A project “consultant” has renewed every April for four years, sits on the same team as permanent analysts, and is paid from the contractor sheet. Legal now asks whether this is fixed-term employment under the Industrial Relations Code - with benefit parity and gratuity clocks. The label on the offer letter is no longer the whole answer.
Fixed-term is a real engagement type
The Industrial Relations Code, 2020 treats fixed-term employment as a first-class way to hire for a defined period or project. The trade for flexibility is parity of wages, allowances and benefits with permanent employees doing the same or similar work - plus social security that attaches to that engagement, including pro-rata gratuity after one year for direct FTEs under the Code on Social Security.
What the appointment letter must make obvious
- That the engagement is fixed-term (not a vague “project hire”).
- Start and end dates, or a clear project-completion trigger.
- Wages and benefits language that matches parity - not a thinner package by default.
- Prescribed fields under the OSH appointment-letter rules where those apply - see appointment letter and wage slip.
Rolling renewals are the risk
| Pattern | Inspection / dispute view | Safer operations |
|---|---|---|
| One project, clear end | Looks like genuine FTE | End-date reminder + FNF ready |
| Annual renewals, same role | Looks like permanent work | Conversion review or real project re-scope |
| Paid via vendor, managed as staff | Misclassification risk | Correct engagement type on day one |
Employment-type flag
Permanent / FTE / contractor-sourced must drive leave, PF, gratuity and letters.
End-date ops
Reminders at 60 / 30 / 7 days so renewal or exit is a decision, not a surprise.
Conversion workflow
When the role is ongoing, convert on record - do not paper over with another letter.
Exit readiness
FTE ends still face the two-working-day wage clock - assets and clearance must be ready.
Fixed-term employment is not a discount permanent hire. It is a documented tenure with parity obligations. If your HRMS cannot tell FTEs apart, your lawyers will invent the distinction under pressure.
The way forward
Audit every non-permanent badge this month. Fix appointment letters, employment-type flags and end-date reminders. Stage FTE exits through exit & offboarding and keep letters in Document Studio.
Practical operations guidance, not legal advice. Confirm IR Code thresholds, conversion risk and state rules with counsel.
Tag FTEs correctly before the next renewal
Employment type, letters, gratuity and exit on one record.
