Fixed-Term Employment (FTE) is a concept and provision in Indian labor law where a worker is engaged directly by an employer for a pre-determined period through a written contract. It is a category of workman added to the classification under the Industrial Employment (Standing Orders) Central Rules, 1946.
The concept was formally introduced in India to the apparel manufacturing sector in October 2016 and extended to all sectors through an amendment to the Industrial Employment (Standing Orders) Central Rules, 1946 on March 16, 2018. The problem it solved was providing employers with workforce flexibility for seasonal or project-based demands without the complexities of contract labor, while simultaneously ensuring statutory benefits for short-term workers who were often deprived of them in the unorganized sector.
The mechanism requires that FTEs receive the same wages, allowances, and benefits as permanent employees performing similar work, calculated on a pro-rata basis. A key provision is that the employment automatically ends upon the expiry of the term and is not considered retrenchment under the Industrial Disputes Act, 1947, thus avoiding associated compensation requirements. The law also prohibits converting permanent employees to fixed-term contracts.
FTE is now formally recognized and reinforced under the new labor codes, specifically the Industrial Relations Code, 2020 and the Code on Social Security, 2020. A significant recent change is the eligibility for gratuity; while permanent employees require five years of service, fixed-term employees are eligible for pro-rata gratuity after completing just one year of service. The core principle of equal benefits and the automatic termination mechanism have stayed the same.