November 21, 2025, marked the initiation of the enforcement of the New Labour Codes. The Government of India announced the implementation of four major labour codes: the Code on Wages 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code 2020. These codes aim to modernise labour regulations, enhancing workers’ welfare, aligning them to the mission of “Aatmanirbhar Bharat”. In this blog, we will specifically discuss the reforms introduced to benefit contract workers and fixed-term employees. To make it easy to understand, we must first have a solid grasp of the terms, contractual workers and fixed-term employees.
Contractual Workers:
Contract workers are professionals engaged for a specific project or for a fixed duration. They are primarily employed for their skill set or subject matter expertise that is unavailable within the organisation’s internal workforce. They remain on the contractor’s payroll and are hired by a third party.
Fixed-Term Employees:
Fixed-term employees are workers engaged by a written contract for a fixed duration of time. In such an employment arrangement, the tenure of employment is predetermined and automatically ends when the predetermined tenure elapses. They are also skilled professionals engaged for their expertise. Unlike contract workers, they are employed on the employer’s payroll.
What do these Amendments mean for both Employment Models?
The circular introduced us to new labour codes that initiate formalisation of employment, social security, preventive healthcare and ESIC coverage for workers. The following are the mandatory codes for both employment models, i.e., contract workers and fixed-term employees:
Contract Workers:
- 1) They are now eligible for social security benefits under the Code on Social Security, 2020.
- 2) They can avail health benefits like annual health check-ups, especially at age 40 years and above, from their employer under the Health and Working Conditions Code, 2020
Know more about our contractual staffing services
Fixed-Term Employees:
- 1) They are now eligible for social security benefits like leaves, medical and legal protection, equal to those of a permanent employee under the Code on Social Security, 2020.
- 2) They can avail a gratuity after one year of employment, rather than five years.
- 3) The circular clarifies that fixed-term employees are to receive wages equivalent to permanent employees.
Benefits for both employers and professionals under these codes:
- 1) Professionals to receive mandatory appointment letters to ensure transparency, security and fixed employment.
- 2) Enables flexibility through contractual and fixed-term hiring models
- 3) Offers clarity over ambiguity on the definition of employment tenure, benefits, and wages.
- 4) Encourages formalisation of the workforce.
Conclusion:
The announcement of the latest labour codes marks the dawn of a transparent, inclusive, and structured employment system. By ensuring workers’ welfare through the recent codes, organisations and professionals can leverage these flexible employment models while contributing to the nation’s economic development.
Are you looking for the best contractual manpower service in Pune?
Contact us: +91 7350014493 / 9552539602
Frequently Asked Questions
Contract workers are hired through a third-party contractor and remain on the contractor’s payroll, while fixed-term employees are engaged by the organisation and are on their payroll.
Yes. Under the new labour codes, contract workers are eligible for benefits such as PF, ESIC, maternity benefits, gratuity, and insurance, subject to applicable conditions.
Yes. The new labour codes clarify that fixed-term employees must receive wages and benefits equivalent to permanent employees performing similar roles.
Yes. Fixed-term employees are eligible for gratuity after completing one year of service, instead of five years.
The new labour codes simplify compliance, provide clarity on employment definitions, and enable organisations to adopt flexible hiring models while ensuring worker welfare.