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Consider the following statements : As per the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 1. if rules for fixed-term employment are implemented, it becomes easier for the firms/companies to lay off workers 2. no notice of termination of employment shall be necessary in the case of temporary workman Which of the statements given above is/are correct?
Explanation
The correct answer is option C because both statements are correct.
The Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 introduced the concept of "fixed-term employment" in all sectors[1]. These rules provided proportionate benefits for fixed-term employment workers, including gratuity after one year of service, without laying down the need for notice or retrenchment benefit on non-renewal of contract[2]. This makes Statement 1 correct, as the absence of notice or retrenchment benefit requirements on non-renewal makes it easier for firms to end employment relationships with fixed-term workers.
Statement 2 is also correct. The amendment explicitly states that "no notice of termination of employment shall be necessary in the case of temporary workman whether monthly rated, weekly rated or piece rated and[3] probationers or badli workmen". This provision directly exempts employers from giving termination notice to temporary workers.
Therefore, both statements accurately reflect the provisions of the 2018 Amendment Rules, making option C the correct answer.
Sources- [1] https://frontline.thehindu.com/social-issues/unsettling-reform/article10106636.ece
- [3] https://labour.gov.in/sites/default/files/fte_final_notification.pdf
PROVENANCE & STUDY PATTERN
Full viewThis question looks like a niche legal bouncer, but it was actually a 'Sitter' for those using updated standard books. The exact statements appeared as a practice MCQ in Nitin Singhania’s Economy book. It proves that 'Current Affairs' in Economy often solidifies into textbook updates within a year.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Do the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 state that implementing rules for fixed-term employment makes it easier for firms/companies to lay off workers?
- Statement 2: Do the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 state that no notice of termination of employment is necessary in the case of a temporary workman?
- Explicitly notes the amendment extended fixed-term employment to all sectors and provided benefits without requiring notice or retrenchment benefit on non-renewal.
- The absence of a requirement for notice or retrenchment benefit on non-renewal implies employers can end fixed-term contracts without following layoff/retrenchment procedures, making it easier for firms.
- States that the March 2018 notification amended the Industrial Employment (Standing Orders) Act/Rules and introduced the concept of fixed-term employment in all sectors.
- Identifies the amended rules as the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, providing the regulatory basis for the fixed-term employment framework referenced in other passages.
States that the Ministry notified fixed‑term employment for all sectors and defines workmen on fixed‑term contracts by written contract for a fixed period.
A student could infer that fixed‑term contracts (ending by expiry) provide an alternative to statutory layoff/retrenchment procedures and check whether expiry avoids prior government permission requirements.
Defines fixed‑term employment as hiring for a specific period or task where after expiry the worker leaves and there is 'no case of firing', implying termination occurs by contract expiry rather than formal retrenchment.
Combine this definition with knowledge of layoff/retrenchment rules to assess if contract expiry functions as an easier route for firms compared with seeking permission to retrench.
Explains that the Industrial Disputes Act requires prior government permission for layoff/retrenchment (a major bottleneck) for firms above thresholds.
Use this rule to reason that any contractual form that avoids triggering retrenchment procedures (e.g., fixed‑term expiry) could make reducing workforce administratively easier for firms.
Shows the exact MCQ claim exists in study material: 'If rules for fixed‑term employment are implemented, it becomes easier for the firms/companies to lay off workers.'
A student can treat this as an asserted proposition to be tested by comparing the statutory effects of fixed‑term contracts and retrenchment rules in the ID Act and subsequent codes.
Notes central introduction of fixed‑term provisions but that states had not notified them, indicating partial/varied implementation across jurisdictions.
A student could map which states implemented the rules (using external sources) to see whether firms in notified states can more easily reduce staff via fixed‑term hires than in non‑notified states.
- This is the amendment text that explicitly substitutes the sub‑paragraph to state the rule.
- It plainly says no notice of termination is necessary for temporary workmen (monthly/weekly/piece rated) and for probationers or badli workmen.
- A secondary source summarising the Notification confirms the amendment's effect.
- It restates that the Notification clarifies no notice of termination is required for temporary workmen.
Contains a textbook MCQ that explicitly asserts as a claim: 'No notice of termination of employment shall be necessary in the case of temporary workman.'
A student could treat this as a reported interpretation and verify by checking the actual 2018 amendment text or authoritative circulars to confirm whether the rule appears verbatim or is a misstatement.
Describes the 2018 amendment introducing fixed‑term employment broadly into the Standing Orders Rules, showing the amendment changed categories of employment (fixed‑term vs permanent).
Compare definitions and provisions for 'fixed‑term' and 'temporary' in the amendment text to see if termination/notice provisions differ for non‑permanent categories.
Explains what 'fixed term employment' means (a contract for a specific period, ends on expiry with no 'firing'), implying different termination mechanics for temporary/fixed‑term hires.
Use this definition to infer that fixed‑term/temporary roles may not require ordinary termination notice — then check the amendment for explicit notice clauses.
Notes that the Industrial Employment (Standing Orders) Act, 1946 was subsumed into the Industrial Relations Code 2020, indicating later legal consolidation which may affect how 2018 amendments were interpreted or retained.
A student could trace whether the 2018 amendment's provisions (including any notice rules) were carried forward, modified or repealed in the 2020 Code to test the current correctness of the statement.
