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| 1 employment law overview

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employment law overview india 2021-2022INDUSLAW / Proud Member of L&E GLOBAL

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2021-2022 / indiaan alliance of employers’ counsel worldwide

table of contents.

i. General overview 03ii. HirinG praCtiCeS 09iii. employment ContraCtS 12iv. workinG ConditionS 14V. Anti-DiscriminAtion LAws 17vi. pay eQUity lawS 21vii. SoCial media and data privaCy 22 viii. termination of employment ContraCtS 24iX. restrictiVe coVenAnts 27X. tranSfer of UndertakinGS 29Xi. trade UnionS and employerS aSSoCiationS 30Xii. employee BenefitS 33

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i. general overview

2. Key Points•LabourandemploymentlawsarelistedundertheConcurrentListintheConstitution,whichmeansthat the Union Parliament (federal legislature)and State Legislatures have co-equal powers toenactlawsrelatingtoalllabourandemploymentmatters in India.Typically,theUnionParliamentenactsaCentral law,whiletheStatesformulaterulesthereunder.Additionally,Statesoftenenactstandalonelegislationaswell.

•OneofthecentralprinciplesofIndianlabourandemploymentlawisthattheydistinguishbetweenemployees who are defined as ‘workmen’ andthose who are in management / supervisory /administrative roles (‘non-workmen’). Most ofthe legislation regulates the service conditions

of workmen, which are subject to far greaterstatutory protections. The service conditionsof non-workmen are typically governed by theterms of the relevant employment contractsand the internal policies of the organisation.Determiningwhetheraparticularemployeeisaworkmanornot,hastobeundertakenonacase-by-casebasis.

•Indiadoesnotgenerallyrecogniseemployment-at-will. Further, in terms of the Indian ContractAct, 1872 (“contract act”), which is theprincipallegislationgoverningcontractsinIndia,agreementsthatrestraintrade,businessorone’sprofessionarevoid– thiscouldhavean impactonemploymentbonds,andonnon-competeandnon-solicitcovenantsinemploymentcontracts.

•Trade unions are typically restricted to themore traditional forms of business, such as

1. introductionTheConstitutionofIndia(“Constitution”)isthecornerstoneofindividualrightsandliberties,andprovidesthebasicframeworkwithinwhichalllawsinIndia,includinglawsrelatingtolabourandemployment,mustoperate.TheConstitutionguaranteescertainfundamentalrightstoindividualssuchastherighttolife,privacy,equalitybeforethelawandprohibitionofdiscriminationinpubliceducationandemploymentonthebasisofreligion,sect,genderandcaste.TheConstitutionrecognisesthe‘righttolivelihood’asanintegralpartofthefundamentalrighttolife.

Inadditiontofundamentalrights,theConstitutionalsoenvisagescertain‘directiveprinciples’whichserveasaguidetothelegislaturetowardsfulfillingsocialandeconomicgoals.GivenIndia’shistory,socialjusticehasalwaysbeenattheforefrontofanumberofIndianregulations,specificallylabourandemploymentlaws.It is important tonote thatseveral labour laws in Indiahavebeendesigned fromaworkeremancipationperspective–includingthoserelatingtofactories,mines,plantations,shopsandcommercialestablishments,aswellasthoserelatingtopaymentofwages,regulationoftradeunions,provisionofsocialsecurity,industrialsafetyandhygiene.

However,givenchangingeconomicrequirementsinrecenttimes,especiallyinlightoftheongoingCOVID-19pandemic,theIndianGovernmenthasbeenincreasinglyconsciousoftheneedsofbusinessesaswell.Inthelast6months,theIndianGovernmenthasalreadybroughtincertainsignificantchangesinlabourlawswiththeaimofimprovingtheeaseofdoingbusinessinIndia.Further,thereareseveralotherbig-ticketreformsinthepipeline,whichwehopewillseethelightofdayinthenearfuture.



the manufacturing sector; however, in recenttimes there has been some unionisation in theInformationTechnology(“it”)sectoraswell.TheTrade Unions Act, 1926 (“trade unions act”)providesforregistrationofatradeunionandtherightsandliabilitiesofaregisteredtradeunion.ItisalsoproposedtorecognisecertaintradeunionsbothattheCentralandStateGovernmentlevels,whichwouldthenparticipateinpolicy-making.

•TheIndustrialDisputesAct,1947(“id act”)isthekey legislation that governs industrial relationsin India. The ID Act aims at securing industrialpeaceandharmonybyprovidingtheprocessforsettlementofindustrialdisputesarisingbetweentwoormoreemployers;betweenemployersandworkmen;anddisputesamongworkmen.

•The Equal Remuneration Act, 1976 (“era”),mandatesthepaymentofequalremunerationtomaleandfemaleworkerswhoundertakesimilartasks. The Contract Labour (Regulation andAbolition) Act, 1970 (“clra”) is another majorlegislation that pertains to regulating contractlabourinIndia.

3. legal frameworKGiven that both the Union Parliament (federallegislature) and State Legislatures have co-equalpowers regarding labour and employment laws,there are currently hundreds of laws relating tolabourandemploymentinIndia,includingaround50 statutes enacted by the Union Parliament.Mostoftheselawsconcernblue-collaremployeesorworkmen,owing to thehistoricalemphasisonimprovingworkingconditionsfortheseemployees.On theotherhand, the legal structurerelating tonon-workmen (i.e., employees havingmanagerialduties or white-collar employees) is not ascomprehensiveandhasevolvedinrecentdecadesmainlythroughjudicialpronouncements.

a. differenCe Between workmen AnD non-workmen

Section 2(s) of the ID Act defines a workman asa person who is employed to do any manual,unskilled,skilled,technical,operational,clerical,orsupervisoryworkforhireorreward.Thedefinitionhowever excludes the following persons: (i)those who are employedmainly in amanagerialor administrative capacity; (ii) those who, being

employed inasupervisorycapacity,drawasalaryexceeding INR 10,000 (~USD 136) per month or(iii) those who exercise, either by the nature ofthe duties attached to the office or by reason ofthepowersvested in them, functionsmainlyofamanagerialnature.

That said, it is important to note that the wageceiling of INR 10,000 (~USD 136) mentionedabove is not the definitive criterion in respect ofascertainingwhetherornotaparticularemployeewill be categorised as a workman. There havebeenmultipleoccasionswhenIndianCourtshaveheld that whether an employee is a workmanor not depends on the exact nature of the jobresponsibilitiesanddutiesandthecontextofhis/her role in the organisation, rather than merelythe compensation package.Determiningwhethera particular employee is a workman or not, hastobeundertakenonacase-by-casebasis. Itdoesnot depend on the level of education or thedesignation. Various judicial precedents have laiddown that in order to determine an employee’sstatusasa ‘workman’, theactual, substantialandpredominant work being performed by her isdecisive,ratherthantheemployee’sremuneration/designation. The other factors that are useful todeterminewhetheranemployeeisaworkmanoranon-workman,isbytakingintoaccountwhethertheemployeehadanymanagerial responsibilitiesandwhetherhehadauthoritytotakeanydecisiononbehalfoftheorganisation.

Employees considered to beworkmen under theIDActhaveseveraladditionalrights–forinstance,changes to their conditions of service and anytermination of their employment can only beundertakenasperthespecifiedprocessguaranteedundertheIDAct.Further,theycanapproachlabourcommissioners and/or the industrial tribunals/labourcourtsincaseofanyunjustifiedterminationand/or unfair labour practice, on part of theemployer.

The termsof serviceofnon-workmen (i.e., thosewhomainlyworkinamanagerialoradministrativecapacity) are ordinarily governed by the State-specific shops and establishments legislation(“S&E Act”), the terms and conditions of theircontractsofemploymentandtheinternalpoliciesof anorganisation.Personsoccupyingmanagerialand confidential positions in an organisation areexempt from the S&E Act of certain States such



as Karnataka, Andhra Pradesh, Kerala, MadhyaPradesh, Tamil Nadu and Maharashtra, amongothers.Theseemployeeswill typically falloutsidethescopeof the IDAct; therearevarious judicialpronouncements which have held that non-workmenarenotentitledtoclaimprotectionundertheIDAct.

