Why contract staffing requires regulation and licensing in India

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It’s an industry which employs millions of job-seekers every year. Yet, no specific regulation for operating in flexi-staffing industry is in place in India, leaving the people who work outside the organised contract staffing companies in the grey zone.

Flexi-staffing or contract workers as it’s commonly known, is becoming the job creation engine in a country where for the next 20 years over nine million youth would be added to the organised workforce. We are in an era where the country is seeing some action on labour reforms, so perhaps it’s time to focus on this area.

The industry currently follows the Indian labour laws which are applicable to all. The current legal system suffers from a number of shortcomings, more specifically, when looked at from the point of view of the flexi staffing sector.

As the current legal provisions are not geared towards addressing tripartite relationship which is the job mobiliser of the country, there is a lack of clarity on many of the relevant issues including individual responsibilities of flexi staffing agency and the user company.

Keeping in mind the major legal issues facing the industry, the government should focus on some of the legislative initiatives in select countries creating landmark regulation towards recognition of flexi-staffing.

In Italy, legislation on flexi-staffing was introduced in 1997 requiring such staffing agencies to obtain licenses to operate, ensure parity in remuneration between flexi staff and comparable employees of the principal employer, provide required insurance and social security contributions and make provision for paid annual holidays apart from many other norms.

Finland, Holland, France and Australia too have implemented several new norms for flexi-staffers, improved their working condition and leave norms and safety standards.

In India, despite legal fuzziness, this sector has grown into one of the largest in a very short span of time. It is therefore imperative that the central government gives serious consideration to the industry demand for explicit recognition by law and regulate it.

As a quick review shows, legal recognition to flexi staffing is not limited in scope to just validating a business model, but developing a complete legal ecosystem encompassing protecting the interests of workers, flexi staffing intermediaries as well as the user company.

It also entails spelling out the sectors and class of employees open to be engaged, exact responsibilities of the intermediaries and the end user company, provision for protection of workers’ interests in terms of wages, social benefits, skill development, and work condition.

Flexi staffing has been seeing an upsurge, and with due implementation of best global practices and recommendations, there would be a reduction in unscrupulous third party players in the labor market.

It will bring in more number of workers into this industry, who are otherwise engaged in the unorganised sector, with little or no protection under the labor laws.

All of these will together encourage job creation at a faster pace than today, especially in the formal sector.

With World Employment Conference going to be held in India for the first time, where major labor groups from across the world would gather under one roof and provide more learning opportunities, it would also provide the government the details of the best public policies needed to be adopted.

By Suchita Dutta is executive director at Indian Staffing Federation. The views expressed are personal. / IANS

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