Industrial Relations And Labour Laws
Gm (hr)
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Thread Started by #Joseph J

Apart from Section 2 (oo)(bb) Industrial Disputes Act, does anybody have any enactment which disables the lien on employment via repeated issue of fixed term contracts?
Also is there a stipulated period for the contract..Is it legal to have a FTC for 3 years, rather than 3 one year ftc's, to bye pass unfair labour practice?
Please also do comment on the policy in your organisation vis a vis recruiting as confirmed employee and on fixed term contracts.
also, are there differences in benefits, (or they treated the same) between confirmed staff and FTC employees.
Please do state the industry type, and what kind of staff you tend to recruit in which manner.
also please do make any other relevant remark on this issue.
23rd October 2008 From India, Kochi
only views? pl comment even if it is not applicable pl state that it does not apply in your org...thx...atleast we all will get a better perspective of practices across
24th October 2008 From India, Kochi
dear joseph
first of all i would like to comment that whether your standing orders permit fixed term appointment.
suppose you have some project work than you can hire manpower on fixed term basis
but when you have regular work than why to hire on fixed term because you want
to adopt unfair labour practice.
dear due to this reason most of the states doesnot allow fixed term appointment.
j s malik
27th October 2008 From India, Delhi
There is hardly any difference between Fixed Time Contract employees and Confirmed employees. The contract of employment may go beyond 3 years also. But what is the benefit that the employer gets out of it? An employee who has worked for 240 days in a year is presumed to have gained continuous service. If the contract is extended to a further period of 2 or 3 years and if he leaves the organisation after two years of such extended period, his total service will become 5 years and he will be eligible for Gratuity. There is no need to serve any letter stating that you have been regularised or confirmed in service. The continuity of service is decided after looking in to whether you have worked for at least 240 days in each year.

I feel that the treatment given with FTC is just to keep a feeling amoung the employees that they are subject to termination without notice sothat they will be forced to 'work' rather than indulge in trade union and other activities. They are also covered under EPF, ESI and other social security benefits available to other confirmed employees right from biginning. They are also eligible for notice if their services are to be terminated. They are also eligible for termination compensation @ 15 days pay for every completed year of service.



29th October 2008 From India, Kannur
Dear Madhu,
Thank you very much for your response.
But isn't this the very fulcrum of the issue where you have stated "There is no need to serve any letter stating that you have been regularised or confirmed in service. The continuity of service is decided after looking in to whether you have worked for at least 240 days in each year."
If it is a contract of fixed term, then 240 days loses its validity??
29th October 2008 From India, Kochi
In labour laws you cannot find any scope for FTC and FTC is only an arrangement by the employer. Therefore, even if you are appointed for a period of, say 3 years, after completion of one year with 240 days of work, you are suppose to get all benefits offered by various labour Acts. Only thing is that the day of discontinuance of service is the date mentioned in the contract and as such no further notice is required in case termination takes place on that date. The contract itself will be taken as intimation for termination. However, if the employer wants to terminate his service before the date mentioned in the contract becomes due, notice should be served and compensation should also be paid.

Most often the contract will bear a term that "service shall be terminated before the date mentioned herein without notice". Such condition may not find good as it lacks social justice. The very purpose of serving notice is to enable the employee to find an alternative employment. Similar is the case when employee is asked to serve notice before leaving the organisation.

30th October 2008 From India, Kannur
Dear Madhu,

Excellent explanation.

But to take it further then, and I'm sure it will benefit all those viewing and not commenting :-) have said that

a) there can be no discrimination of leave and or other benefits to any category of employee who remains in service longer than 240 days. Being on contract doesn't justify or allow such discrimination.

b) The sole advantage of the FTC is to ensure that service may be discontinued without any other process on the date stipulated on the contract.

c) The reason for placing on contract must not be to deny employment to worker, but because the real nature of service is either seasonal or temporary.

What is your thought on the principle of the job itself being permanent but the persons ability to do it being short termed...say having a life of only 5 years or so?

For example the army retires soldiers at 35 or thereabouts?

Since the private sector doesn't have that provision, I am of the opinion many employers have now chosen or hoping to choose the FTC option.

Statistics say that across India, the percentage of contractual relationships with employees across industries have gone up by more than 20% in the last five years.


30th October 2008 From India, Kochi
As stated earlier, if the job is permanent the person doing the job should also be permanent. But there may be cases where the ability to perform the job ceases after 5 or 10 years. In such cases, since the employee had contributed his good resources during this 5 or 10 years for the exclusive benefit of the employer, the employer should take care of the employee while he leaves the organisation after having become 'stale'. It shall be read as the resources of the employee have been fully drained out due to his employment with the organisation. Therefore, the amount which employer should give shall only be a compensation or a kind of indemnity. In Defence Service, short serviced personnels are treated very good even after their retirement. In private sector though it is not practical to bring about a consensus to pay such benefits, initiative shall be made to open up the real story. In fact, it brings about motivation to work if employees are given an impression that they belong to one family under the organisation. I don't think that trade unions are aware of these whereas they go behind 'demands' for 'regularisation' of service and wage hike only.