B. otHer faCtorS

Apart from the classification of employees intoworkmen and non-workmen, the applicability oflabour legislation also depends on the nature ofactivitythattheemployeesareengagedinaswellastheplaceofwork–for instance,different lawsapplydependingonwhethertheplaceofwork isa factory, plantation, mine, shop, or commercialestablishment. Certain labour laws also take intoaccount the number of employees engaged at aparticular place of work; for instance, the scopeandapplicabilityofcertainsocialsecuritybenefitsvaries, depending on the number of employeesengaged in an establishment, the wages earned,andthepositionoftheemployeeattheworkplace.

C. overview of key laBoUr lawS

Thevarious labourandemployment laws in Indiacan be broadly categorised into two importantthemes, namely (i) employer-employee relations;and(ii)serviceorworkingconditions,suchaswages,socialsecurityandworkinghours.EnactmentssuchastheIDAct,theTradeUnionsAct,theIndustrialEmployment (Standing Orders) Act, 1946 (“IESOAct”)andCLRAarefocusedprimarilyonemployeremployee relations,whereas enactments such astheFactoriesAct,1948(“FAAct”),thevariousS&EActs, the Payment of Wages Act, 1936 (“WagesAct”),theMinimumWagesAct,1948(“MWAct”)and the Payment of Bonus Act, 1965 (“BonusAct”) are focused primarily on service conditionsof employees. There are both Central and Staterules framed under each of the aforementionedenactments. In addition, there are enactmentssuch as the Employees Provident Fund andMiscellaneousProvisionsAct,1952(“EPFAct”),theEmployees State Insurance Act, 1948 (“ESI Act”)andthePaymentofGratuityAct,1972,(“PGAct”)whichprovideforcertainsocialsecuritybenefitstoemployees.

industrial disputes act, 1947: The scope of thislegislationisprimarilyrestrictedtoworkmenalone.However, the principles and processes laid downin this legislation have been replicated in otherstatuteswithwiderapplication.TheIDActinteraliacovers industrial disputes, industrial action (i.e.,strikesand lockouts), regulationof retrenchment,layoffs,closure,transferofundertakings,envisagestheconstitutionofworkscommitteesandgrievanceredressal committees,andalso regulates changesincertainserviceconditionsofworkmen.

shops and commercial establishments act: TheS&E Act is State specific – almost all States inIndia have enacted their own S&E Act. The S&EAct regulates service conditions of employeesengagedinshopsandcommercialestablishments,whichincludesmostprivatecompaniesandfirms.It regulates hours of work, payment of wages,overtime, leave,holidays,andotherconditionsofservice.

employees Provident fund and miscellaneous Provisions act, 1952: The EPF Act read with allrules and schemes framed thereunder is one ofthemajor social security laws in India.Under theEPFAct,boththeemployerandemployee,subjectto certain monetary limitations and conditions,are required to contribute 12% of an employee’s‘basicwages’ to the Employees Provident Fund /EPF. The employer’s contribution is also directedtoapensionfund,fromwhichanemployeewouldbe entitled tomonthly pension upon retirement.TheEPFandpensionschemehasextensiverulesinrelationtocontributionandwithdrawaloffunds.InlightoftheCOVID-19crisis,theIndianGovernmenthad temporarily reduced the above contributionrateto10%forthemonthsofMay,JuneandJuly2020.

Payment of wages act, 1936: The Wages Actregulates the mode and method of payment ofwagestocertaincategoriesofemployees,namely,thosetowhomthepayablewagesdonotexceedINR 24,000 (~USD 330) permonth, and to thoseemployedinfactoriesandindustrialestablishments.TheWagesActprovidesthatwagesmustbepaidwithout deductions of any kind except certainauthorised deductions, such as taxes on income,fines,ordeductionsowingtoabsencefromduty.



factories act, 1948: The FA Act was enacted toregulate working conditions in factories wheremanufacturing operations are undertaken. It hasextensive provisions with respect to the health,safety and welfare of persons who work infactories,andalsoregulatestheworkingconditionsofpersonsworkinginafactory.

minimum wages act, 1948: The MW Actprovides for the payment of minimum rates ofwagestoemployeesworking inspecifiedkindsofemployment, termed ‘Scheduled Employment’.Under theMW Act, the Government is requiredtofixindustry-specificdailyandmonthlyminimumwages, depending on the skill of the employee.Onceminimumwageshavebeenfixed,anemployeris required to pay to every employee engaged inScheduledEmployment,wagesataratethatisnotlessthantheminimumrateofwagesfixedbytheconcernedGovernmentforthatclassofemployees.

industrial employment (standing orders) act, 1946: TheIESOActisgenerallyapplicabletoeveryindustrial establishment wherein 100 or moreworkmen are employed, subject to any specificState rules in this regard. Certain States such asKarnataka, Maharashtra and Tamil Nadu havereduced the applicable threshold. The IESO Actrequiresemployersinindustrialestablishmentstoformally define conditions of employment, suchasclassificationofworkmen,mannerofintimatingwage rates, working hours, leave periods,recruitment,shiftworking,attendance,procedureforavailingleave,transferofworkmen,terminationof workmen, and inquiries for misconduct. Suchconditionsarereferredtoasthe‘StandingOrders’.The State specific rules framed under the IESOAct provide for ‘Model Standing Orders’, whichareasetofdefaultconditionsapplicabletothoseindustrial establishments that have not framedtheir own Standing Orders or to those industrialestablishmentsthatareawaitingcertificationfromthe Government on their own Standing Orders.In most cases, the internal employee handbook/serviceregulationsoftheemployersaregenerallycustomisedandfiledastheStandingOrdersofthatestablishment.TheIESOActhoweverprovidesthatwhiletheStandingOrdersadoptedbyanemployerneednotnecessarilybeaduplicationoftheModelStandingOrders,theyshould,asfaraspracticable,beinconformitywiththesame.

trade unions act: TheTradeUnionsActprovidesfor registration of a trade union and the rightsand obligations of a registered trade union. Theminimum number of persons required to applyfor registration of a trade union is 7; however, atrade union cannot be registered unless at least10%oftheworkmenor100workmen(whicheverislesser,andsubjecttoaminimumof7workmen),employed in an establishment are its members.While employers in certain States are not legallybound to recognise trade unions or encouragecollective bargaining, a registered trade unioncan enter into collective bargaining agreementswith the employer for better wages and serviceconditions.

Contract Labour (Regulation and Abolition) Act, 1970:TheCLRAprovidesforregulationofcontractlabour in establishments and provides for itsabolition in certain circumstances. A ‘workman’isdeemedtobe ‘contract labour’ ifhe ishired inconnection with the work of an establishment,by or through a ‘contractor’, with or withoutthe knowledge of the ‘principal employer’. Theterm contractor is defined to mean a personwho undertakes to produce a given result foran establishment through contract labour orwhosupplies contract labour foranyworkof theestablishment. The manager or occupier of theestablishment is the principal employer. UndertheCLRA,everyprincipalemployer is required tomakeanapplicationintheprescribedform,fortheregistration of the establishmentwith the labourauthorities. Every contractor under the CLRAAct must also be licensed and should undertakework through contract labour only in accordancewith such license. The contractor is required topay wages and provide facilities for the welfareandhealthof thecontract labour,which includesproviding rest rooms, canteens, wholesomedrinkingwater, toilets,washing facilities,andfirstaid facilities in every establishment. The abovecompliances vary depending on the number ofcontract labourengaged inanestablishment. It isimportanttonotethataspertheCLRA,incasethecontractorfailstopaywagestothecontractlabour,theprincipalemployerwillberesponsible for thesame.



