Fixed-Term Employee Benefits: Ensuring Parity Under the New Codes

India’s new Labour Codes mark a decisive shift in how fixed-term employment is viewed and regulated. What was once treated as a flexible, often loosely governed arrangement is now firmly anchored in statutory parity, transparency, and social security. From wages and gratuity to health, safety, and written contracts, fixed-term employees are entitled to the same core protections as permanent staff.  

This blog breaks down what has changed under the new codes, why it matters for employers and HR teams, and how organisations can ensure true benefit parity for fixed-term employees going forward. 

Key changes in fixed-term employee benefits under the new labour codes 

The new Labour Codes fundamentally change how fixed-term employees are classified, compensated, and protected. What was earlier fragmented or inconsistently applied is now clearly defined and enforceable. 

1. Clear legal recognition of fixed-term employment 

Before the labour reforms, fixed-term employment existed but was regulated unevenly across sectors and states. Many employers used fixed-term contracts without a uniform legal framework, leading to ambiguity around rights and benefits. 
Under the new framework, fixed-term employment is explicitly recognized under the Industrial Relations Code, 2020, giving it formal legal standing. This clarity ensures that fixed-term roles are no longer treated as informal or secondary arrangements but as legitimate employment contracts governed by statutory protections. 

2. Mandatory wage parity with permanent employees 

Historically, fixed-term employees were often paid differently from permanent employees, even when performing the same or similar work. Wage structures varied widely, creating pay gaps and inequity. 
The new Labour Codes mandate equal pay for fixed-term employees performing the same or similar work as permanent employees. This ensures fairness in compensation and prevents the use of fixed-term contracts as a cost-cutting tool at the expense of workers. 

3. Consistent application of Provident Fund and ESIC 

Earlier, Provident Fund (PF) and ESIC coverage for fixed-term employees was applied inconsistently, especially for short-duration contracts. In many cases, benefits were avoided due to ambiguity or administrative gaps. 
From 21 November 2025, PF and ESIC coverage becomes mandatory wherever eligibility thresholds are met, regardless of the length of the fixed-term contract. This significantly strengthens social security access and ensures continuity of benefits during fixed-term engagements.  

4. Gratuity eligibility after one year of service 

Under the previous regime, gratuity was payable only after completing five years of continuous service, which excluded most fixed-term employees by default. 
The new Labour Codes introduce a critical shift: fixed-term employees become eligible for gratuity after completing one year of service. This recognizes the contribution of fixed-term workers and ensures they receive long-term financial benefits even in time-bound roles. 

5. Mandatory written appointment letters 

Earlier, appointment letters for fixed-term employees were not uniformly enforced. Many contracts lacked clarity on tenure, benefits, or conditions of employment, leading to disputes and insecurity. 
The new Labour Codes make written appointment letters mandatory for all fixed-term employees, clearly outlining wages, tenure, benefits, and service conditions. This improves transparency, reduces ambiguity, and strengthens trust between employers and employees. 

6. Equal health and safety protections under the OSHWC Code 

Health and safety protections for fixed-term employees previously varied by establishment and sector. In many cases, safety standards were applied inconsistently to temporary or fixed-term roles. 
With the implementation of the Occupational Safety, Health and Working Conditions (OSHWC) Code, fixed-term employees receive the same workplace health, safety, and welfare protections as permanent employees. Tenure no longer determines the level of protection an employee is entitled to. 

7. Annual health check-ups where applicable 

Annual health check-ups were not consistently extended to fixed-term employees, even in roles or age groups where health risks were higher. 
Under the new framework, annual health check-ups become mandatory where applicable, based on age, sector, and risk category, and apply equally to fixed-term employees. This reinforces the preventive healthcare focus of the Labour Codes and integrates fixed-term workers into broader wellbeing initiatives. 

Fixed-term employees across industries: What changes in practice 

This section mirrors the “across sectors” treatment in the PIB release but focuses only on fixed-term roles commonly used in different industries. 

