Dear Members ,
Would like to seek your valuable guidance on fixed term contracts . Kindly suggest whether their service conditions and entitlements are governed by labour laws (Shops and Commercial Est. Act, Payment of Wages and Payment of Gratuity Act etc.) or they are simply guided by the terms and conditions laid down in their respective contracts . I am primarily looking for information w.r.t Leaves, gratuity , working hours .
Kindly advise .
26th December 2013 From Saudi Arabia
Fixed Term Contract employees are employees directly employed by the employer but for a fixed period or for a certain project, say for one year/ three years depending upon the duration the project will take to complete. They are entitled to all benefits like ESI, PF, leave with wages maternity benefits and even gratuity provided they have worked for 5 years with each year 240 days of work (including all weekly off days, holidays and leave with pay days). The only difference is that for a regular worker notice and compensation as per Industrial Disputes Act are required to be given in case of their retrenchment whereas for a fixed term contract employee no need of giving prior notice and pay compensation for retrenchment. Still, if the employment is terminated before the project or period for which he is hired is completed, he should be given notice.

This issue has been discussed in theis forum many times. You are also requested to go through the following link.


27th December 2013 From India, Kannur
Thanks Madhu for your valuable guidance . To close the thread , I would like to ask a specific query w.r.t. gratuity . Kindly suggest how would be the provision of gratuity in case a fixed term employee dies before the end of the contract . Please suggest :
- Whether dependents will be eligible for the gratuity for the period elapsed and remaining in the contract or
- Whether dependents will be eligible for the gratuity for 5 years or
- Whether dependents will be eligible for the gratuity for 20 years or
- Whether dependents will be eligible for gratuity till retirement age.
27th December 2013 From Saudi Arabia
In the case of death the dependent of the deceased employee is entitled to get gratuity for the period the employee had served in the company without reference to the qualifying service of five years. That is, if the death has happened after three years, the gratuity will be for three years. This is so even in the case of regular employees.

Gratuity paid considering the superannuation date is only an arrangement by the LIC under a scheme wherein the insurance company undertakes to pay gratuity calculated till the date of superannuation in return for an additional premium. This does not mean that the employer who has not taken any gratuity insurance of insurance company is also under an obligation to pay the dependent of the deceased employee gratuity calculated till the date of superannuation. Service gratuity is limited to the years served by the deceased in the company.

An establishment who has taken the gratuity insurance scheme shall include the FTC employee with his date of expiry of FTC as date of superannuation. Since the date of expiry of FTC is the date of retirement, if he dies before that date, he will get gratuity calculated till that date. Unless otherwise provided, however, the insurers will take the common policy with regard to superannuation, that is, if the age of superannuation is 58, then anybody employed will be put in that only. Since the premium will be worked out with reference to salary, the date of birth and the years to complete his age of superannuation, care should be taken by the employer to ensure that proper instructions are given to the insurance company about the date of termination of the contract of employment of an FTC employee.

27th December 2013 From India, Kannur
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