4. new develoPments

a. CodifiCation of laBoUr lawS

As part of a major rationalising and simplifyingexercise,Indiahasconsolidatedabout29ofthe44Central laws into 4 comprehensive labour codes:Code on Wages, 2019 (“Code on Wages”); theOccupationalSafety,HealthandWorkingConditionCode,2020(“OSHWCode”);theIndustrialRelationsCode, 2020; (“IR Code”); and the Code on SocialSecurity,2020(“SocialSecurityCode”).

B. Code on waGeS

TheCodeonWageswasnotifiedbytheMinistryofLawandJustice in2019.TheCentralGovernmenthasnotifiedveryfewoftheprovisionoftheCodeonWages. However, it is yet to notify the otherprovisions of the Code on Wages. The Code onWagessubsumesandamendsthefollowingCentrallabour laws: the Wages Act; the MW Act; theERA; and theBonusAct. Further, on 7 July 2020,the Indian Ministry of Labour and EmploymentpublishedthedraftCodeonWages(Central)Rules,2020 for seeking input from the stakeholders.These rules inter alia, prescribe the process andfixationmethod of calculating theminimum rateof wages, procedures for making payments, theprocessofconstitutingtheCentralAdvisoryBoardforthepurposeoffixingthefloorwage,proceduresforthedeductionofwagesandrecovery,etc.

C. Code on SoCial SeCUrity

TheSocialSecurityCodehasbeenpassedbybothhousesof the IndianparliamentandreceivedthePresident’sassenton28September2020.However,theSocialSecurityCodewillenter intoforce(andlikewisebecomeenforceable)onadateyettobenotified by the Central Government. The SocialSecurity Codewill subsume the following Centrallabour laws: the Employees’ Compensation Act,1923;theEmployees’StateInsuranceAct,1948;theEPFAct; theEmploymentExchanges (CompulsoryNotificationofVacancies)Act,1959;theMaternityBenefit Act, 1961; the PG Act; the CineWorkersWelfareFundAct,1981;(h)TheBuildingandOtherConstructionWorkersWelfareCessAct,1996;andtheUnorganisedWorkers’SocialSecurityAct,2008.One of themost important aspects of the Social

Security Code is that it includeswithin its ambit,certain non-traditional types of occupations/workerssuchasgigworkers,platformworkersandunorganised workers, and makes provisions forprovidingsocialsecuritybenefitstothem.

d. indUStrial relationS Code, 2020

The IR Code has been passed by both houses oftheIndianParliamentandreceivedthePresident’sassent on 28 September 2020. However, it shallcomeintoforceandbecomelawonadateyettobenotifiedby theCentralGovernment. The IRCodeshall subsume the following Central labour laws:theIDAct;theIESOAct;andtheTradeUnionsAct.Theapplicabilityof the IRCode (and itsChaptersthereof) on industrial establishmentsdependsonvariousfactors,suchasthenumberofworkers inan industrial establishment,aswell as thenatureandtypeoftheindustrialestablishment.

TheIRCodehasintroducedcertainkeychangestothe current labour law.The IRCodehaswidenedthe scope of the termworker to include personsemployedinasupervisorycategory,earningwagesup to INR 18,000. Currently, the ID Act definestheterm‘workman’to, interalia, includepersonsin a supervisory category, earning wages up toINR 18,000. Significant changes with respect tothe retrenchment process of workers have alsobeen made. In regard to declaring a strike, theIR Code requires workers to give their employera prior 14 days’ notice before going on strike.This requirementunder the IDActwas limited toemployerscarryingoutapublicutilityservice.TheIRCodealsomakesprovisions for therecognitionof trade unions. Further, penalties under the IRCodehaveincreasedsignificantly.

e. oCCUpational Safety, HealtH and workinG ConditionS Code, 2020

TheOSHWCode aims to consolidate and amendthelegislationthatcurrentlyregulateoccupationalsafety,healthandworkingconditionsofindividualsemployed in establishments, while providing therequiredflexibilityformakingnecessaryrulesandregulations with respect to the subject matterthereof.TheOSHWCodehasbeenpassedbyboth



houses of the Indian Parliament and receivedthe President’s assent on 28 September 2020.However, it shall come into force (and becomeenforceable) on a date yet to be notified by theCentralGovernment.

TheOSHWCodewillsubsumethefollowingCentrallabour laws:theFAAct; theMinesAct,1952;theDock Workers (Safety, Health and Welfare) Act,1986;theBuildingandOtherConstructionWorkers(Regulation of Employment and Conditions ofService) Act, 1996; the Plantations Labour Act,1951;theCLRA;theInter-StateMigrantWorkmen(Regulation of Employment and Conditions ofService)Act,1979;theWorkingJournalist(FixationofRatesofWages)Act,1958;theWorkingJournalistand Other Newspaper Employees (Conditions ofService and Miscellaneous Provisions) Act, 1958;theMotorTransportWorkersAct,1961;theSalesPromotionEmployees (ConditionsofService)Act,1976; the Beedi and Cigar Workers (ConditionsofEmployment)Act,1966;and theCineWorkersand Cinema Theatre Workers Act, 1981. TheOSHW Code is applicable to all ‘establishments’including: places where an industry, trade,business, manufacturing or occupation is carriedout; motor transport undertakings; newspaperestablishments; audio-videoproductions;buildingandconstructionworks;andplantations,providedthatthereareaminimumof10workersemployedinsuchplacesofwork.

TheOSHWCodeisalsoapplicabletoestablishmentsengaged in hazardous/life threatening activities,mines or ports, regardless of the number ofworkersengagedtherein.Withrespecttofactories,theOSHWCodeappliesto:i)factorieswherein20ormoreworkersareengagedinthemanufacturingprocess carried out with the aid of power; ii)factorieswherein40ormoreworkersareengagedin themanufacturingprocess carriedoutwithouttheaidofpower.

TheOSHWCode imposes certainnewobligationson employers, such as the obligation to conductfree health checkups for a certain class ofemployees, duty to issue appointment letters toeveryemployee,andanobligationtoreportcertainaccidents and diseases. Further, the employershall also provide separate bathing places andlocker rooms for male, female and transgenderemployees.

f. tranSGender perSonS (Protection of rights) Act, 2019

The Transgender Persons (Protection of Rights)Act, 2019 (“Transgender Act”) entered into forcein December 2019. The Transgender Act aims toprovidefortheprotectionofrightsoftransgenderpersons and their welfare, and for mattersconnected therewith. Amongst other provisions,theTransgenderActprohibitsdiscriminationagainstatransgenderperson,includingunfairtreatmentinrelationtoemploymentaswellasdiscriminationinmattersconnectedwithemployment(recruitmentandpromotion), etc. Employers are also requiredto designate a complaint officer, who shall beresponsible for dealing with complaints withrespect to violations of the Transgender Act andshallalsoensurecompliancewiththesame.

