What is fixed-term employment in India under the Labour Codes?
Fixed-term employment in India is a direct engagement of an employee under a written contract for a fixed period. The Code on Social Security says hours, wages, allowances and benefits cannot be lower than a permanent employee's doing similar work. Benefits are proportionate to the service period, and gratuity applies after one year.
At a glance
- Written contract for a fixed period, with the employer directly (not through a contractor).
- Equal wages, hours and allowances as a permanent employee doing the same or similar work.
- Statutory benefits available proportionately, even if the contract is shorter than the usual qualifying period.
- Gratuity on completing one year of service under the contract.
What is fixed-term employment in India?
Section 2(34) of the Code on Social Security defines fixed term employment as engagement on the basis of a written contract for a fixed period. The Ministry's FAQ clarifies that it covers employees engaged directly by the employer, not contract labour supplied through contractors.
What a fixed-term employee gets
- Parity: same hours, wages and allowances as permanent staff doing similar work.
- Proportionate benefits: all statutory benefits available to a permanent employee, in proportion to service.
- Gratuity: on expiry of the contract, if one year of service under the contract is complete; paid pro rata.
- Appointment letter and health check-up: the OSH Code covers all employees, including fixed-term workers.
Worked example: contract length
| Contract length | Gratuity at expiry? |
|---|---|
| 11 months | No, because the one-year requirement is not met (Ministry FAQ) |
| 12 months | Yes, pro rata |
| 24 months | Yes, pro rata for the service completed |
If a fixed-term employee leaves before completing the one year, gratuity is not payable on the Ministry's reading.
For employers
Use a written contract with start and end dates, pay and benefits matching comparable permanent roles, and a record of benefits applied. See what changes for employers.
For employees
Read the contract for the end date and any renewal terms. Ask what benefits apply and whether your CTC shows gratuity. See what changes for employees. For the glossary definition, see fixed-term employment.
Sources
- The Code on Social Security, 2020 (official text), https://www.labour.gov.in/static/uploads/2025/07/b0620548445580767b5c0d18c95c26f7.pdf, checked 2026-10-31
- Ministry of Labour and Employment, Additional FAQs on Labour Codes (as on 16 Mar 2026), https://www.labour.gov.in/static/uploads/2026/03/a4ccf4c6d97c4f1f36a6d83f8c64213d.pdf, checked 2026-10-31
- PIB, Government makes the four Labour Codes effective (21 Nov 2025), https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2192463®=3&lang=2, checked 2026-10-31
- PIB, India's Labour Reforms: Simplification, Security, and Sustainable Growth (21 Nov 2025), https://www.pib.gov.in/PressReleasePage.aspx?PRID=2192524®=3&lang=2, checked 2026-10-31
- Ministry of Labour and Employment, FAQs on the OSH Code, 2020, https://www.labour.gov.in/static/uploads/2026/01/fb8c6466d0d6a7ed581bcb2bee34694c.pdf, checked 2026-10-31
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.