Is FTE the Future in India…
The Industrial Relations Code, 2020 which aimed at amending, simplifying and rationalizing the existing three laws relating to the trade unions, conditions of employment of workers and investigation and settlement of industrial disputes, introduced the method of ‘Fixed-term Employment’ which is relatively a new method of engaging and deploying workforce that would lead to healthier employer-employee relations in the industry, as seen from the experiences in some of the developed economies.
Engagement of a worker on the basis of a written contract of employment for a fixed period is called ‘Fixed-Term Employment (FTE)’. The introduction of FTE with all statutory benefits like wages; social security coverage, including gratuity on pro-rata basis, etc. at par with the regular employees who are doing work of same or similar nature is a historic move that is likely to fundamentally change the existing misconceptions between the employee and the employer related to remuneration and other conditions of employment. FTE could prove to be a game-changer for both employee’s and employer’s. While on the one hand it would be beneficial to the workers in terms of better remuneration, working conditions and work culture, on the other hand it would provide functional flexibility to the employers and enterprises to plan their manpower requirements precisely as per the seasonality of operations and the demands of the market, thus providing a win-win bargain to both.
Hitherto, in the absence of the formal provision of fixed term employment, an employer had the limited options to either engage workforce on regular basis or on contractual basis through an intermediary i.e., the contractor. This process not only resulted in higher transaction cost to the employer but also resulted in lack of continuous and sustained availability of skill, especially when required during the peak demand. Further, the contractual arrangement also resulted in lesser commitment towards work on hand with less or no sense of belongingness towards the enterprise working for, thus having its own impact on the efficiency and productivity. Even the worker has been on the receiving end in the contractual system as the remuneration and other conditions of service were to his disadvantage though the contractor raises the full bill and service charges to the employers.
Fixed Term Employment (FTEs) tries to address the above genuine concerns as it is in the overall interest of all the stakeholders viz. workers, employers, enterprises, Industry and the economy of the nation as a whole. Experiences of some of the states viz. Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Punjab, Rajasthan and Uttar Pradesh which had introduced the FTE selectively in certain sectors of the manufacturing, has shown that efficiency and productivity of both – workers and the enterprises had gone up. FTE has also shown to have a spiraling effect in terms of spreading equity and inclusiveness.
Fixed Term Contracts (FTC) has been in existence for quite some time in the labour market the world over. While providing required flexibility to the enterprises to respond to changes in demand, it is an attractive option to workers too as it provides opportunity to exit, enter or reintegrate into the labour market as and when they desire. Due to these factors, off late there has been a trend, the world over, towards engaging more and more persons (ranging from 5% to over 40%) on Fixed Term Contract basis, and the available studies and literature suggests that this new norm in the labour market is likely to stay in the days ahead. Further, it needs to be seen whether it would be the new norm in the Government too gradually replacing the permanent workforce with the Fixed-term workforce.