G. laBoUr law reformS in liGHt of coViD-19 crisis

Several States, such as Andhra Pradesh, Bihar,Punjab, Rajasthan and Karnataka have issuedordinances to relax theapplicabilityof the IDActto certain establishments, such that provisionsrelatingtolayoffs,retrenchment,closureofcertainestablishments,wherein thenumberofworkmenemployedisnotlessthanonehundred,hasrecentlybeen increased to three hundred workmen. Inadditiontotheabove,someStateshaveintroducedchangesintheretrenchmentcompensation,whichwaspreviouslycalculatedasfifteendays’averagepayforeverycompletedyearofcontinuousservice,oranypartthereofinexcessofsixmonths.



ii. Hiring Practices 1. requirement for foreign emPloyees to worK Onceforeigncompaniessetupanentity in India,theyoftenprefertoappointemployeesfromtheirhomecountryorheadquartersforthemanagementand control of the Indian business. This is donemainly for the convenience of co-ordinationwiththeparent company in termsofdecision-making,financialmanagementandotherbusinessmatters.Thismovementofemployeescouldbeundertakenbywayofsecondmentortransfer.Therearethreebroad considerations thatmust be kept inmind,ineitheroftheapproaches:(i) incometax issues;(ii) social security contributions; and (iii) visaconsiderations.

a. inCome taX iSSUeS

It is imperative that any secondment/transfer ofemployees be structured appropriately, so as tominimise any permanent establishment risks fortheforeignentityinIndia.Also,thetaxtreatmentofanyservicefeepaid/reimbursementofexpensesbythe Indianentitytotheforeigncompanymustbeanalysedwellinadvancegiventhatthisareahasoftenbeenthesubjectofscrutinybytaxauthorities.Further, the taxpositionof the individual in Indiamustalsobeexamined–thiswoulddependonhis/her tax residential status as specified under theIncome taxAct,1961 (“ITA”). In termsof the ITA,an individual is said tobe resident in India if he/shehasbeenphysicallypresentinIndiaforaperiodof182daysormoreintherelevantfinancialyear.However,theFinanceActof2020hasreducedtheabovementionedtimeperiodto120daysforIndiancitizens and person of Indian origin with a totalincome,other than income from foreign sources,ofmorethanINR1.5Million(~USD20,453)

Indian tax residentsaresubject to tax in Indiaontheirglobalincome,whilenon-residentsaresubjecttotaxonlyonincomethatisreceived/deemedto

bereceived in India,or incomeaccruesorarises/deemedtoaccrueorarisetotheminIndia.TherearecertainothertaxexemptionsprescribedundertherelevantDoubleTaxationAvoidanceAgreementexecuted between India and the concerned hostcountry.

B. SoCial SeCUrity ContriBUtionS

ItisimportanttonotethattheEPFActalsoextendsto a category of employees called ‘internationalworkers’ (“IWs”). An IW is defined both in aninbound (i.e. in the contextof foreignemployeescomingtoIndia)andoutboundcontext(i.e.Indianemployees going abroad). An IW (inbound) isa person who holds a passport other than anIndianpassport and comes towork for an Indianestablishment that is covered under the EPFAct.It is importanttonotethattheEPFActmakesnodistinctionbetweenaforeignworkerondeputationtoIndiaandaforeignworkerwhoistransferredtoIndia.AllIWs(inbound)arerequiredtocontributeto the EPF, unless they are ‘excluded employees’.ExclusionfromEPFcontributionsisonlygrantediftheIWcontributestoasocialsecurityprograminhis/her host countrywhich has executed a socialsecurityagreement(“SSA”)withIndia.

There are certain significant differences betweenEPFcontributionsinrespectofIWs(inbound)anddomestic employees. For instance, such IWs arerequired to contribute to the EPF on their ‘fullsalary’ and not merely ‘basic wages’. There arealso differences in case of timing andmanner ofwithdrawalofEPFcontributions.

C. viSaS

Business visas to India are given strictly only for‘business purposes’, such as sales or establishingcontactonbehalfoftheforeigncompanyinIndia.Likemostotherjurisdictions,businessvisasinIndiacannotbeusedforanydirectrevenuegeneratingworkoremployment in India.There isaseparate



employment visa category for employees comingto work at an Indian establishment, which isgrantedbasedon the sectorand the termof theassignment.Therearecertainadditionalconditionsprescribedinthisregard,includingthattheforeignnationalmustdrawasalaryinexcessofUSD25,000perannum.Foreignnationals,includingtheirfamilymembers,whointendtostayinIndiaformorethan180days,mustregisterwiththeForeignRegionalRegistration Office (“FRRO”) within 2 weeks ofarrivalinIndia.Forthepurposesofregistration,theindividualisrequiredtomakeanapplicationintheprescribed form and be present in person at thetimeofregistration.

2. does a foreign emPloyer need to establisH or worK tHrougH a local entity to Hire an emPloyee?Foreign employers may often have requirementswhereintheymightneedtoengageasalesperson,representativeoragentinIndia,eventhoughtheymaynothaveaplaceofbusinessinIndia.Also,theforeign employermay not intend to immediatelygenerateanyrevenueinIndia. Insuchascenario,theforeignemployerneednotmandatorilysetupa localentity in India.Therearevariousmethodsthroughwhichtheforeignemployermayengage/hirerepresentativesoranagentinIndiadependingontheexactbusinessrequirements.

a. enGaGement of tHe repreSentative or aGent tHroUGH a manpower aGenCy

Thisisamodelwheretheforeignemployerentersintoanarrangement/agreementwithamanpoweragency in India, which would provide certainservicestotheforeignemployerthroughidentifiedemployeesofthemanpoweragency.However,themanpoweragencywouldberequiredtosatisfythefollowingobligationsaspartofthearrangement:i)processingofsalariesfortheidentifiedindividuals;and ii) undertaking all legal compliances for theidentified individuals on account of being theiremployer, including under all Indian employmentlawsandtaxationlaws.

B. enGaGement of tHe repreSentative or SaleS perSon aS an independent ContraCtor

Here,thearrangementbetweentherepresentativeandtheforeignemployerwillbethatofa‘contractfor services’. A contract for services implies anagreementwhereinonepartyundertakestoprovideservices to or for another in the performance ofwhich he is not subject to detailed direction andcontrol, but exercises professional or technicalskillanduseshisownknowledgeanddiscretionasappropriate.Such independentcontractorswouldtypically not be entitled to any social securitybenefits(astheywillnotbeconsideredemployees)and would have to pay their own taxes in India.However, it is importanttonotethat intheeventtheforeignemployerengagespersonnelinIndiabywayofmethod1or2,thereisariskoftheforeignemployer having a permanent establishment inIndia;accordingly,thisarrangementwouldhavetobestructuredappropriatelyandthetaximplicationwithrespecttothesamewillneedtobeidentified.

3. limitations on bacKground cHecKsEmployersareincreasinglyconductingbackgroundchecks to guard against inaccurate resumés,overstated work experience and any employeebehavioral issues. Typically, employers issue anoffer letter, conduct background checks, andexpresslystatethattheperson’semploymentwiththeorganisationiscontingentuponhis/herclearingthebackgroundchecks,andvettingofeducationaland job qualifications. However, the permissionof theconcernedemployeewouldberequiredtoconductabackgroundverification.IntermsoftheInformationTechnologyAct,2000andInformationTechnology (Reasonable Security practices andprocedures and sensitive personal data andinformation) Rules, 2011 (“IT Rules”), which isthe governing legislation on data protection,any company collecting, using, or disclosing anypersonal informationofanemployee/prospectiveemployee, will require such person’s consent.Further, the employer’s compliance requirementsunderthePersonalDataProtectionBill,2019,whichislikelytocomeintoeffectin2021,willneedtobeexamined forpurposesofconductingbackgroundchecksonemployees.



4. restrictions on aPPlication/interview questionsGiven Constitutional safeguards againstdiscrimination on the grounds of religion, race,caste, sex, and place of birth, it is imperativethat employers bear these principles in mindwhile conducting background verifications andjob interviews. Excessively personal questionsare generally not advisable. The IT Rules applyto the collection of personal information duringbackgroundverificationsandduringthe interviewprocess as well. In terms of the IT Rules, at thetime of application, the employer must informthe concerned person of: i) the fact that his/her personal information is being collected; ii)the purpose for which the information is beingcollected (i.e. verification of credentials); and iii)theintendedrecipientsoftheinformation(i.e.theemployer and/or the third-party service providerwhoconductsbackgroundchecks).

