The thread starter has aimed at Fixed Term Contract and not contract labor, I presume. The apprehension was whether the permanent workers be converted into fixed-term contract workers? The answer is No. That was what was given in the notification issued some two years back when the Govt issued a notification allowing FTC employment across industries and amending the Standing Orders Act. The notification (GSR 235(E) dated 16-3-2018 in clause 3 has provided for an amendment rule 3 of Industrial Establishment (Standing Order) Rules by inserting section 3A as follows:
"No employer of an industrial establishment shall convert the posts of the permanent workmen existing in his industrial establishment on the date of the commencement of the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, as fixed-term employment thereafter."
However, when the bargaining power of employees becomes less, the permanent workers may have to accept any offer given by their employers. Fixed-term Employment per se is an attempt to make the labor market more elastic. For an employer, it is not the EPF, ESI, or gratuity that is hindering his decision to hire people but the permanency or the 240-day clause or the restrictions for FIRING that disallows him to hire people. When you have the option to hire people for one year, he will hire and fire them if not fit or if he is found "anti-employer" in attitude. He is okay with contributions like PF or even Gratuity. If he can terminate an employee without undergoing the formalities of retrenchment that gives a lot of relief, and that is what is called 'ease of doing business'! FTE gives the employee flexibility. If the employee is not okay, the maximum the employer has to do is to keep him until the period ends. Then his contract will not be renewed, and obviously, the employee has to go.
From India, Kannur
4481"No employer of an industrial establishment shall convert the posts of the permanent workmen existing in his industrial establishment on the date of the commencement of the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, as fixed-term employment thereafter."
However, when the bargaining power of employees becomes less, the permanent workers may have to accept any offer given by their employers. Fixed-term Employment per se is an attempt to make the labor market more elastic. For an employer, it is not the EPF, ESI, or gratuity that is hindering his decision to hire people but the permanency or the 240-day clause or the restrictions for FIRING that disallows him to hire people. When you have the option to hire people for one year, he will hire and fire them if not fit or if he is found "anti-employer" in attitude. He is okay with contributions like PF or even Gratuity. If he can terminate an employee without undergoing the formalities of retrenchment that gives a lot of relief, and that is what is called 'ease of doing business'! FTE gives the employee flexibility. If the employee is not okay, the maximum the employer has to do is to keep him until the period ends. Then his contract will not be renewed, and obviously, the employee has to go.
From India, Kannur
India has a secular economy, and it will be very difficult for a permanent employee to work under a contractor. In general, many dominant factors will be visible. As of now, employers were aware that these employees are permanent and cannot be sacked easily; however, now, for small reasons or arguments, they can take action. India cannot be compared with other states or international bodies where the salary and wage scale is much higher compared to India. Now, only skilled and educated employees can survive; others will have to hunt for jobs or beg for their livelihood. The situation is going to be crucial as unemployment and burglary will increase. India will go on the back foot after implementing this bill effectively.
From India, Boisar
From India, Boisar
Dear Deenajag sir,
Under all labor enactments, all such benefits of bonus, gratuity, minimum wage principal, employer's liability for the safety of all workers irrespective of temporary, permanent, contract, daily trainee, etc., in payments, salary, PF, ESI benefits are as usual with permanent employees. The only difference is contract employees are monitored by a contractor authorized by the principal employer with the prior approval of the Government of India and state-level Labor Departments. Whereas permanent employees are directly monitored by the company itself by managerial cadres. Managers do the same monitoring through the contractors on contract labor. For contract labor employees, all labor laws are one and the same as the Employees' Compensation Act (W.C.) Act. Industry disputes act equally applicable as usual, the same with regular permanent employees. Ok
From India, Nellore
Under all labor enactments, all such benefits of bonus, gratuity, minimum wage principal, employer's liability for the safety of all workers irrespective of temporary, permanent, contract, daily trainee, etc., in payments, salary, PF, ESI benefits are as usual with permanent employees. The only difference is contract employees are monitored by a contractor authorized by the principal employer with the prior approval of the Government of India and state-level Labor Departments. Whereas permanent employees are directly monitored by the company itself by managerial cadres. Managers do the same monitoring through the contractors on contract labor. For contract labor employees, all labor laws are one and the same as the Employees' Compensation Act (W.C.) Act. Industry disputes act equally applicable as usual, the same with regular permanent employees. Ok
From India, Nellore
The gist of the question is whether the new Labour Code will accelerate the conversion of permanent jobs to that of contractual jobs lasting for a fixed period. The answer is an inevitable 'YES' only.
At the outset, I would like to answer the three questions raised by Mr. Deenajag.
1) It is the common practice across all industries that contract labor is paid only the minimum bonus of 8.33%. It is going to continue as the bonus is taken out of the definition of wages under the Codes.
2) FTC employees are going to get gratuity proportionate to their length of service. It would be equally applicable to contract labor as well.
