India’s workforce model is undergoing its most significant reform in decades as the four new Labour Codes — covering wages, industrial relations, social security, and occupational safety — come closer to implementation. The new framework consolidates multiple labour laws into a streamlined system aimed at improving compliance, workforce protection, and organisational flexibility.
A major shift under the new regulations is the formal elevation of fixed-term employment. Previously seen as temporary hiring, fixed-term roles now legally carry nearly the same benefits as permanent positions. Employees hired on fixed-term contracts are entitled to equal wages, company leave policies, medical coverage, PF, ESIC, maternity benefits, bonuses, and even gratuity after one year of service.
The codes mandate detailed employment contracts defining work responsibilities, schedules, safety rules and exit policies — a move expected to reduce ambiguity and protect both employers and workers.
Experts say the reforms aim to strike a balance between operational flexibility and employee security. While permanent staff will remain critical for core business functions, fixed-term hiring is expected to grow across sectors such as technology, manufacturing, GCCs, retail, logistics and services.
Industry View: A More Balanced Workforce, Not the End of Full-Time Jobs
According to Ashish Dhawan, Senior Partner at AIMS International, the reforms will certainly push companies to reassess hiring strategies — but will not trigger a replacement of full-time jobs.
Dhawan says fixed-term contracts will rise alongside permanent jobs to create a mixed workforce model, especially for project-based and seasonal requirements. Cultural preference for job stability makes full-time roles unlikely to decline sharply.
He adds that many senior professionals are already engaged on contract structures through GST invoicing for greater flexibility and tax benefits, but the shift will be gradual rather than drastic.
No Substitution, Just Clarity in Contract Hiring
R P Yadav, CMD of Genius HRTech Limited, says the new codes make fixed-term employment more structured and transparent, with PF and gratuity rules clearly defined.
Yadav believes contract roles will gain legitimacy under tighter documentation and compliance — but will not replace permanent employment.
Salary Structures Set for Redesign
Both experts agree that the new wage definition will reshape CTC design.
- Basic pay must constitute at least 50% of total salary, raising PF and gratuity contributions.
- Take-home pay may reduce initially, while long-term financial benefits improve.
- Variable pay and salary transparency are expected to increase.
HR Systems Face Major Overhaul
Neesu Sharma, VP–HR at Corporate Infotech, says payroll and HR systems across companies will require significant upgrades to calculate PF, ESIC, leave and gratuity for both permanent and fixed-term employees.
She says the new rules will not reduce permanent hiring but will extend greater social security to gig-based and assignment-based workers.
A More Transparent and Equitable Labour Market
Experts agree that the Labour Codes signal an evolution — not erosion — of full-time employment.
The reforms aim to:
✔ modernise workforce planning
✔ reduce disparities in employment benefits
✔ enable secure fixed-term opportunities
✔ bring contract workers under formal social security
Fixed-term employment will now function as a recognised and protected hiring model, complementing rather than replacing permanent roles.