TheITRulesfurtherstatethatwhereanySensitivePersonalDataorInformation(“SPDI”)issoughttobecollected(suchaspasswords,financialinformation,bank account or payment instrument details,details of health conditions, sexual orientation,medical records and history), the same can becollected only for a lawful purpose connectedwith a function or activity of the company,and the collection of this information must benecessary to achieve such purpose. This purposemust be notified to the prospective employee inthe application/background verification form/duringan interview,andhis/herconsentmustbeobtained.ItmaybenotedthattheITRulespermitapersontowithdrawconsentatanystage,inwhichcasethecompanywouldberequiredtoreturntheSPDIandnotstoreortransferthesameanyfurther.TheITrulesprescribecertainadditionalsafeguardsforcollecting,storing,processing,andtransferringSPDI; for instance, the IT Rules state that anySPDI collected by a company cannot be stored/retainedlongerthanrequiredforthepurposeofitscollection,exceptunderanyapplicablelaw.

Apartfromtheabove,itmaybenotedthatIndianlabourandemploymentlawsarelargelysilentastotheprocessofselectionandhiringofemployeesintheprivatesector.Inanycase,asmarketpractice,

most employers in India conduct at least basic(education,jobhistory)backgroundverificationofprospective employees in accordancewith the ITRulesand/oraskprospectivecandidatestodisclosespecific information as a condition precedent totheemploymentrelationship.



iii. emPloyment contracts1. minimum requirementsWhile the current labour laws in India do notstrictly require that an employment contractbe in writing, it is predominant market practice(with very rare exceptions) to have all terms andconditions of employment agreed and signed bybothparties.A fewStates however, have specificlegislation that necessitate a written contractin order to establish an employer-employeerelationship. From the perspective of certaintyand enforceability, it is strongly recommendedthat all employment contracts be in writing,whetherasasimpleappointment letterora fullydetailed contract, setting out relevant terms andconditions agreed to between the employer andemployee.EmploymentcontractsaregovernedbytheContractAct;accordingly,provisionsstipulatedtherein with respect to parties being competentto contract, consideration, and validity,would beapplicabletoemploymentcontractsaswell.

Employment contracts in India are generallyconsidered to be ‘unlimited term’ contracts,(i.e. contracts that are valid until termination orsuperannuation, unless specifically identified asa ‘fixed term’ contract). Some of the commonprovisionsincludedinanemploymentcontractare:i)location,descriptionandtitleofthejob;ii)dateof commencement, duration (whether fixed termorunlimitedterm)andtype(whetherpart-timeorfull-time)ofthejob;iii)detailsofanyprobationaryperiod; iv) leaveentitlement;v)salarydetailsandotherbenefits;vi)termsgoverningterminationofemployment; vii) restrictive covenants; and viii)governinglawanddisputeresolution.

Asdiscussedabove,itisimportanttonotethatfor‘workmen’, some employment terms and certainservice conditions can only be changed with 21

days’ prior written notice (for certain States likeWest Bengal, Telangana and Andhra Pradesh,the above notice requirement is 42 days). If anyworkmanchallengestheproposedchangesbeforethe labour courts during this period, it is likelythat the said changewill be suspended, pendingresolutionofthedisputebythecourt.

2. Fixed-teRm /Open-ended contractsFixed-term employment contracts are permittedin India, as long as the employer is employingthe person for a short-term requirement. TheGovernment has recently stated that fixed-termcontractswillbepermittedacrosssectors;earlier,theywereexpresslypermittedonlyintheapparelmanufacturing sector. However, it is unlikelythat employers will be able to convert existingpermanentpositions intofixed-termemploymentpositions.

Inthecontextoffixed-termemploymentcontracts,the Indian judiciary has consistently held thatsuccessive fixed-term contracts cannot be usedas a substitute for employing the person on a‘permanent’ or ‘unlimited term’ basis and thatfixed-term employment is not to be used in jobroles or functions that are permanent in nature,as far as the particular employer or industry isconcerned. Fixed-term employment contractsmaybesigneddirectlybetweentheemployerandemployeeor created throughuseof a contractorundertheprovisionsoftheCLRA.Expiryofafixedterm contract will typically not be considered‘retrenchment’undertheprovisionsoftheIDAct;thus,thecompliancespertainingtoretrenchmentwouldnothavetobeundertakeninthiscase.



3. trial / Probation PeriodIndian law permits new employees to be placedon a trial or ‘probation’ period. Such period ismeant to provide employers the opportunity toassesstheabilitiesandsuitabilityoftheemployeeto the organisation; and hence, by definition,allowtheemployergreater freedomtoterminateemployment if the employee is found unsuitableduringtheprobationperiod.TheIESOActenvisagesa probation period of 3 (three) months – this islargelyfollowedbycompaniesthatarenotsubjectto the IESO aswell. The generalmarket trend inIndiaistohaveaprobationperiodbetween3and6months,especiallyinthetechnologyandservicessectors.

During the probation period, the employer willusually have the right to terminate employmentof the probationary employee without providingany notice; however, this would be subject tothe stipulations of the concerned S&E legislationas well. At the end of the probation period, theemployee may be ‘confirmed’ as a permanentemployeeordismissed. Termswith respect toanemployee’sprobationperiodshouldbeadequatelycaptured under his/her employment agreement/appointmentletter.

4. notice PeriodIn terms of Indian labour legislation, ‘workmen’whohaveundertakenatleast1yearofcontinuousserviceareentitledtoanoticeperiodof1month,orequivalentwagesinlieuthereof.Inaddition,theemployerwouldberequiredtopay‘retrenchmentcompensation’totheworkman,whichiscalculatedattherateof15days’wagesforeverycompletedyear of service. Further, for industries havingmorethan100workmen(300workmenincertainStates),theabovenoticeperiodrequirementmaydifferandtheremaybecertainothercomplianceswith respect to undertaking a retrenchmentexercise. However, no notice period (or paymentin lieu thereof) or payment of retrenchmentcompensationisrequiredinthecaseofworkmendismissed formisconduct,provided theemployerconductsaninternalinquirypriortosuchdismissal.

Additionally, any notice period prescribed underthe relevant S&E Acts, as well any requirementsunder the relevant employment contract in thisregardwouldhavetobetakenintoaccount.GiventhatIndiadoesnotrecognisetheemploymentat-will doctrine, judicial precedents have held thattermination of employment without providingany prior notice would render the contract ofemployment as an ‘unconscionable bargain’, andhenceillegal.



iv. worKing conditions 1. minimum worKing conditionsRequirements in this regard are principallystipulated in theconcernedS&EActs, theFAAct,the IESO Act and the CLRA. The S&E Acts havestipulations relating to working hours, overtime,intervals of rest, provision of basic amenitiessuch as drinking water, toilets, first aid facilities,etc., for employees at shops and commercialestablishments. The Standing Orders formulatedas per the IESO Act also have stipulations withrespecttoworktimings,leave,overtime,holidays,for industrial establishments engagingmore than100workmen(thethresholdmaybedifferent forcertainStates).

The FAhas extensiveprovisions in respect to thehealth, safety andwelfare ofworkers engaged inmanufacturingestablishments–thesecompliancesvary depending on the number of workmenengaged.Forinstance,inindustrialestablishmentswhere 250 ormoreworkmen are employed, theemployer has to provide for a canteen. Suitableshelters or rest rooms, and lunchrooms withdrinkingwater facilitiesaretobeprovidedwhere150workmenareemployed.Factorieswherein30ormorewomenworkersareordinarilyemployed,aretobeequippedwithcrechefacilities/nurseriesfor children under the age of 6 years. There arealso provisions regarding toilets, washing places,temperature control mechanisms, adequateventilation, lighting in the workrooms, paintingof factory walls, doors and windows, cleaning offloors,effectiveremovalofdirtandrefuse,etc.TheFA Act envisages certain precautions to be takenagainst explosives, inflammable gases, dangerousfumesandgasesandfire.

