A PARADOXICAL SITUATION HAS RECENTLY EMERGED in the Indian employment landscape. On one hand, there are traditional bastions of ‘secured employment’ like Tata Consultancy Services (‘TCS’), which recently retrenched around 12,000 employees and halted the on-boarding of over 600 graduate trainees (‘GETs’) due to ‘skill-mismatch’ with AI advances (NITES, a trade union of IT workers also approached labor authorities to protect these retrenchments). On the other hand, in the government sector, the Haryana government recently notified The Haryana Contractual Employment (Security of Service) Act, 2024, to secure contract employment of thousands of contract/ad-hoc/outsource employees of up to 60 years of age under state government organisations.
On both sides of the employment spectrum, what is at stake is youth employment and its future. But perhaps, an equally important question to mull over is how technological disruptions and global transitions transform the space of contractual employment.
Today we are living in an age where the employment landscape is fast shifting due to continuous pressure to ‘learn, unlearn and then re-learn’ owing to the intensive skill driven nature of the employment world. In such a context, would legislations like the 2024 Act, be able to respond to the current requirements of the employment landscape?
Such ‘Security of Employment’ labour legislations are laudable in the absolute spirit of welfare-ism and social justice to protect all forms of precarious employment. Recent trends of short term contractual employment must be viewed as modern techniques to circumvent fairness under the labour laws and ensure performance at minimum wages. The Haryana government must be congratulated for this ground breaking initiative to ensure security of tenure and surety of benefits to thousands of youths employed under it on contract, ad-hoc or outsource basis.
Such ‘Security of Employment’ labour legislations are laudable in the absolute spirit of welfare-ism and social justice to protect all forms of precarious employment.
However, there exist several substantive and procedural questions that are bound to arise during administration of this law and may have wider implications for our employment landscape and the future of youth employment. I shall strive to outline them briefly to provide better policy feedback and appropriate appreciation of this law with other pari materia labour legislations.
In essence, the 2024 Act provide for security of employment or ‘secured employment till ordinary age of superannuation i.e 60 years, surety of regular benefits i.e periodical salary hike’ to all ‘secured’ employees who are at par with entry level pay in regular government service along with preferential hike. There are certain pre-requisites like completion of at least five years of service by August 15, 2024, and receipt of 240 working days wages for each completed year by the beneficiary. It will apply to all departments, boards, corporations or authority etc under the Haryana government. The Act has not yet provided for disciplinary procedures and nature for such ‘secured contractual employees’ but in due time it shall be provided. Till now, the object of the Act is ‘to provide security of service to contractual employees’. Now there arise certain inconsistencies and incongruences that require urgent attention.
The Haryana Act creates a new category: The permanent contract employee
Firstly, this law introduces a new specie of category of employee i.e ‘permanent-contract employee’ as contractor employee is entitled to the employment till ‘he attains the age of superannuation i.e 60 years’. It creates a sui generis security in insecure employment relations. This trend was started in 2023 when the Calcutta High Court ordered Municipal Corporation of Kolkata in Kausik Ghosh & Ors.vs. The State of West Bengal & Ors (2023) ‘to absorb all lab technicians as ‘permanent-contract workers’ due to their long period of services as outsourced employees till their age of superannuation.
The Court mentioned that ‘this judgment is not to be treated as a precedent’ yet it inspired laws like the one in Haryana. Interestingly our currently employment laws system already provides several categories of employees’ i.e permanent, regular, ad-hoc, causal, badly, temporary, part time, daily waged, piece rated contractual and, the recently added, fixed term employees (‘FTE’) under the Industrial Employment (Standing Orders) Act 1946. Now another new amorphous category like this one i.e ‘permanent-contractual' is introduced.
With FTE, direct contract workers — DCW’,— (In Kerala, all mining companies like KMML, IREL etc have this mechanism), and contract workers through manpower suppliers etc, we now have several forms of ‘contractual employment’ and they all operate on different legal systems. Even small countries like Vietnam have adopted a ‘standard and universal’ standard for employment of any kind of contractual employment.
These multiple and hierarchical classes and categories confuse both employers and employees and fragment the employment landscape to the peril of legitimate interests of workers. It provides a huge grey area for employment mischief wherein prejudicial application of these categories and attached entitlements are rolled out preferentially and selectively.
