Article (May-2018)


Fixed Term Employment- Much ADO nothing

H.L. Kumar

Designation : -   Advocate, Supreme Court

Organization : -  New Delhi


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Applicability of the amendment
Since the amendment has been made to the Rules under Industrial Employment (SO) Rules, 1946, it is imperative to know the applicability of the Industrial Employment (SO) Act, 1946, hereinafter referred to as 'Standing Orders Act'.
As per section 1(3) of the Standing Orders Act, it applies to every 'industrial establishment' wherein one hundred or more workmen are employed. However, the State Governments have been vested with the powers to apply to any establishment employing less than the prescribed number of persons. Most of the States have reduced the applicability to the establishments employing 50 or more workmen whereas some States like Madhya Pradesh and UP have even reduced it 20 or more workmen only.
An important clarification is needed about the applicability of the Standing Orders Act since it is not applicable to every establishment or industry. The term 'industrial establishment' for applicability is not defined under the Standing Orders Act but has been borrowed from clause (ii) of section 2 of the Payment of Wages Act, 1936 which reads as under :
2(ii) "Industrial or other establishments" means -
(a) tramway service, or motor transport service engaged in carrying passengers or goods or both by road for hire or reward;
(aa) air transport service other than such service belonging to, or exclusively employed in the military, naval or air forces of the Union or the Civil Aviation Department of the Government of India;
(b) dock, wharf or jetty;
(c) inland vessel mechanically propelled;
(d) mine, quarry or oilfield;
(e) plantation;
(f) workshop or other establishments in which articles are produced, adapted or manufactured, with a view to their use, transport or sale;
(g) establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on;
(h) any other establishment or class of establishments which the Central Government or a State Government may having regard to nature thereof, the need for protection of persons employed therein and other relevant circumstances, specify, by notification in the Official Gazette.
In view of the limited applicability of the amended rules, the fixed term appointment is fraught with many shortcomings like :
1. No employer of an industrial establishment shall convert the posts of the permanent workmen existing in his industrial establishment on the date of commencement of the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 as fixed-term employment thereafter.
2. The hours of work, wages, allowances and other benefits of the fixed term worker shall not be less than that of a permanent workman and he shall be eligible for all statutory benefits available to a permanent workman 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.
This implies that for entitlement of gratuity under the Payment of Gratuity Act the condition of rendering minimum 5-year service will not be applicable when a fixed term employee has worked even for less than 5 years.
3. Some of the States have enacted their own rules which will be applicable upon the industrial establishments in the State instead of Central Rules as per settled law. Hence the amended Rule will not be automatically applicable unless the State Governments amend their State Rules.
4. Even the industrial establishments as covered by the amendment will need to insert the amended provisions in their certified standing orders by seeking amendment in their existing certified standing orders.
Despite above restrictions and limited applicability of the amendment, it is advantageous for the industrial establishment as covered by the amendment.
Status of Standing Orders
More than Industrial Disputes Act, it is the Industrial Employment (SO) Act, which is highly irritating and perplexing. Section 3 of this Act enjoins upon the Establishments to submit to the Certifying Officer five copies of the draft standing orders proposed for adoption in the industrial establishment. Section 12A provides that notwithstanding anything contained in sections 3 to 12, for the period commencing on the date on which this Act becomes applicable to an industrial establishment and ending with the date on which the standing orders as finally certified under this Act comes into operation under section 7 in that establishment, the prescribed model standing orders shall be deemed to be adopted in that establishment. The Standing Orders Act in its Schedule under the caption of "Model Standing Orders in respect of industrial establishment not being industrial establishments in Coal Mines" provides classification of workmen into six categories e.g. (i) permanent, (ii) probationers, (iii) badlis, (iv) temporary, (v) casual and (vi) apprentices. Now by this amendment, the fixed term employment is given at No. (vii) in the Model Standing Orders. While drafting the standing orders for certification instead of adopting outdated model standing orders (which would become automatically applicable if an employer as covered by the Standing Orders Act) cannot circumvent or enlarge the scope of model standing orders.
A 'probationer' is a workman who is provisionally employed to fill a permanent vacancy in a post and has not completed three months' service therein. If a permanent employee is employed as a probationer in a new post s/he may, at any time during the probationary period of three months, be reverted to her/his old permanent post.
The right of the employer even in engaging the probationer has been so rigid that it was not possible to have sufficient period for assessing the performance of a probationer. Now, the employers of the industrial establishments will have the liberty to engage the workmen on fixed term basis which will enable them to assess their performance of the employee before inducting them in permanent employment. This is the only silver line in the dark clouds of above amendment.
Accordingly, the ease of doing business is not at the desired level. Time has come that both the archaic statutes i.e. Industrial Employment (Standing Orders) Act, 1946 and Industrial Disputes Act need to be totally repealed earlier the better.
The Industrial Establishment (Standing Order) 1946 and the Industrial Disputes Act, which are now more than seven decades old, are for practical purposes the mother of all Labour related laws. They were conceived and enacted when the form and areas were completely different and do not have even the remote similarity with present scenario. Both acts go hand in hand to make the employment law so tedious, vexatious and exasperating that the employers and HR executives often gasp for breaths to handle the workers. Therefore, if the government really wants to ease the doing of business then it would have to address to the root of the problem by drastically amending the Industrial Establishment (Standing Order), 1946 and the Industrial Disputes Act of 1947.
The mindset of both the employees and the employers have changed. In fact, today's workers do not need the same protection, which was needed in the yesteryears, particularly when the country got the freedom from the British yokes. No deserving employee wants to remain stuck and rot for an indefinite period of time in one employment and on the other hand, it is equally true that no employer wants to get rid of any deserving employee. The labour laws, unfortunately, are caught in the time warp and consider that employees are so feeble that they always need the crutches of the governments to stand up. Moreover, these outdated and old laws drill the fear psychosis among the workers. The element of equality is always missing and that is why these laws engender animosity and hostility rather than healthy competitiveness, so necessary for outshining each other. Cooperative competition and not the adversarial atmosphere is the hallmark of easing the business doing. While former generates the feeling of amicable relationship the latter invariably gives rise to doubts and prejudices.
What was relevant yesterday may not remain so today. This is why law must consider public opinion and public sentiment. Vidur, the wise man of the Mahabharata had said that like humans, law and policies have a life and are rendered invalid beyond that. As early as in 1992 Justice P.N. Bhagwati in National Textile Workers' Union etc. vs. P.R. Ramakrishnan and other, 1983 (46) FLR 38 (SC) has stated “we cannot allow the dead hand of the past to stifle the growth of the living present. Law cannot stand still; it must change with the changing social concepts and values. If the bark that protects the tree fails to grow and expand along with the tree, it will either choke the tree or if it is a living tree, it will shed that bark and grow a new living bark for itself. Similarly, if the law fails to respond to the needs of changing society, then either it will stifle the growth of the society and choke its progress or if the society is vigorous enough, it will cast way the law which stands in the way of its growth. Law must therefore constantly be on the move adapting itself to the fast changing society and not lag behind. It must shake off the inhibiting legacy of its colonial past and assume a dynamic role in the process of social transformation.”
The Government, therefore, must go for the holistic approach and drastically change the employment law so as make free from all hassles. Now the government has obtained the majority in the Rajya-Sabha also, therefore, if it has the intent to have the simple, knot-free labour laws, it can do without anybody throwing the spanner in the wheel.