Contracts and support

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