The proposal recognizes workers under fixed-term contracts as the contract may lapse before five years of uninterrupted service is rendered.
The government has proposed certain provisions under the Code on Social Security Bill, 2019, which if passed, would make workers who are hired under fixed-term contracts that are below five years eligible for gratuity.
An employer pays gratuity to the employee for services rendered in the company only after the employee completes five or more continuous years of service in the same company.
Under the current provisions, an employee can avail gratuity before the completion of his five consecutive years of service under exceptional cases, which include death and disablement.
The proposal differentiates between contractual, permanent and temporary workers. It further recognizes workers under fixed-term contracts as an exception as a contract may lapse before five years of uninterrupted service is rendered.
For instance, if a contract expires in 2 years, the fixed-term worker remains eligible for gratuity.
KR Shyam, a labour economist told Business Standard that the move will incentivise workers under fixed-term contracts by bringing them at par with regular-wage employees. As a result, employers will also get good supply of workers ready to work for a fixed term.
Social security benefits of gratuity will expand to fixed-term category of workers only if the proposal is accepted. Some industry experts feel that the proposal brings in equitable opportunity to the workers.
The Ministry of Labour and Employment had circulated the preliminary draft on September 17 in order to simplify and amalgamate acts like the Payment of Gratuity Act 1972 and The Employees’ Compensation Act, 1923 among others.
LAW IS YET TO BE PASSED,THIS IS A PROPOSAL UNDER DSICUSSION WHICH WILL IMPACT CONTRACT LABOUR AND HIRING COSTS.
HRs CAN KEEP A CLOSE WATCH ON THE PROGRESS OF THIS PROPOSAL.
From India, Pune