30th October 2008 From India, Kannur
Yet that is not legal either.....even if we pre agree on a severance amount at the end of period of 5 years or more?
or how do you mean it? If the employee has been there 5 years in any case gratuity is applicable.
what is the other severance comp that you were referring to?
30th October 2008 From India, Kochi
Even if the FTC specifies an amount payable at the end of 5 years of service the same cannot be construed as gratuity but it will be taken only as a pre agreed lumpsum amount. In such cases, if the employee is leaving after 5 years of service, he needs to be paid gratuity @ 15 days pay for every year of service. The former will not be taken as gratuity unless the amount is equal to the sum calculated under the Gratuity Act. And if, after accepting the lump sum amount (pre agreed in the FTC) the employee submits form I for getting gratuity, the employer may be forced to pay it.

If suppose his service is continued by the employer- means he has been terminated- he has to be paid retrenchment compensation which will be 15 days pay for every year of service. This is in addition to the amount payable by way of gratuity. Retrenchment compensation has to be paid irrespective of service whereas gratuity is payable only if he has at least 5 years of continuous service. If his service is discontinued before the date mentioned in the contract, naturally, payment in lieu of notice should also be paid. These are the other benefits due to an employee under the ID Act in which there is no reference is made about FTC.


31st October 2008 From India, Kannur
Dear moderator,
A question??
A contract labourer resigns from the services of the contractor within 240 days of date of joining and is reinstated after 30 days of date of resignation. Will there be continuity of service?
7th July 2009
It is the responsibility of the contractor and not the principal employer. In any case, if an employee rejoins after 30 days of his leaving, his service would be deemed regularised if he had 240 days of work in that year.
13th July 2009 From India, Kannur
Dear Moderator
What about the case of someone on fixed term annual contracts renewed on 1st january for the 5 years continuously? If this person is terminated at the end of the fifth year, ie on December 31st, the date of closure of the last contract is the employer obliged to pay compensation and or gratuity? if the contract explicitly states that the benefits applicable to the permanent staff are not applicable, does this cover the employer?
10th February 2010 From India, Madras
If an employee is leaving the establishment after a pre fixed period of five years, then also he is eligible for gratuity. However, being on a fixed term contract wherein the date of termination is fixed, no notice nor compensation is required to be paid on his termination. Since any condition of service stated in the order of appointment and agreed upon with the employee which is against the provisions of the Standing Orders of the Company and the provisions of the Industrial Disputes Act, Payment of Gratuity Act or any relevant Act is void, you can not make a provision in the contract of appointment to the effect that no benefit available to permanent employee would be payable.
10th February 2010 From India, Kannur
Dear Moderator
Thank you very much for the reply. Some related doubts:
1. If the Rules of functioning of the Company (Standing Orders, I guess) do not explicitly cover Fixed term annual contracts and in fact state that the benefits apply only to the permanent employees does the law of the land (IDA, Gratuity and other acts) still take precedence?
2. Can an employee on fixed term annual contracts (with regular 1 month breaks without pay) for 6-10 years be eligible for Maternity leave as applicable to permanent employees?
3. By saying that the benefits applicable to permanent employees are the same for the ones on fixed term annual contracts - what benefits are implied, specifically, does this include the leave eligibility (annual/ Earned, Casual and medical)?
Thanks again
11th February 2010 From India, Madras
1) Yes, Payment of Gratuity Act is applicable to all employees who have worked at least for 5 years and a year of service with at least 240 days (above the ground) or 190 days(below the ground) shall be sufficient for any employee to be eligible for gratuity.

2) For entitlement of Maternity Benefit under the Maternity Benefits Act, one need not work for 6 to 10 years but if she had worked at least for 80 days during the 12 weeks immediately preceding her date of delivery, she is eligible for it.

3) Yes, any employee who has worked at least for 240 days in the preceding twelve months shall be eligible for annual leave with wages at the rate of one leave for every 20 days worked as per Factories Act. There is similar provision in the Plantations Labour Act also. If your establishment is covered by Shops and Commercial Establishments Act (State Act) then also you may find similar provisions and no where it is mentioned that only permanent employee is eligible for leave.

Similarly, Payment of Wages Act and Minimum Wages Act do not limit the legal rights of employees only to permanent employee. As such you can not fix separate pay days for confirmed employees and FTCs or you can not have separate kinds of deductions from the salary for confirmed employees and FTCs. Similarly, you can not fix a salary less than the minimum wages to an FTC employee.


11th February 2010 From India, Kannur
plz let me know that in what conition an fta can become permanent by law. It is very urgent plz
11th September 2013 From India, Haridwar
Very strictly speaking an establishment is not suppose to engage workers on a Fixed Term Contract unless the Standing Orders of the establishment permits so. Similarly, fixed term appointment should be restricted to works which are expected to be completed in a fixed period. It should not be just to deter rights of employees under various Labour Acts.

