FIXED TERM EMPLOYMENT
- Prachi Kushwaha
Fixed Term Employment (FTE) has been given explicit statutory recognition under India’s
new labour law regime through the Industrial Relations Code, 2020 and allied labour codes.
The objective behind introducing and expanding Fixed Term Employment is to provide
flexibility to employers while ensuring that employees engaged for a fixed duration are not
deprived of wages, benefits, and social security available to permanent workers. Under the
earlier legal framework, fixed-term contracts existed in limited forms and were often
challenged as unfair labour practices. The new labour codes seek to bring clarity, uniformity,
and legal certainty to this mode of employment.
Fixed-term employment is specifically mentioned under the Industrial Relations Code 2020,
under subclause (o) of Section 2, and means the engagement of a worker on the basis of a
written contract of employment for a fixed period. Provided that the hours of work, wages,
allowances and other benefits shall not be less than that of a permanent worker doing the
same work or work of similar nature and shall be eligible for all statutory benefits available to
a permanent worker proportionately according to the period of service rendered by him even
if his period of employment does not extend to the qualifying period of employment required
in the statute; and shall be eligible for gratuity if he renders service under the contract for a
period of one year. Under the Social Security Code under sub clause (34) of Section 2, the
employee shall be eligible for all benefits, under any law for the time being in force, available
to a permanent employee proportionately according to the period of service rendered by him,
even if his period of employment does not extend to the required qualifying period of
employment. By placing the definition within the statute itself, Fixed-Term Employment is
no longer merely a contractual arrangement but a legally recognised category of employment,
establishing the principle of parity.
Further, the expiry or non-renewal of a fixed-term contract is expressly excluded from the
definition of retrenchment under the Industrial Relations Code, 2020. Consequently, the
natural termination of employment upon the completion of the contract period does not
attract retrenchment compensation or notice requirements, provided the termination is in
accordance with the agreed terms of the contract.
Fixed-term employment is also integrated into the framework of standing orders under the
Industrial Relations Code, with the Model Standing Orders recognising fixed-term employees
as a distinct category and requiring establishments to clearly specify their conditions of
service. While the law permits flexibility in hiring for project-based, seasonal, or time-bound
work, it also contains implicit safeguards against misuse. Repeated or artificial renewals of
fixed-term contracts for work of a permanent nature may still be subject to judicial scrutiny,
as courts continue to examine the substance of the employment relationship rather than its
form. Overall, fixed-term employment under the new labour laws represents a calibrated
reform that promotes workforce flexibility while ensuring fairness, wage parity, and social
security for employees engaged for a fixed duration.
References
Ministry of Labour & Employment, Government of India, 2020. labour.gov.in. [Online]
Available at: https://labour.gov.in/sites/default/files/224080_compressed_0.pdf
[Accessed 07 01 2026].
Ministry of Labour & Employment,Government of India, 2020. https://labour.gov.in/.
[Online]
Available at: https://labour.gov.in/sites/default/files/ir_gazette_of_india.pdf
[Accessed 07 01 2026].
Ministry of Law and Justice, Government of India, 2020. labour.gov.in. [Online]
Available at: https://labour.gov.in/sites/default/files/ss_code_gazette.pdf
[Accessed 07 01 2026].
Ministry of Law and Justice, Government of India, 2020. labour.gov.in. [Online]
Available at: https://labour.gov.in/sites/default/files/ir_gazette_of_india.pdf
[Accessed 07 01 2026].
Press Information Bureau, 2025. [Online]
Available at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2192524®=3&lang=2
