Is It Legal to Have Fixed-Term Contracts in Kerala's Hotel Industry? Seeking Advice

Dear Sir,

I would like to know, is a fixed-term contract legal in the Kerala State hotel industry? Please advise.

Thank you.

Lok Sabha/Raja Sabha had referred to the issue of "FIXED TERM CONTRACT" to the standing committee as the labor union protested against the said clause in the "Industrial Employment Standing Orders Act". On the recommendation from the committee, the said clause had been struck down.

So, in my opinion, Kerala state doesn't have such provisions.

Engaging workmen for a fixed term is not illegal as per statute, provided it is not to deter any statutory right of employees. Therefore, if you give them EPF, ESI, and consider the period of starting the initial contract as the date of appointment for the purpose of eligibility for maternity benefits, gratuity, etc., then there seems to be no violation of law by the employer. Certainly, continuously engaging workmen as casual workers or temporary workers will be 'unfair' under the provisions of the Industrial Disputes Act.

Regards,
Madhu.T.K

Dear Sir,

Many of the star hotels in Kerala are following the system of FTC employment, like a one-year contract, and the contract will come to an automatic end on the expiry of the contract. Then the said employee would be continued on the job on a daily basis for one month, and again their contract will be restarted after one month for the next one year. Likewise, there are employees working for 3 to 8 years continuously. Is there any possibility to claim permanency for them? Most of them are getting EPF, ESI facilities but no gratuity.

Fixed-Term Contracts can be offered to people for positions that are similar in nature, such as Casual Workers engaged for casual work. If an FTC is offered to individuals for permanent positions, it would not be considered a fair practice.

Vasant Nair

Dear FTC employees,

Gratuity cannot be denied. Unfortunately, if they claim, they will be saved. Therefore, it is a Hobson's choice between the continuity of employment and losing the job. Though it may be legal, it may not be practical unless the issue is taken up by some Union or Association.

With regards,

E-mail: rajanassociates@eth.net
Mobile: 9025792684.

As already stated, FTC should not be used to misuse the law. At the same time, the employer who engages workmen on FTC after giving a few days break is unaware of the fact that renewing the employment contract every year or giving a break of one or two weeks will not make the employees ineligible for gratuity since, for gratuity, a total working of 240 days in a year is sufficient to constitute continuous service. Therefore, if an employee who has worked for at least five years with every year contributing to 240 days is entitled to gratuity when he leaves the establishment. It is the responsibility of the employer to pay gratuity even if the employee(s) are unaware of it.

Regards,
Madhu.T.K

Thank you very much for your advice, sir. Also, I would like to know if there is any chance of claiming permanency for employees on such FTCs if they have worked for 240 days in a year.

"Fixed Term Contract" is not prohibited as an extended limb of Sec. 2(oo)(bb) of the Industrial Disputes Act. However, the nature of the job should be such that it expires within the "Fixed Term"; otherwise, it could be considered an "unfair labor practice." To prevent any misuse, Parliament has eliminated the Fixed Term Contract provisions in the Industrial Employment (Standing Orders) Act.

Claiming permanency is a different topic. An employee under FTC will exercise all rights as given in the ID Act regarding layoff compensation, retrenchment benefits, and compensation in case of closure, provided they have worked for at least 240 days in the 12 months immediately preceding such layoff, retrenchment, or closure, and the period of expiry is yet to occur. This means they will not be entitled to these rights if the closure or retrenchment occurs on the date they are supposed to complete their contracted date of expiry.

On the other hand, being permanent in a job has a different interpretation in labor law. An employee engaged in a job of a permanent nature or one that is not temporary is considered a permanent employee. For example, a fitter or welder in an automobile unit performs a permanent job. Similarly, a Chef or Steward in a hotel is also involved in a permanent job. Conversely, a worker who paints the walls of a factory or hotel or performs maintenance work that the company's maintenance mechanic cannot do due to the nature of the work is not engaged in permanent work; they are considered a temporary employee. When a worker in a permanent job meets the basic requirements of 240 days or other parameters set by the management and outlined in the Standing Orders of the company, they will become a confirmed employee.

Regards,

Madhu.T.K