Fixed-term employment or contract staffing: which is better under the labour codes?

Short answer

Fixed-term employment puts the worker on your own payroll for a set period, with the same wages and benefits as permanent staff and gratuity after one year. Contract staffing keeps the worker on the agency payroll, with the agency handling wages, compliance and replacements. Choose fixed-term for skilled roles you manage; choose contract staffing for volume.

Answered by Lifeline Crew, Aminjikarai, Chennai. Updated 12 Nov 2026

Side-by-side comparison

PointFixed-term employmentContract staffing
Whose payrollYoursThe agency's
BenefitsSame as permanent staff doing the same workStatutory benefits paid by the agency
GratuityAfter one year of serviceAgency's liability, billed to you
Replacement if someone leavesYou recruit againThe agency replaces under the contract
Licence issuesNone for the arrangement itselfContractor licence at 50 or more workers
FitsProjects of 6-24 months needing skilled peopleVolume roles, seasonal peaks, high churn

Can I combine both?

Yes. Many employers hire supervisors and skilled operators on fixed-term contracts and run helpers and packers through contract staffing. Lifeline Crew can recruit fixed-term hires through permanent placement, so they join your payroll, and supply the volume roles on contract.

As of Nov 2026, under the Code on Social Security and the Industrial Relations Code. General information, not legal advice.

Sources

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