Mentions that fixed‑term employment was made applicable for all industries under later law and highlights other mandatory notice requirements elsewhere (e.g., 14‑day strike notice), showing notice requirements can be explicitly specified in labour laws.
Use the pattern that labour statutes explicitly state when notice is required to look in the 2018 amendment for any explicit clause saying notice is not necessary for temporary workmen.
- [THE VERDICT]: Sitter (Hidden). While it looks like a complex notification, the exact MCQ appears in Nitin Singhania (Ch: Indian Industry). If you skipped the book's practice questions, it was a Bouncer.
- [THE CONCEPTUAL TRIGGER]: The 'Ease of Doing Business' push and the consolidation of 29 Labour Laws into 4 Labour Codes.
- [THE HORIZONTAL EXPANSION]: Memorize the 4 Codes: (1) Wages, (2) IR, (3) Social Security, (4) OSH. Key thresholds: IR Code raised the retrenchment permission threshold from 100 to 300 workers. Gig workers: Defined for the first time in the Code on Social Security.
- [THE STRATEGIC METACOGNITION]: When a term like 'Fixed Term Employment' (FTE) is introduced to *all* sectors, do not just read the headline. Read the *conditions* attached: (1) Can permanent workers be converted? (No). (2) Do they get benefits? (Yes, pro-rata). (3) How do they exit? (Automatic expiry).
Fixed-term employment is a written contract for a specified period or task and the employment relationship terminates on expiry of that term.
High-yield for UPSC because it clarifies the legal nature of a major labour reform and helps answer questions on employment types, formalisation and worker rights. Connects to labour law definitions, contract types, and comparisons between permanent, contract and fixed-term workers. Enables question patterns on legal consequences of different employment arrangements.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 8.5 Fixed Term Employment > p. 265
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > INDUSTRIAL EMPLOYMENT (STANDING ORDERS) CENTRAL (AMENDMENT) RULES, 2018 > p. 393
The Industrial Disputes framework requires prior government permission for layoff or retrenchment in firms above a specified size, creating legal hurdles for employers.
Important for UPSC as it provides context for why employers and policymakers consider alternative arrangements (like fixed-term contracts). Links labour law with industrial policy, employment generation and business response strategies. Useful for essay and mains answers on labour reform trade-offs and historical constraints.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > Issues with the current laws and impact on economy: > p. 260
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 6: Indian Economy [1947 – 2014] > 6.5 Economy Jumped from Agriculture to Services > p. 221
Making fixed-term employment applicable across industries is presented as helpful for businesses that experience seasonal spikes or temporary changes in activity.
Useful for candidates to explain policy intent and practical effects of labour-code changes, and to evaluate trade-offs between flexibility for employers and job security for workers. Enables analysis-type questions on reform impacts and sectoral employment dynamics.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 4. The Industrial Relations Code, 2020 > p. 264
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 8.5 Fixed Term Employment > p. 266
The 2018 Rules introduced fixed‑term employment across sectors and required engagement on the basis of a written contract for a fixed period.
High-yield for UPSC because questions probe recent labour-law reforms and their specific provisions; links directly to industrial relations and employment policy. Mastering this helps answer questions on contractualisation, statutory changes, and their economic/social implications.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > INDUSTRIAL EMPLOYMENT (STANDING ORDERS) CENTRAL (AMENDMENT) RULES, 2018 > p. 393
Fixed‑term contracts apply for a specific period or task and the amendment did not allow conversion of existing permanent workmen into fixed‑term status.
Important for UPSC as many questions test differences in legal status, protections, and termination rules for permanent versus temporary/fixed‑term workers; connects to retrenchment, notice requirements and employer liabilities.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 8.5 Fixed Term Employment > p. 265
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > INDUSTRIAL EMPLOYMENT (STANDING ORDERS) CENTRAL (AMENDMENT) RULES, 2018 > p. 393
The Industrial Relations Code, 2020 subsumed the Industrial Employment (Standing Orders) Act, 1946 and incorporated related reforms such as fixed‑term employment.
Crucial for aspirants because the consolidation of multiple labour laws into codes is frequently examined; understanding which acts were subsumed and the implications enables answers on legislative reform, federal implementation and worker protections.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > RECENT REFORMS IN INDUSTRIAL LABOUR LAWS > p. 392
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 4. The Industrial Relations Code, 2020 > p. 264
The 'Conversion Trap': The same 2018 Rules explicitly state that no employer can convert existing permanent workmen into fixed-term employment. A future statement will likely flip this to say 'Employers can convert permanent staff to FTE to save costs'—which is False.
Use 'Teleological Interpretation' (Purpose-driven logic). Purpose of FTE: To give firms flexibility. If Stmt 1 were false (i.e., it's NOT easier to lay off), the reform would be useless to firms. Thus, Stmt 1 must be True. For Stmt 2: 'Temporary' by definition implies transience; requiring a formal notice period contradicts the very nature of 'temporary' work in Indian legalese. Both flow from the definition.
Mains GS-3 (Employment): FTE is the 'Middle Path' solution to the 'Missing Middle' problem in Indian manufacturing. It balances flexibility for employers (Stmt 1) with social security for workers (pro-rata benefits), aiming to reduce informalisation.