Fixed term employment used to sit in the rules rather than in the statute, which made it easy for employers to use the form without giving the substance. Since 21 November 2025 it is defined in the Industrial Relations Code, 2020 and again in the Code on Social Security, 2020, and the definitions themselves carry the protections.
What that gives you
- Parity of terms. If a permanent colleague doing the same or similar work gets a higher basic, a longer leave entitlement, medical cover or a bonus, the parity proviso is the provision to point at. It is written into the definition, so an employer relying on the fixed term label takes the proviso with it.
- Proportionate statutory benefits. Qualifying periods that would otherwise shut you out are read down proportionately. This is the answer to the familiar line that a benefit "only applies to confirmed employees".
- Gratuity at one year. The Industrial Relations Code definition says one year of service under the contract. The gratuity chapter of the Code on Social Security reaches the same place from the other direction: gratuity is payable on termination of the contract period under fixed term employment, the five year requirement is expressly not necessary where employment ends on expiration of fixed term employment, and gratuity for a fixed term employee is paid on a pro rata basis. Our note on gratuity under the Code on Social Security takes the arithmetic further.
- Written contract, or it is not fixed term at all. The definition requires a written contract for a fixed period, so an oral arrangement or a contract with no stated end date does not qualify.
"Retrenchment" in the Industrial Relations Code is defined to exclude the termination of service of a worker as a result of completion of tenure of fixed term employment, and separately to exclude termination on the non-renewal of a contract on its expiry. So when the term simply runs out, the conditions precedent to retrenchment do not apply: no one month's notice, no fifteen days' pay per year of service, no notice to the appropriate Government. That is the bargain the category represents.
Where the argument usually is
Most fixed term disputes are not about the expiry. They are about something else dressed up as an expiry.
- Termination before the term ends. Cutting a fixed term short is not the completion of tenure. It is an ordinary termination, and if you are a worker it has to meet the conditions precedent to retrenchment unless it is punishment following a proper enquiry. Read the contract as well, because an early termination clause creates a contractual claim in its own right.
- Rolling renewals. A series of short contracts covering years of continuous work invites the argument that the fixed term form is a device. Continuous service under the codes counts service rendered before the Code commenced and is computed on days actually worked, so successive contracts can add up.
- Parity denied. Where the fixed term worker sits beside a permanent colleague doing the same work on materially better terms, the parity proviso is being breached and that is a live claim regardless of how the engagement ends.
- The form without the substance. A written contract that names no end date, or that is signed after the person started, does not create fixed term employment. Our guide on what an Indian employment agreement should contain sets out what the document has to do to be worth anything.
What to do at the start and at the end
At the start, get the contract in writing with the start and end dates on its face, and get the parity position in writing too. Ask for the appointment letter that the Occupational Safety, Health and Working Conditions Code, 2020 requires every employer to issue to every employee, in the form the appropriate Government prescribes. That letter is often the only document that records your role accurately.
At the end, before the last day, write and ask for four things: the gratuity computation on a pro rata basis, the leave encashment, the full and final statement head by head, and the experience certificate. If gratuity is refused on the footing that you did not complete five years, reply in writing citing the fixed term limb, because that refusal is the commonest error in these settlements and it usually reverses once the provision is quoted.
The maximum gratuity payable is not written into the Code. It is such amount as the Central Government notifies, so take the figure from the notification in force. The codes also use a common definition of wages which does not stop at the "basic" line on your payslip, so run the computation yourself before accepting the employer's number.
For how the fixed term category sits within the wider reorganisation of Indian labour law, and what else changed on the same date, see our overview of what the four labour codes changed for employees.