UndertheCLRAAct,thecontractor isrequiredtoprovidecertainfacilities,whichincluderestrooms,

child nursery facilities, canteens, wholesomedrinkingwater, toilets,washing facilities,andfirstaid. It is pertinent to note that if the contractordoes not provide these facilities, the onuswouldfallontheprincipalemployer.

2. salaryAlthough the words ‘wages’ and ‘salary’ arecommonly used interchangeably, there is adiscernible difference between the two. Theterm ‘wages’ is used under labour/employmentlaws to refer to any and all remuneration andemoluments earned by an employee (excludingcertainallowancesandbonuses)whereastheterm‘salary’isusedunderincometaxlawtodenotethetotaltaxableincomereceivedbyanemployee.Itisimportant to note that currently, different labourlawshavedissimilardefinitionsofwages.However,thesameis likelytoberemediedundertheCodeofWages,whichprovidesforauniformdefinitionof wages, which would then have to be closelyexamined.

For instance, the EPF Act refers to ‘basic wages’whichisusedasthebaseforcomputingemployeeand employer social security contributions. Basicwagesaredefinedasallpaymentswhichareearnedbyanemployeeinaccordancewiththetermsoftheemploymentcontract,butdoesnotinclude:i)thecashvalueofanyfoodconcession;ii)anydearnessallowance (i.e. cashpaymentspaidonaccountofarise in thecostof living),house-rentallowance,overtime allowance, bonus, commission or anyothersimilarallowance;andiii)anypresentsmadebytheemployer.

The Wages Act on the other hand, has a muchwiderdefinitionofwages;here‘wages’ isdefinedas all remuneration (whether by way of salary,allowances, or otherwise) expressed in terms ofmoney or capable of being so expressed, which



would, if the terms of employment, express orimplied, were fulfilled, be payable to a personemployed in respect of his employment andincludes: i) any remuneration payable underany award or settlement between the parties ororder of a Court; ii) any remuneration to whichthe person employed is entitled in respect ofovertimeworkorholidaysoranyleaveperiod;iii)any additional remuneration payable under thetermsofemployment (whethercalledabonusorbyanyothername); iv)anysumwhichbyreasonof termination of employment is payable underanylaw,contractorinstrument;andv)anysumtowhich thepersonemployed isentitledunderanyschemeframedunderany law for thetimebeinginforce.

Thefollowingareexcluded:i)anybonus(whetherunder a scheme of profit sharing or otherwise)which does not form part of the remunerationunder the terms of employment or which is notpayable under any award or settlement betweenthepartiesororderofaCourt;ii)thevalueofanyhouse-accommodation, or of the supply of light,water, medical attendance or other amenity orof any service excluded from the computation ofwages by a general or special order of the StateGovernment; iii) any contribution made by theemployer to any pension or provident fund, andthe interest accrued thereon; iv) any travellingallowanceorthevalueofanytravellingconcession;v)anysumpaidtotheemployedpersontodefrayspecialexpensesentailedonhimbythenatureofhisemployment;orvi)anygratuitypayable.

3. maximum worKing weeKThiswouldbe subject to stipulations in the StatespecificS&EActsincasesofshopsandcommercialestablishmentsand theFAAct forestablishmentsinthemanufacturingsector.Asageneralprinciple,employees cannot be required to work in anyestablishment for more than 9 hours a day or48 hours a week, without attracting overtimepayments. In order to overcome the economiccrisis in times of pandemic, certain States haveincreased thepermissible limitsofworkinghoursfor employees, subject to certain conditions andrestrictions.

4. overtimeAs described above, employees working longerthan9hoursadayor48hoursaweekaretypicallyentitled to overtime payments. An employeeworking ‘overtime’ becomes entitled towages attherateoftwicehis/herordinaryrateofwagesandcouldalsobeentitledtoacompensatorytimeoff.Thiswouldhoweverhave tobeanalysed further;giventhattherearesomeStateswhichalsoprohibitovertimework,exceptinlimitedcircumstances.

5. HealtH and safety in tHe worKPlace

a. employer’S oBliGation to provide a HealtHy and Safe workplaCe

An employer’s health and safety obligationstowardsitsemployeesarefarmoreextensiveinthemanufacturingsectorand incertainothersectorssuch as mines and building and construction.The various State-specific S&E Acts have specialprovisions with respect to ensuring safety ofwomen who work during night shifts. Employersinsuchcasesarerequiredtoensurethatadequatesecurity and transport facilities are provided (attheirowncost)tofemaleemployees.

As described above, the FA Act read with Statespecificrulesthereunderhaselaborateprovisionsregarding health and safety of workmen. Thesestipulations include maintaining cleanliness,disposalofwastesandeffluents,provisionofcleandrinkingwaterandtoilets,ensuringatemperaturecontrolmechanismsoas topreventany injury tohealthofworkmen,ensuringadequatelightingandventilation,measurestopreventinhalationofdustand fumes, regulation of artificial humidification,measures to prevent overcrowding on factorypremises, construction and proper maintenanceof floors, stairs, passages and ensuring that theyareobstructionfreeforthesafetyoftheworkers,fencingofdangerousmachinery,providingsuitablegearor appliances, drivingbelts andother safetydevices.TheFAActalsoenvisagesprecautions tobe taken against explosives, inflammable gases,dangerousfumes,gasesandfire.Non-compliance



with provisions of the FA attracts bothmonetarypenaltyandimprisonment.

In addition, the ESI Act and the EmployeesCompensation Act, 1923 (“ECA”) also addresscompensationandotherbenefitsthattheemployermust provide employees in contingencies suchas maternity, temporary or permanent physicaldisablementdueto injuryarising inthecourseofemploymentthatresultsinlossofwagesorearningcapacity,deathduetoemploymentinjury,aswellas medical care to workers and their immediatedependents.

Given changing economic requirements in recenttimes,especially in lightof theongoingCOVID-19pandemic, the Indian Government has beenincreasinglyconsciousoftheneedsofbusinessesaswell.Inthelast6months,theIndianGovernmenthasalreadybrought incertainsignificantchangesinlabourlawswiththeaimofimprovingtheeaseofdoingbusinessinIndia.Further,thereareseveralotherbig-ticketreforms inthepipeline,whichwehopewillseethelightofdayinthenearfuture.

B. Complaint proCedUreS

In the terms of the ISEO Act, employees arerequiredtoframegrievanceredressalmechanismsto address individual worker complaints. Also,undertheFAwherethereare20ormoreworkmen,a grievance committee is to be constituted inthemanner prescribed. In any case as a generalpractice, most employers do have an internalcomplaint mechanism that details the processesemployeesmust follow, in case of anyworkplacerelated issues. It is also important to note thatIndia has a standalone legislation pertaining tosexual harassment at theworkplace – the SexualHarassmentofWomenatWorkplace (Prevention,ProhibitionandRedressal)Act,2013(“SHWAct”)–whichprescribesadetailedcomplaintmechanismfor instancesofsexualharassment,thatall Indianestablishmentsmustadhereto.

C. proteCtion from retaliation

India does not have extensive provisionsregarding protection of employee complainants/ whistleblowers, that apply to establishmentsin the private sector. However, the SHW Actstipulatesthatduringthependencyofanyinquiry,

companiesmusttakeinterimmeasurestoprotectthe complainant from any retaliation at theworkplace.Mostemployersdohavestipulationsintheiremployeehandbooks/ internalpolicies thataddressemployeecomplaintsandprotectionfromanyretaliationinthisregard.



V. Anti-diSCRiminAtiOn laws1. brief descriPtion of Anti-diSCRiminAtiOn lawsInthecontextofprivatesectoremployment,Indiacurrentlydoesnothaveacomprehensivelegislationthataddressesworkplacediscrimination,exceptinrelationtosexualharassmentandinthecontextofpersonswithdisabilitiesandwithHIV, and in thecontextofprotectionoftransgenderpersonsfromdiscriminationundertheTransgenderAct.

