Modi Government Is Pushing Ahead With Big Bang Labour Reform

The National Democratic Alliance government, led by Prime Minister Narendra Modi, has amended labour rules, allowing companies to employ workers on contract for a fixed term. This has been done by extending the labour contract rules introduced in 2016 for the textiles and apparel industry.

The change will support fixed tenure of contract jobs in all industries. This could signal a change in strategy in employment generation from job security to job creation, reported The Mint. The move will provide firms flexibility in hiring employees besides creating more jobs. It will also boost India in World Bank’s ranking of ‘ease of doing business’ in various countries across the world.

The changes were made through a gazette notification last weekend. This will help the government in employment generation, ahead of Parliament elections next year.

The change made in the gazette is that “fixed term employment workmen in apparel manufacturing sector” in the Industrial Employment (Standing Orders) Central Rules, 1946 has been replaced with “fixed term employment”.

This means no notice of employment termination need to be given to a worker if the employee is contracted to work for a specific period. Workers will not be entitled to any notice pay once the contract ends.

However, the workers contracted for a fixed term will enjoy benefits like pay parity and other statutory benefits. Fixed-term workers who have served for three consecutive months will get two weeks’ notice and those who have not will be informed of the reason for their retrenchment in writing.

To protect permanent workers, who are currently on the rolls, the rules specify that no employer can convert permanent workmen posts into a fixed-term one.

These rules, The Mint report said, are expected to allow free labour movement and facilitate a hire-and-fire policy for companies, overriding the existing retrenchment requirements.