Manufacturing, factories, and industrial establishments 

• Fixed-term workers must receive the same wages, working hours, overtime, and safety protections as permanent shop-floor employees 
• Mandatory health and safety standards apply equally under the OSHWC Code 
• Gratuity eligibility after one year significantly improves income security for project-based industrial roles 

Services, IT, and project-based white-collar roles 

• Fixed-term professionals hired for projects, transitions, or specialist roles must receive full statutory benefits 
• Wage structures can no longer rely on low basic pay to dilute PF or gratuity obligations 
• Appointment letters and defined tenure reduce ambiguity around rights and benefits 

Infrastructure, construction, and contract-heavy sectors 

• Fixed-term hiring replaces informal short-term contracts with a compliant structure 
• Equal wage and safety protections reduce misuse of temporary classifications 
• Improved clarity on benefits improves workforce stability without increasing permanent headcount 

Why this matters: 
Across sectors, fixed-term employment is no longer a “lighter” form of employment. It is now a regulated, benefit-backed arrangement aligned with core labour protections. 

Beyond core benefits: Additional reforms impacting fixed-term employees 

Beyond wages and social security, the Labour Codes introduce several reforms that directly strengthen the experience of fixed-term employees while simplifying employer compliance. 

Mandatory written contracts and transparency 

• Appointment letters must clearly state wages, tenure, benefits, and conditions 
• Reduces disputes and strengthens trust for time-bound roles 

Uniform wage definitions and reduced allowance fragmentation 

• Caps excessive allowances and strengthens basic wage components 
• Improves PF, gratuity, and long-term savings outcomes for fixed-term employees 

Health, safety, and working conditions parity 

• Fixed-term employees are fully covered under workplace safety, welfare facilities, and working hour norms 
• Reinforces that tenure does not reduce employer responsibility 

Simplified compliance for employers 

• Unified definitions across four Codes reduce ambiguity in benefit eligibility 
• Easier to design fixed-term roles that are compliant by default 

Why this matters: 
These reforms shift fixed-term employment from an administrative workaround to a legitimate workforce strategy—one that balances flexibility for employers with dignity and security for employees. 

HR Compliance checklist for fixed-term employees under the new labour codes 

As fixed-term employment gains full legal recognition under India’s new Labour Codes, HR teams must move beyond ad-hoc contracting practices to structured, auditable compliance. This checklist helps ensure benefit parity, legal alignment, and operational readiness. 

1. Contracting & legal documentation 

• Confirm that all fixed-term roles are explicitly classified as fixed-term employment under the Industrial Relations Code. 
• Issue mandatory written appointment letters to every fixed-term employee 
• Clearly define tenure, role scope, wages, benefits, and renewal or exit terms 
  Maintain digitally stored, audit-ready contracts for all fixed-term employees 

2. Wage structure & pay parity 

• Review compensation structures to ensure equal pay for same or similar work 
• Eliminate differential wage components between fixed-term and permanent employees performing comparable roles 
• Align fixed-term wage definitions with the Code on Wages for consistency and transparency 
• Communicate pay parity clearly to reduce employee confusion or disputes 

3. Provident fund & ESIC coverage 

• Enroll fixed-term employees in Provident Fund wherever statutory thresholds apply 
• Ensure ESIC registration and contributions for eligible fixed-term roles and wage bands 
• Activate UAN creation and Aadhaar-linked portability for seamless benefit continuity 
• Monitor compliance for short-duration contracts where benefits were previously overlooked 

4. Gratuity eligibility & accrual 

• Track service duration accurately for fixed-term employees 
• Ensure gratuity accrual eligibility after one year of service 
• Update internal gratuity policies and payroll systems to reflect this change 
• Maintain records to support gratuity payouts at contract completion 

