Fixed Term Employment

• In India, it is generally believed that the reason we are not able to industrialize or open new industry is due to the rudimentary labor laws applicable where the employer has no rights/ flexibility is provided to the employer on the matters of downsizing, termination, or closure even if the employee's performance is not at par or in case of loss in the business the employer has given no choice to closure rather they are forced to run the business in losses, further if closure takes place after all the due diligence, Employer has to pay hefty retrenchment benefits to the employees.
• Now the govt of India has proposed FTE as an option under the industrial relations code, let us understand what is FTE means:
• It is a contract in which a company hires an employee for a specific period. In most cases, it is for a year but can be renewed after the term expires depending on the requirement.
• The payout or the payment is fixed in advance and is not altered till the term expires but, in most cases, it is mutually agreed and a salary hike is given after assessing the performance or value added by the employee
• In most IT companies, professionals are hired on a contractual basis to complete a specific project. They could be absorbed in the company later when the project is completed. Further, it allows the company to assess the potential of the person before taking them on the permanent roles of the company.

Let us understand what the industrial relations code says about fixed-term employment:

• FTE has been included as a category of employment in the classification of workers in the first schedule for matters to be provided in standing orders at item 1 in the industrial relations code.
• FTE worker is a worker who has been engaged based on a written contract of employment for a fixed period.
• Hours of work, wages, allowance, and other benefits shall not be less than a permanent worker.
• All statutory benefits (EPFO, ESIC, Bonus, Gratuity) available to the permanent worker shall also be available to FTE workers in such proportion as according to the period of employment.
• No need to render the service required in the statute.
• No notice of termination of employment shall be necessary in case of temporary workman whether weekly/monthly paid No notice pay or retrenchment compensation shall be given to FTE
• It is assumed that once these codes /rules are implemented they will help in boosting the economy of the country as the employer will not be liable for permanent employment and can take a risk to do newer business often. If a new industry opens then it will generate more job opportunities which will be a win-win situation for both employer and employee.