India implements Four Labour Codes with key reforms like Fixed Term Employment, ensuring flexibility with full statutory protection.
Satendra Singh, Chairman – Indian Council of Industrial Management (ICIM)”
The Indian Council of Industrial Management (ICIM) today announced its formal welcome and support to the Government of India’s landmark implementation of the Four Labour Codes-the Code on Wages 2019, Industrial Relations Code 2020, Code on Social Security 2020, and the Occupational Safety, Health and Working Conditions (OSHWC) Code 2020-effective from 21 November 2025. These reforms mark one of the most significant transformations in India’s labour governance framework since Independence.
One of the most forward-looking provisions introduced under these new Labour Codes is the Statutory Recognition of Fixed Term Employment (FTE), a model that brings legal clarity, uniformity, and flexibility for both employers and employees across India.
According to the statutory definitions under the Industrial Relations Code, 2020, and the Code on Social Security, 2020, a Fixed Term Employee is an individual hired through a written contract for a specific duration, enjoying all statutory benefits at par with permanent employees, including wages, allowances, leave, social security, and working conditions. Unlike the previous regime, the new framework ensures seamless parity and full protection for fixed-term workers.
- Key Features of Fixed Term Employment under the New Labour Codes
- Mandatory written contract specifying duration, duties, benefits, and renewal terms
- Equal wages, allowances, leave, and social security benefits as permanent workers
- Eligibility for gratuity after one year of service, a historic reform
- Automatic cessation of employment upon contract expiry without retrenchment procedures
- Unlimited scope for contract renewal, based on organisational requirements
- Complete coverage under EPF, ESI, maternity benefits, bonus, and OSHWC standards
Speaking on the development, Satendra Singh, Chairman of ICIM, said:
“Fixed Term Employment is a milestone reform that modernises India’s workforce system. It offers industries the flexibility they require for project-based and specialised assignments while ensuring full statutory protection for employees. This model ensures that flexibility does not come at the cost of welfare. It is a balanced, progressive and globally aligned framework that will strengthen India’s competitiveness and support the vision of Ease of Doing Business.”
The ICIM Chairman further added that FTE will reduce disputes related to permanency, streamline compliance, and encourage transparent workforce planning across sectors like manufacturing, infrastructure, IT, services, logistics, education and seasonal industries.
Benefits for Employers and Employees
Under this new legal regime, employers gain agility in manpower deployment, predictable contract closure, reduced litigation, and access to skilled professionals for fixed-duration assignments. Employees, on the other hand, benefit from statutory equality, safe workplaces, timely wages, full social security, paid leave, and early access to gratuity.
A Step Towards Global Standards
Fixed Term Employment aligns India’s labour system with international best practices, creating a flexible yet rights-based employment model suitable for a fast-growing economy.
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