In practice, I found cases where employers would ornate employees as ‘team leader’ without granting any additional pecuniary or non-pecuniary entitlements.
In practice, I found cases where employers would ornate employees as ‘team leader’ without granting any additional pecuniary or non-pecuniary entitlements. This fragmentation is done with a double aim: one to deprive them of rightful wages and secondly to stifle upward growth of an employee in rewards and positional recognition. In such a context, one must wonder whether permanent-contract status would not add to the woes of employees?
Is the ‘permanently contractual’ status in harmony with central laws?
Another important question that arises is whether this law is incongruent with central law as far as creating this status of ‘permanently contractual’ is concerned. Towards this, provisions of the Industrial Disputes Act (‘ID Act’) and Contract Labour (Regulation and Abolition) Act are to be analysed. Schedule 5 and Item no. 10 of the ID Act enjoins that ‘to employ one for a number of years with the object of depriving them of the status and privileges of permanent workmen is unfair labour practice’. Besides that, Section 10 of the CLRA notes that ‘no contract workers can be deployed for perennial nature or regular works’. Prima facie, this law of security of employment is incongruous with existing provisions in this regard.
Where does the newly launched FTE scheme stand now?
This also calls into question the newly launched legal scheme of Fixed Term Employment (‘FTE’). FTEs is a contractual arrangement for jobs, and is based on written contract for a particular tenure under the the Industrial Relations Code, 2020. Now if state legislations keep converting contractual employment accumulated over the years into ‘permanent type’, then what is the need of FTE as a mechanism to provide flexible employment policies? FTE is already under rough scrutiny since trade unions perceive it as ‘short cut’ to regular employment. Now the question that arises is whether this Act shall overlook the very purpose and scope of FTE to provide an unencumbered contractual system of employment, which is based on the needs of the time and the budget of employers.
The fate of Article 16
Another aspect worthy of proper scrutiny is whether Article 16 of the Constitution will be properly observed when the 2024 Act is implemented. The Act provides for all contract workers engaged either ad-hoc or outsourced from an agency and manpower supplier. These outsourcing agencies or manpower suppliers are private parties who recruit through private recruitment methods. There is little scope for consideration of Article 16 by these private outsourcing agencies. Now as the Act and rules provide for ‘permanent status of contractual employment’ under the government, Article 16 shall apply. This is because a special vested interest for perennial employment is created within the State.
Who should be the employer now?
Another important aspect e is who, now, shall be the employer of these ‘secured contract employees’. Should their permanent contractual status be directly handled by the ‘government organisation’ or routed through existing manpower suppliers? As the state government of Haryana has enacted this law to provide for terms and conditions of employment for ‘secured contract employees’, any routing through outsourcing agencies or manpower suppliers shall not be legal. And if the government hires them directly as ‘permanent contract workers’, then the legal question arises: why did the government dispense with ordinary procedures of recruitment, only to create a new class of contractual employment?
The government is also mulling over ‘creating new posts’ to continue with this arrangement. Creating new posts just to adjust contract employees is frankly unprecedented and unheard of. The Act, notably, does not talk about the career plans or vertical mobility of such ‘permanent contract workers’ within the organisations. How can one’s productive lifetime pass simply carrying one fossilized employment status?
Haryana’s Security of Service Act, must be welcomed, albeit with caution and keeping in mind the potentially significant implications it could have on India’s employment landscape.
Last, but not the least: we must ask what might be the repercussions of such employment policies on the workers themselves. Multiple artificial and genuine hierarchies of employment status often erode confidence and the creative sheen of the young workforce, who are relentlessly running after the carrots of ‘government jobs’ being dangled in front of them. They become a Trishanku in employment relations where they are neither rewarded nor recognized adequately due to an ‘outsourced system’ and also because they are unable to focus on augmenting skills or professional training to respond to the wide needs of the employment landscape in India.
Haryana’s Security of Service Act, must be welcomed, albeit with caution and keeping in mind the potentially significant implications it could have on India’s employment landscape.
What is required is a holistic, step bound and organically interlinked employment status that provides not only fair means of livelihood but also an assured career for the meritorious and young workforce. The topmost priority in today's technology and skill driven world of work must be to have a stable, agile and productive employment landscape. Law must orient itself to this national goal.