Contracts and support

Business Standard     8th October 2020     Save    

Context: While not introducing real flexibility to the market, the recently introduced codes have sought to formalise and expand the paradigm of contract employment.

Opportunities in Fixed term Employment (FTE):

  • Increased Competitiveness: It will ensure the continuance in employment of permanent employees and improve the ability of employers to increases competitiveness, raise capital and expand operations.
  • Increases Formalisation: It removes the absolute permanence of tenure which is a reason why the penetration of formal, decent employment in India remains so tragically low.
  • Transparency in contracts: As long as statutory payments of all kinds are guaranteed; there is complete transparency in the contract; and the wage code is adhered to.
  • Creates more jobs: Such flexibility will  allow for greater competitiveness and thus more jobs will be created. 

Concerns about Fixed Term Employment (FTE):

  • Permanent employees can be converted into fixed-term contract employees:
  • Companies would be permitted to convert current permanent employees into fixed-term contract employees:  
  • Lack of security of tenure: There remains a concern that fixed-term contract employment is somehow inferior to the existing forms of permanent employment due to absence of security tenure. 

Way Forward

  • Provide recourse if contracts are violated: 
  • Greater flexibility should be permitted, alongside a supporting ecosystem that can provide recourse if contracts are violated
  • Ensure that violations are settled in a reasonable time frame
  • Promote Skill development: Workers should be provided with opportunity to create skills, to shop those skills around
  • Provide Statutory Saving and other social security coverages
  • Allow Representative bodies: Allow for unions or some other form of representation or recourse to ensure contracts are adhered to by powerful companies