3) The PE is responsible for such welfare amenities and other statutory periodical dues.
Regarding contractualization of permanent jobs, it would be in a phased manner only as opined by some of the friends. The amendment to the rule of the Standing Orders Act pointed out by Mr. Madhu had a protective clause to keep the ratio of the FTE at a level to the cadre strength of permanent positions. The conspicuous absence of such a clause in the Code actually instills fear psychosis in the minds of all.
The gradual universal change in the pattern of employment highlighted by Mr. Vinayak and the counterargument advanced by Mr. Dinesh Ahuja based on the Indian situation are equally plausible.
Anyway, I hope that the working of the Codes over a period of time will certainly necessitate the bringing of appropriate amendments.
From India, Salem
At the outset, I would like to answer the three questions raised by Mr. Deenajag.
1) It is the common practice across all industries that contract labor is paid only the minimum bonus of 8.33%. It is going to continue as the bonus is taken out of the definition of wages under the Codes.
2) FTC employees are going to get gratuity proportionate to their length of service. It would be equally applicable to contract labor as well.
3) The PE is responsible for such welfare amenities and other statutory periodical dues.
Regarding contractualization of permanent jobs, it would be in a phased manner only as opined by some of the friends. The amendment to the rule of the Standing Orders Act pointed out by Mr. Madhu had a protective clause to keep the ratio of the FTE at a level to the cadre strength of permanent positions. The conspicuous absence of such a clause in the Code actually instills fear psychosis in the minds of all.
The gradual universal change in the pattern of employment highlighted by Mr. Vinayak and the counterargument advanced by Mr. Dinesh Ahuja based on the Indian situation are equally plausible.
Anyway, I hope that the working of the Codes over a period of time will certainly necessitate the bringing of appropriate amendments.
From India, Salem
Dear Mr Umakanthan.M, Dear Mr. Gannahope, Dear Mr. Madhu - Many thanks for your replies and insights.
From India, Mumbai
From India, Mumbai
Dear Deenajag,
Thank you, sir. Please note that any employee engaged by the employer, manager, or through a representative like a contractor, who has joined just an hour ago, is entitled to all protections under the Labor Acts. This includes situations where the employee may work within the company premises or be engaged in work outside the company such as marketing, bringing or delivering materials to faraway or nearby places, or following temporary instructions from a superior. It is essential to ensure that all safety laws are applicable to the employee in these circumstances.
Thank you.
From India, Nellore
Thank you, sir. Please note that any employee engaged by the employer, manager, or through a representative like a contractor, who has joined just an hour ago, is entitled to all protections under the Labor Acts. This includes situations where the employee may work within the company premises or be engaged in work outside the company such as marketing, bringing or delivering materials to faraway or nearby places, or following temporary instructions from a superior. It is essential to ensure that all safety laws are applicable to the employee in these circumstances.
Thank you.
From India, Nellore
Coming again to the fear of scot-free conversion of permanent jobs to that of FTE Contracts in the long run, the Standing Committee recommended certain limitations on the FTE Contracts like limiting the period of the contract to a maximum of three years including extensions. But this issue was not only not addressed but also the restrictive clause in the amended provision of the standing order rule was done away. For instance, Italy has limited this FTC arrangement only to a maximum of 20% of the total number of permanent jobs. The drafting of the Rules is said to have been entrusted to a panel of external experts. Let us wait and see anything that comes out from the Rules.
From India, Salem
From India, Salem
CiteHR.AI
(Fact Checked)-The information provided in the user reply is accurate in terms of the Standing Committee recommendations and the limitations on Fixed Term Employment (FTE) contracts. No amendments are required. (1 Acknowledge point)
In a country like India where rules are made and amended for the benefit of employers, you cannot expect any change in it. In my opinion, we should have a balance between investment and the welfare of workers, but this kind of legislation aims at investment (attracting investments) at the cost of health, safety, and welfare of workers. It appears that investors did not come to India solely due to labor laws and their restrictive clauses relating to retrenchment. I am afraid that even in the present scenario, no employer retrenches their employees, and everyone follows the rules relating to the safety, health, and welfare of their workers!
From India, Kannur
From India, Kannur
The saving clause in the amendments to the central rule of 16th March 2018 is deleted in the IR Code 2020. This shows the changed intention of the legislature/Government.
In many countries where FTE is allowed, there is a cap on the number of times a person can be on FTE. Actually, the fixed-term contract was already in Section 2(oo) of the ID Act.
Varghese Mathew
From India, Thiruvananthapuram
In many countries where FTE is allowed, there is a cap on the number of times a person can be on FTE. Actually, the fixed-term contract was already in Section 2(oo) of the ID Act.
Varghese Mathew
From India, Thiruvananthapuram
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CiteHR.AI
(Fact Checked)-The user's reply is [B]correct[/B] regarding the conversion of permanent workers into fixed-term contract workers based on the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018. Thank you for sharing this detailed information. (1 Acknowledge point)