New Labour Codes Boost Fixed-Term Hiring — But Full-Time Jobs Still Hold Strong

India’s new labour codes have officially come into effect, reshaping how companies hire, compensate, and retain workers. One of the most significant shifts is the enhanced status of fixed-term employees, who now receive benefits much closer to those of permanent staff—including gratuity eligibility after one year.

With benefit parity narrowing the gap between fixed-term and permanent roles, employers across industries are reassessing workforce planning strategies. The development has sparked a key debate: Will fixed-term hiring threaten full-time jobs, or create a new hybrid balance?

A Selective but Structured Shift

Experts believe full-time roles are not disappearing but agree that companies will reorganise work distribution.

Balasubramanian A, Senior Vice President at TeamLease Services, said fixed-term hiring will grow in sectors where flexibility, project-based work, and cost control are critical.
He noted that fixed-term roles will expand in seasonal, cyclical, and project-linked functions, while core operations will remain permanent.

“Employers will continue to prefer full-time hires where institutional knowledge and long-term retention matter,” he said.

Where the Impact Will Be Most Visible

The shift will vary by industry and job type:

• IT & Digital Services: Fixed-term roles for sprint-based or pilot work; permanent staff for core product, security, and long-term development.

• Manufacturing & Retail: More fixed-term hiring for seasonal spikes; continuity required for skilled shop-floor roles.

• Media & Services: Flexible contracts for campaign-based work; creative, editorial, and leadership roles remain permanent.

Experts say this is not a sweeping overhaul but a layered rebalancing of the workforce.

Hybrid Workforce Model Becomes Viable

The clarity provided by the new labour codes has made hybrid workforces more feasible.

Kartik Narayan, CEO of Jobs Marketplace at Apna, said companies can now operate with “a smaller stable core supported by a larger flexible pool,” without navigating multiple state-level regulations.

However, he cautioned that flexibility cannot replace structure. Without proper onboarding, skill development, and career pathways, fixed-term roles may lead to worker frustration instead of efficiency gains.

Concerns Over Misuse

Workers fear employers might repeatedly renew short-term contracts for roles that are effectively permanent.
Balasubramanian emphasised the need for objective definitions of permanent functions, while Narayan stressed that enforcement must be “predictable, fast and visible” to prevent misuse.

Oversight will determine whether fixed-term hiring strengthens formal employment or undermines job security.

What Workers Should Know

Fixed-term workers now enjoy equal pay, social security benefits, and gratuity eligibility, marking a significant improvement for millions previously in informal roles. However, long-term career growth still hinges on continuity, training, and clear progression paths.

Narayan noted that “permanent careers are built on graded responsibility and structured pathways,” urging companies to provide transition opportunities for fixed-term staff.

Pay Structure Changes Ahead

The labour codes’ cleaner definition of wages will force companies to redesign compensation.
Balasubramanian said pay structures will shift toward transparent, basic-pay-heavy designs, narrowing the pay gap between fixed-term and permanent workers while raising baseline costs for employers accustomed to fragmented CTCs.

Will Fixed-Term Roles Become the Default in Downturns?

During economic slowdowns, companies often prefer flexibility. Narayan said the new codes make this shift “legitimate and easier to administer,” though excessive use may attract scrutiny or damage employer reputation.

Core teams—linked to strategy, institutional memory, and stability—will still rely on permanent roles.

A New Workforce Balance

Full-time jobs are not being replaced. Instead, companies are rethinking which roles require continuity and which can operate on flexible contracts.
Fixed-term hiring will rise in variable-demand functions, while permanent roles will remain essential in areas demanding long-term ownership.

Whether this becomes a long-term reset or a gradual recalibration will depend on how organisations adapt in the coming years.