FTE has been included in the Standing Orders (First Schedule of the IR Code 2020) applicable to all industrial establishments, adding a new category of employees to the existing five: permanent, temporary, apprentices, probationers and badlis. ('Badli' workman is a workman who has been appointed in the post of permanent workman or a probationer, who is temporarily absent.)
FTE is a contract in which a company or an enterprise hires an employee for a specific period of time without the services of the intermediary contractor. In most cases, it is for a year but can be renewed after the term expires, depending on the requirement. In a fixed-term employment, the employee is not on the payroll of the company. Fixed-term workers are entitled to all statutory dues that permanent workers in the same unit get. However, fixed-term contract workers are not entitled to retrenchment compensation like permanent employees.
The positive side:
FTE is meant to provide both flexibility to the industry and act as a stepping stone for young and raw hands to establish their suitability for permanent employment. Such flexibility is necessary f in view of the pandemic induced economic crisis.
FTE gets provident fund, gratuity and other social security facilities on a par with permanent employees.
In view of the flexibility, more employment is likely to be created as rigid labour laws were a hurdle earlier.
Worries are the following:
It may increase the temporary category of workers, though called by a different name.
Under the new regime of FTE, a permanent employment can potentially be turned into FTE at any time.
The via media should be to restrict FTE renewals and facilitate absorption as permanent workers and restrict it to specific activities outside "core activity" to bring stable employer-employee relationships which is essential for investing in skilling to improve productivity as well as end uncertainty in the career of young recruits.
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