Ease of doing business just got a big boost. In a big-ticket labour reform, the government has now allowed fixed-term employment contracts across sectors, which will allow companies to hire staff on the basis of their actual requirement.
The move is in line with Finance minister Arun Jaitley’s Budget announcement that the facility to hire fixed term employees, which was available only for apparel manufacturers until now, will be made part of the uniform labour law
The government has also made sure that the big shift doesn’t result in large-scale retrenchments, as the new law says no permanent employee can be forcefully moved to fixed-term employment.
The move comes as a big relief to India Inc, especially those companies that are in cyclical businesses and hence need flexibility in hiring. In fact, the rigid labour laws have often been cited by multinational companies as the biggest hurdle in setting up shop in India.
Experts say the shift will create new job opportunities in companies with seasonal businesses. The critics of the new norms, however, argue that it will only help companies hire and fire at will, even as it creates huge imbalances in the job market.
Interestingly, the new law comes into force at a time when the government is facing flak for its failure to create quality jobs.