Further,thereareprinciplessetoutbytheIndianjudiciary that seeks to protect employees fromdiscriminationandharassmentattheworkplace.Itis also important tonote that thatmostnew-ageemployers in India already cover these subjectscomprehensivelyaspartoftheirinternalpolicies/employeehandbook.

a. SHw aCt

As discussed above, the SHW Act provides for adetailedcomplaintandinquirymechanismincaseofsexualharassmentcomplaintsattheworkplace.Though it is not an anti-discrimination legislationperse,theSHWActrecognisesthatwomenmaybeespecially vulnerable to workplace discriminationandharassment–thus,thescopeoftheSHWActonly extends to complaints raised by ‘aggrievedwomen’ that pertain to the ‘workplace’ (it isimportanttonotethattheSHWActisnotagender-neutral legislation). That said, several companiesdo framegenderneutralpoliciesonbothgeneraland sexualharassment. TheSHWAct requiresanemployer to formulate an anti-sexual harassmentpolicy for the effective redressal of complaintspertainingtosexualharassment.

TheSHWActdefinestheterms‘sexualharassment’broadlytoincludeanyofthefollowingunwelcomeactsorbehavior:i)physicalcontactandadvances;or ii) demand or request for sexual favors; iii)making sexually colored remarks; or iv) showingpornography; v) any other unwelcome physical,verbalornon-verbalconductofasexualnature.

In addition, the SHW Act also identifies certaincircumstances which, if occurring in conjunctionwith sexual harassment (as defined in the SHWAct), would provide strong evidence that anoffence has been committed. Such circumstancesare: i) implied or explicit promise of preferentialtreatmentinemployment;orii)impliedorexplicitthreatofdetrimentaltreatmentinemployment;iii)impliedorexplicit threat aboutpresentor futureemploymentstatus;oriv)interferencewithworkorcreatinganintimidatingoroffensiveorhostileworkenvironment;orv)humiliatingtreatment likelytoaffectone’shealthorsafety.Itisimportanttonotethat theprotectionsprovidedundertheSHWActextend beyond the parameters of the traditionalemployee-employer relationship. For example,the‘aggrievedwoman’neednotnecessarilybeanemployee-shecouldbeanywomanwhomaybesubject tosexualharassmentataworkplace.Theterm‘workplace’isalsodefinedbroadlytoincludenotonly theusualplaceofemployment,but anyplace visited during the course of employment,including any transportation provided by anemployer. Further, as working from home hasbecome the new norm amidst the COVID-19pandemic, theambitof the term ‘workplace’hasalsobeenexpanded.

B. otHer leGiSlation

Otherlawsaddressworkplacediscriminationissuesin the private sector by prohibiting acts such as:i) refusal of / obstructing employment solely on



the grounds of a person belonging to a sociallybackward community; ii) deducting salary ordismissingwomenemployeeswhileonmaternityleave; iii) paymentofunequalwages tomenandwomen employees performing similar tasks; iv)discriminating against persons with disability(as prescribed under the Rights of Persons withDisabilities Act, 2016 (“RPD”); v) discriminatingagainstpersonswithHIV,asfurtherprovidedundertheHumanImmunodeficiencyVirusandAcquiredImmune Deficiency Syndrome (Prevention AndControl) Act, 2017 (“HIV Act”); vi) discriminatingagainsttransgenderpersonsinrelationtomattersassociatedwithemployment,suchasrecruitment,termination, promotion, etc. as prescribed undertheTransgenderAct.Therecenttrendisthatmostcompanies,irrespectiveofsize,havefarmorestrictinternal policies with reference to the workplacediscriminationissues,thanwhatisrequiredundervariousstatutes.

It is also pertinent to note here that the ID Actprohibits commission of certain ‘unfair labourpractices’, which include: discrimination againstanyworkmanforfilingchargesortestifyingagainstanemployer inany inquiryorproceedingrelatingtoany industrialdisputeordiscriminatingagainstworkmenby reasonof their beingmembers of atradeunionand/orshowingfavoritismorpartialitytoonesetofworkersregardlessofmerit.

There have also been attempts by the Centraland State Governments to introduce ‘quotas’/ reservation of posts in the private sector,for members of particular socially backwardcommunities. However, this has been resisted inthepast,anditisunlikelythatsuchmeasureswillbeimplementedinthefutureduetoitssensitivityandother contemporarypolitical and sociologicalcircumstances.

2. extent of Protection Indiacurrentlydoesnothaveasinglecomprehensivelegislation on discriminatory practices at theworkplace; instead, there are various laws thatprohibit certain kinds of discriminatory practicesandprotecttheinterestsofvulnerablecommunitiessuch asworkmen,women, personswithHIV andAIDS,personswithdisabilities,transgenderpersonsandmembersofcertainsociallybackwardclasses.For instance, with respect to women, the ERA

stipulates that male and female employees whoperform similar tasksmust be paid equal wages,andalsomandates thatemployersareprohibitedfrom discriminating against women inmatters ofrecruitment, promotions and transfers. The CodeonWages,whichhasyet tocome into force,alsogrants similar protections to employees. Further,women employed in labour intensive industriessuchasfactoriesandconstructionsites,canworkfewerhoursthanmaleemployees.TheMBActalsohasstipulationsprotectingwomenfromdismissal,whileonmaternityleave.

UndertheRPD,theheadoftheestablishmenthasthe responsibility of ensuring that persons withdisabilities are not discriminated against. In caseanycomplaint is received inthisregard, theheadof theestablishmentshalleither initiateaction inthemannerspecifiedundertheRPD/ informtheconcernedpersonastohowthe‘impugnedactoromission isaproportionatemeansofachievingalegitimateaim’.

Under the Transgender Act, establishmentsare prohibited from discriminating against anytransgender person with respect to mattersrelated to the employment of such persons. TheTransgender Act also requires an establishmentto designate a complaint officer who wouldbe responsible for the redressal of complaintspertainingtoviolationsoftheAct.TheTransgenderAct also requires an employer to provide thenecessaryfacilitiestotransgenderpersons.

3. Protections against Harassment

a. SHw aCt proCedUreS

Every employer is required to constitute anInternal Complaints Committee (“ICC”) that willinquire into sexual harassment complaints. TheICC shall consist of: (i) a presiding officer whowill be a senior women employee; (ii) at least 2employees preferably committed to the cause ofwomenorwhohavehadexperienceinsocialworkorhavelegalknowledge;(iii)anexternalmemberfromamongstnon-governmentalorganisationsorassociationscommittedtothecauseofwomenoranexternalcounselfamiliarwithissuesrelatingtosexualharassment.Thisexternalcounselcaneither



beasocialworkerwithatleastfiveyears’relevantexperienceorapersonfamiliarwithlabour,service,civilorcriminallaw.AtleasthalfoftheICCmembersshallatalltimesbewomen,andthetermoftheICCmembersshallnotexceed3years.

The broad process followed by an ICC will be asfollows: (i) Upon receipt of a complaint, if thecomplainant is agreeable, the ICC may attemptto settle the matter by way of conciliation. If asettlementisarrivedat,theICCneednotconductan inquiry; (ii) If the ICC conducts an inquiry, itshould be conducted as per the general rules oftheorganisationandinaccordancewithprinciplesofnatural justice.Aquorumof3 ICCmembers isrequired for conducting the inquiry, which hasto be completed within 90 days. In the courseof conducting the inquiry, the ICC is vested withthe powers of a civil court under Indian laws.Accordingly, the ICC can summon and enforcethe attendance of any person and examine him/her on oath, and also require the discovery andproduction of documents. The parties cannot, atanystage,bringinalegalpractitionertorepresentthembeforethe ICC; (iii)Uponcompletionoftheinquiry, the ICC shall prepare a report with itsrecommendations, and submit the same to theemployer within a period of 10 (ten) days. It isimperative that the ICC records detailed reasonsforarrivingatitsconclusionandrecommendations.Themanagement is required toactupon the ICCrecommendationswithin 60 days from receipt oftheinquiryreport.

