) Act, 1946 , the Ministry intends to make such workman on fixed term employment  eligible for all statutory benefits available to permanent workman proportionately accordingly to the period of service rendered by him. Even though his period of employment does not extend to the qualifying period of employment required in the statute.
  • This step would ultimately benefit the workers as their working conditions would be at par with the regular employees including social security and other benefits. It would, on the one hand provide flexibility to the employers and on the other hand improve the working conditions of the workers already working for some fixed tenure only by way of contracts.
  • It would also provide prescribed format of contract for engaging workers on fixed term employment, thereby avoiding any exploitation of such workers. The inclusion in the IE (SO) Act would define formally the conditions of employment on which the workman would be engaged for Fixed Term.

Inclusion of Fixed Term Workmen as classification of Workmen in IESO Act

  • The Industrial Employment (Standing Orders) Act, 1946 require employers to define conditions of employment in their industrial establishments. The item one of the schedule to the Act classifies the workman (a) Permanent (b) Temporary (c) Apprentice (d) Casual (e) Probationer (f) Badlis.
  • The list in this schedule is not exhaustive. The nature of industrial establishments may be a factor to decide the classification of the workmen. Example:- a seasonal establishment, intermittent working establishment, work of the establishment.
  • The Central Government can add any other matter in the schedule and in the rules under the powers given in section 15 of the Act. As per the powers under Section 15, Central Government has presently proposed to introduce the concept of Fixed Term Employment for workers in Apparel Manufacturing Sector. The draft notification for comments has been issued on 04.08.2016 and would be in public domain for 30 days i.e. 04.09.2016.

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