The genesis of Indian labour law regime is sown in the preamble of the constitution of India. India does not recognize the principle of at-will employment and directs the state to protect the rights of workers. In some way, question of at-will employment has become a moot point after the introduction of the fixed-term employment. Ministry of Labour and Employment, vide a notification dated 16th March, 2018, in exercise of the powers conferred by section 15 of the Industrial Employment (Standing Orders) Act, 1946, has notified the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 (“Amended Rules”).

Amended Rules allow employers to engage workman on fixed term basis. It defines “fixed term employment workman” as a workman who has been engaged on the basis of a written contract of employment for a fixed period: Provided that- (a) his hours of work, wages, allowances and other benefits shall not be less than that of a permanent workman; and (b) he shall be eligible for all statutory benefits available to a permanent workman proportionately according to the period of service rendered by him even if his period of employment does not extend to the qualifying period of employment required in the statute.

The objective of the Amended Rules is to bring ease of doing business and also generate additional employment. It is important to examine the extent, to which, these Amended Rules can bring-in ease of doing business. Amended Rules enable employers to engage workmen for a fixed period, through a written contract clearly determining the terms of the service. The fixed-term employment shall stand terminated as a result of nonrenewal of the employment contract without any need of a notice of termination. It however, prohibits employers from converting the posts of the permanent workmen to fixed-term workman. This prohibition is just and fair in all ways as it would eliminate the possibility of misuse of fixed-term employment, to a larger extent.

For most of the companies, it becomes essential to engage contractors for services like housekeeping, security and other non-core jobs of a company. It is a well settled principle that contract labour cannot be engaged for core activities or for perennial jobs. In Standard Vacuum Refinery Company v. Their Workmen (1960 AIR 948, 1960 SCR (3) 466), the workmen of the company, with respect to contract labour employed by it for cleaning maintenance work at the refinery including premises and plant belonging to it, made a demand for abolition of the contract system and for absorbing the workmen employed through the contractors into the regular service of the company. The Supreme Court, while upholding the decision of Industrial Tribunal held that (1) the work which is perennial in nature and must go on from day to day and (2) which is incidental and necessary for the work of the refinery and (3) which is sufficient to employ a considerable number of whole-time workmen and (4) which is being done in most concerns through regular workmen, should not be allowed to be done by contractors.

It is also true that there are times when companies require to hire people on short term basis to perform core activities and perennial jobs and owing to the provision of Contract Labour (Regulation and Abolition) Act, 1970, rules framed thereunder (“CLRA Law”), companies/employers are not able to engage workmen for a fixed-term to perform such jobs which can be qualified as core jobs or perennial jobs for an organization. In this era of startups, there are many young companies, who requires workforce on project basis because they may not have financial capabilities to engage workforce on permanent basis. Amended Rules certainly comes to the rescue for those firms and companies who wants to engage workforce for a fixed term. E.g. if there is an Information Technology (IT) Firm which has a IT project to deliver and they require workforce for a period of 12 (Twelve) months, the same can be achieved by hiring workmen on fixed term contract basis. However, for bigger firms, this may not be a preferred approach, as big firms always have a vision, an organizational culture and ability to treat workforce as a competitive advantage.

Looking at the Amended Rules from a workman standpoint, it is obvious to understand that fixed term employment lacks job-security and may result into stressful situations for workmen. It is indeed a new experiment and government must look at reliable data about the use and misuse of the Amended Rules.

It can also be used as an alternate strategy to engage contract labour as it potentially mitigates the co-employment risks. Within the scheme of CLRA Law, there are various obligations casted upon the principal employer and with the same set of obligations, with larger say in hiring process, these firms can hire fixed term employees.

At this stage, it would be premature to comment upon the utility and/or misapplication of the Amended Rules, a close watch on the hiring trends by startups and big firms would provide better insight to the practices and usefulness of fixed-term employment. Undoubtedly, it has capabilities to emerge as an alternate strategy for engaging contract labour but acceptability of the approach among employers and workforce remains uncertain.