Government likely to abolish ‘hire and fire’ clause in Industrial Employment Act


As per the current Act, companies could fire up to 300 temporary/contractual employees with any notice or compensation.

The ‘hire and fire’ clause approved by the Union Government in the Industrial Employment (Standing Orders) Act last year might soon be abolished. The clause was introduced with the objective of promoting ease of doing business and curbing the role of middlemen.

According to a news report, the Bharatiya Mazdoor Sangh (BMS), an affiliate of the RSS, had raised objections regarding the clause to the Ministry of Labour and Employment. BMS leaders, who had also met BJP chief Amit Shah regarding their objections, said they are assured that changes in labour laws and reforms would be undertaken only after deliberating with trade unions. They also said that the BJP president has promised to strengthen mechanisms to settle issues. At present, as per the ‘hire and fire’ clause, companies can fire up to 30 temporary/contractual employees with any notice or compensation. The clause also states that fixed-term employees (contract employees) will not be eligible for any statutory benefits that are available to permanent employees.

The report quoted a Ministry of Labour and Employment official as saying, “If we can put together all initiatives, including a possible change in the number of people factories can hire or fire, the Ministry will be successful in changing its image from anti-worker to pro-worker.”

On the other hand, the Government is also planning better wages for contractual employees and changes in the EPFO and ESIC norms to make more employees eligible for the same. There is no doubt that the Government is working hard towards improving its image and becoming a preferred employer for people.

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