The Industrial Disputes Act has provided that engaging workmen on FTC and keeping on renewing the period for years is unfair. Therefore, if the job in which the employee is engaged is of regular nature, he can claim regularisation. Only thing is that he should prove that he was appointed after a process of selection which is followed for regular employees.

Various courts including Supreme Court have clarified that casual employees have no right of regularisation because they are not appointed after a series of recruitment/ selection process like, advertising the vacancy in the news paper, calling the candidate for interview, issuing offer/ appointment letters and induction. At the same time, one has gone through all these processes but is given a "temporary" employment, then the law will favour him. Like this, FTC employee will get the rights regularisation if he was appointed following the regular processes of recruitment and for a work of regular nature.

12th September 2013 From India, Kannur
If an employee had worked in a organisation for 4 years 11 month and 27days on adhoc and then 4 years and 8 month on fta fixed tenure appointment then he is eligible for gratuity or not.if yes can he claim for his regularization as he has passed about 9 years 8 month in the same .
There is only one day gap in petween adhoc and fta.
Plz some one help me
18th September 2013 From India, Haridwar
19th September 2013 From India, Haridwar
I hope I have answered the question in my previous post itself that if the status of FTC is just for fancy or to create a feeling in the mind of the employee that his service is purely temporary but at the same time has been doing the work of permanent nature, he can claim regularisation. Only thing to prove is that he was given employment not through any easy way or factory gate but after undergoing the set of procedures of recruitment.
Regarding gratuity, an employee under FTC is entitled to gratuity if he has put in 5 years with each year accounted for 240 days of working. For this a gap or break of 1 day or two will not make any difference. 240 days is 240 pay days which shall include sundays (weekly off days) holidays and approved leave days.
19th September 2013 From India, Kannur
Dear Sir/Madam,
My appointed following the regular processes of recruitment and for a work of regular nature (Direct Recruitment not by third part) .But in advertisement It was mentioned that the candidate will recruit on contract basis and the period of contract is 5 years and the probation period in that is one year and contract may extended by the competent authority.
Some points to noted:
1. I am working in a autonomous government society .
2. This my second renewal tenure and cease shortly (Total services period 5 + 5 = 10 years)
3. There is no contact signed between employee and employer.
4. There is no gap between this 10 years of service.
5. There is one circular of regularization for those who has completed 10 years of services. According to this circular one of the batch gets benefited . My just senior batch gets only three years of renewal services (in 2014).
My query is do I proceed to court for regularization ?
16th September 2014 From India, Delhi
Being a government organisation, your services would be better regulated by the service rules of the organisation than the provisions of the ID Act. However, considering the facts that you were appointed after undergoing the usual processes of recruitment and that also for a job the period of which is not definite but regular in nature you are entitled to regularisation. The main point is that you were appointed on a job of permanent nature. Also your contract was extended beyond the first spell of five years. This will give benefit to you.
17th September 2014 From India, Kannur
Dear Madhu, Is there any latest inclusion/ amendment on FTC concept in ID Act?
15th December 2014
Say some one join after the retirement and drawing pension from E.P.F under this situation can the employee be exempted from P.F liability or not?
17th December 2014 From India, New Delhi
Greetings of the Day!
Can someone share the details on Fixed Term Contract for Hotel employees.
18th April 2018 From India
This thread was started by Mr.Joseph J in October 2008, nearly 10 years back and it is very good to see that the thread is still alive. I believe that the answer to the question asked by Gouri is very well there in the posts because there is no labour law which is special to hotel industry but whatever discussed here will apply to hotels also.
However, deviating from the above discussions I would like to draw your attention to the proposal made by the Government to amend the Industrial Employment (Standing Orders) Act which aims to bring in a separate class of workers called Fixed Term Contract workers. With this the relevance of hiring persons on permanent basis even for jobs of permanent nature has come to an end. Whether or not we should amend the Industrial Disputes Act to accommodate a provision that keeping an employee for years without regularizing will not be considered as an unfair labour practice by an employer is a question to be asked in to those who favour FTC concept. Now the situation is that any establishment, irrespective of the industry, can have FTC employees. The job need not be short term.
In hotel industry there is no such job which is not perennial in nature. You should have Front Office executives regularly, you should have Housekeeping personnel regularly, you should have regular commis, chefs etc, you should have regular employees to take care of service and maintenance . But in a IT/ITES/BPO it may not be so. When you get a project the same is expected to be finished within a certain time and you cannot hire employees permanently but can afford to have employees whose period can be fixed depending upon the project. With the new initiative the government has taken a stand that irrespective of the nature of industry, nature of job, you can have FTCs and that will give you flexibility in operations.
19th April 2018 From India, Kannur
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