5. Health, safety & OSHWC code compliance 

• Extend equal workplace health and safety protections to fixed-term employees 
• Include fixed-term workers in safety training, PPE distribution, and emergency protocols 
• Ensure compliance with OSHWC Code requirements across all establishments and shifts 
• Document safety measures and participation for audit and inspection readiness 

6. Annual health check-ups & preventive care 

• Identify fixed-term employees eligible for mandatory annual health check-ups (age/sector-based) 
• Ensure health screenings are provided free of cost where applicable 
• Maintain participation and follow-up records as proof of preventive care compliance 
• Integrate fixed-term employees into broader organizational health and wellness programs 

7. Policy communication & employee awareness 

• Communicate benefit parity clearly during onboarding and contract renewals 
• Educate managers and supervisors on fixed-term employee rights under the new codes 
• Provide easy access to policy documents, benefit summaries, and grievance mechanisms 
• Ensure fixed-term employees understand PF, ESIC, gratuity, and health entitlements 

8. Payroll, systems & audit readiness 

• Update HRIS and payroll systems to reflect fixed-term benefit eligibility 
• Ensure automated deductions, contributions, and accruals are correctly configured 
• Maintain centralized, digital records for inspections and compliance audits 
• Conduct periodic internal audits to identify gaps before regulatory scrutiny 

Why this checklist matters 

Under the new Labour Codes, fixed-term employees can no longer be treated as exceptions to standard benefits. Parity, documentation, and consistency are now legal expectations—not optional best practices. 

HR teams that proactively implement this checklist reduce compliance risk, improve employee trust, and create a more resilient and future-ready workforce. 

 
How Xoxoday helps HR ensure fixed-term benefit parity under the new labour codes 

The Labour Code 2025 changes the expectation for fixed-term employment from “contractual convenience” to “benefit parity by default.” With equal pay, mandatory appointment letters, PF/ESIC wherever applicable, and gratuity eligibility after one year for fixed-term employees, HR teams need systems that make parity easy to deliver and even easier to prove during audits. 

Xoxoday supports this shift by helping HR teams operationalize consistent benefits access, communication, and engagement across fixed-term and permanent employees—without adding manual workload. 

1. Centralized benefits access for fixed-term employees 

Fixed-term employees often miss out simply because benefits are fragmented across tools and processes. With Xoxoday, HR can: 

• Provide a single place where fixed-term employees can view and access eligible benefits. 
• Reduce dependency on HR for basic queries and entitlements visibility. 
• Standardize experience across locations, teams, and contract durations. 

2. Policy and parity communication that reduces confusion 

Parity often fails in practice due to poor communication during onboarding and renewals. Xoxoday helps HR: 

• Share clear benefit summaries and policy updates in one channel. 
• Run structured communication campaigns around fixed-term entitlements. 
• Improve trust by explaining “what’s included” consistently for every cohort. 

3. Structured wellbeing benefits that complement OSHWC-aligned protections 

Beyond statutory coverage, wellbeing access improves retention and performance for fixed-term workforces. With Xoxoday, organizations can extend: 

• Preventive health and wellbeing support (aligned with OSHWC expectations). 
• Lifestyle savings and everyday discounts that improve perceived value. 
• Mental wellbeing and engagement touchpoints that keep fixed-term talent connected. 

4. Recognition and incentives to build continuity across contract cycles 

Fixed-term employees are often high-impact contributors but feel invisible. Xoxoday enables: 

• Spot recognition for quality delivery, reliability, safety adherence, and milestones. 
• Incentive programs that drive repeat engagement and better outcomes. 
• A more inclusive culture where fixed-term employees feel valued, not temporary. 

5. Audit-friendly visibility that helps HR prove parity delivery 

Under the new codes, it’s not enough to “intend parity”—you need evidence. Xoxoday helps HR teams: 

• Maintain clearer records of benefit access and participation. 
• Run standardized programmes across business units with consistent governance. 
• Strengthen readiness for compliance reviews without heavy manual reporting.