Whileinquiryproceedingsareordinarilyconductedface-to-face,withpartiesandwitnessesphysicallyappearingforthemeeting,incertaincircumstances,especially during the on-going pandemic, theICCmayallow thepartiesorwitnesses toappearthroughvideoconferenceorbytelephonicmeans,subjecttocertainconditionsandconsiderations.

The SHWAct also prescribes other obligations ofanemployer,includingconductingperiodictrainingand ensuring that the workplace has adequatesafetyarrangements.

B. General HaraSSment

Cases of general harassment (provided they arenot criminal officesunder the IndianPenalCode,1860)aretypicallygovernedbytheestablishment’s

internal policies, provisions of the IESO Act, andstipulationsundertheFAthatmandatethesettingup of a grievance redressal committee. Typically,the internal policies clearly stipulate the conductthat would amount to harassment, the mannerof conducting an internal inquiry and nature ofdisciplinary action that would be undertaken,dependingontheseriousnessoftheconduct.

4. emPloyer’s obligation to Provide reasonable accommodations This is again governed mainly by the internalpoliciesofanorganisation–however,theSHWAct,theRPDandHIVActhavecertainstipulationsinthisregard.IntermsoftheRPD,employersarerequiredto ensure compliance with certain accessibilitystandards,suchas:(i)standardsforpublicbuildingsas specified in the ‘Harmonised Guidelines andSpaceStandardsforBarrierFreeBuiltEnvironmentforPersonsWithDisabilitiesandElderlyPersons’asissuedby theGovernmentof India; (ii) standardsfor Bus Body Code for transportation system asspecified in the relevant Government of Indianotification; (iii)website standardsas specified intheguidelinesforIndianGovernmentwebsites,asadoptedbyDepartmentofAdministrativeReformsand Public Grievances, Government of India; (iv)ensuring that the documents to be placed onwebsitesareintheElectronicPublication(ePUB)orOpticalCharacterReader(OCR)basedpdfformat.

Under the HIV Act, every establishment engagedinhealthcareservicesandthosewhere there isasignificantriskofoccupationalexposuretoHIV, isrequired to ensure a safe working environment.In terms of the SHW Act, employers have theobligation toprovidea safeworkingenvironmentwhich shall include safety from persons comingintocontactattheworkplace.

5. remediesEachof the statutes listedabovehaveadifferentmechanism, and also penalties in case of non-compliances by employers – these penaltiesextendtomonetaryfines,imprisonmentandeven



cancellation of any Government registration forcarryingouttheirbusiness.

For instance, if an employer commits any ‘unfairlabour practice’ as defined under the ID Act,workmenhavetherighttoapproachtheconcernedlabour court / industrial tribunal. In termsof theSHWAct,womenemployeescanapproachtheICC/fileacomplaintonaportal(www.shebox.nic.in).In termsof theRPD,personswithdisabilities canalsoapproachtheCentral/StateCommissionerforDisabilities.



vi. Pay equity laws 1. extent of Protection InIndia,theEqualRemunerationAct,1976ortheERAmandatesthepaymentofequalremunerationto male and female workers undertaking similartasks or work of a similar nature. The ERA alsoprovides for the prevention of discrimination ongroundsofsexagainstwomeninmattersconnectedwithrespecttoemployment,suchasrecruitment,promotion, etc. This legislation not only provideswomenwitharighttodemandequalpay,butalsoholds employers accountable for any violation oftheERA.

WhiletheERAextendsprotectiveprovisionsinfavorofwomen,theCodeonWageshastakenagender-neutral approach and prohibits discrimination onthegroundsofgenderinmattersrelatingtowages.

Theprincipleof‘equalpayforequalwork’hasalsobeenenumeratedunderArticle39(d)oftheIndianConstitution,whichrequirestheStatetostriveforsecuring equal pay for equalwork, for bothmenandwomen.

2. remedies Under theERA,anemployeehas the right tofileacomplaintwiththeconcernedlabourauthoritieswithrespecttocontraventionoftheprovisionsoftheERAonthepartoftheemployer,orforclaimsthatariseoutofnon-paymentofwages,atequalrates,tomenandwomen.Theappropriatelabourauthority, after verifying the merits of the case,mayinitiateaninquiryintothismatterandtaketheappropriateaction(asitmaydeemfit).

Further, under the ERA, employers are requiredto maintain registers which should contain theparticulars of the remunerationof its employees.The inspector appointed under the ERA has theright,atanypoint intime, to inspect the registerif there is any suspicionof a violationof theERAonthepartoftheemployer,orifacomplainthas

been filed by an employee, alleging violations oftheprovisionsoftheERA.

3. enforcement/litigation Overtheyears,theprincipleofequalpayforequalwork has evolved through judicial precedents.IndianCourtshaveheldthatdiscriminationbasedon gender only arises when men and womenperformthesameworkorworkofasimilarnature.For differences in educational qualifications orfor those relating to responsibility, reliability orconfidentiality,theprincipleofequalpayforequalworkwouldnotapply.

The constitutional principle of ‘equal pay forequal work’ has been upheld by Indian Courtswith respect to temporary employees’ vis-à-vispermanent employees in the government sector,where temporary employees performing similardutiesandfunctionsaspermanentemployees,areentitledtodrawwagesatparwithsimilarlyplacedpermanentemployees.Theprincipleisrequiredtobeappliedinallcaseswherethesameworkisbeingperformed,irrespectiveoftheclassofemployees.



vii. social media and data Privacy 1. restrictions in tHe worKPlaceIndia is also in the process of framing acomprehensive legislation on data protection,which would certainly have an impact on theemployer’srighttomonitorandreviewemployees’electroniccommunications.

a. Can tHe employer monitor, aCCeSS, review tHe employee’S eleCtroniC CommUniCationS?

In terms of the IT Rules, employers can access,review and monitor an employee’s officialelectronic data (i.e.work-related data) subject toobtaininghis/her consent, as clearly stipulated intheconcernedemploymentcontract/appointmentletterand internalpolicy /employee’shandbook.Employerswouldalsohavetoformulateaprivacypolicy and upload the same on its website andthe intranet. This privacy policy would detail allits obligations regarding collecting, storing, andprocessing of employees’ personal information.AdditionalobligationsareprescribedundertheITRulesincasetheemployercollects/hasaccessto‘sensitivepersonalinformation’ofemployeessuchascredit card information,biometric information,passwords andmedical records. Moreover, thereareacoupleoflandmarkjudgmentsinIndiaonthefundamentalrighttoprivacy.

2. emPloyee’s use of social media to disParage tHe emPloyer or divulge confidential informationWhile there are no specific laws that governemployees’useofsocialmedia,anydisparagementofemployersand/oranydivulgingof confidentialinformation would attract consequences underexisting civil and criminal laws that governdefamation, breach of contract, divulging tradesecretsandinfringingintellectualproperty.Further,keeping in mind the rapidly evolving regulatoryframeworkinrelationtotechnologylawsanddataprotection, employers are also defining policiesthat would affect their employees’ participationon social media during work hours. Severalcompanies,especiallytechnologyandoutsourcingcompanies, have installed firewalls that preventemployeesfromaccessingsocialmediasitesattheworkplace,whereasseveralothercompanieshavedefined social media usage policies that educateemployeesontheimplicationsofmisuseofsocialmedia (especially given that employers could beheldvicariouslyliableforanyactionsofemployeesinthisregard).

Inaddition,employerscanincludestrongprovisionsintheiremploymentcontracts/appointmentlettersfor protection of confidential information, tradesecrets,intellectualproperty,andotherproprietaryinformation.IndianCourts,typically,takeclaimsofconfidentialitybreachesanddisclosureofsensitiveinformation very seriously; it is an established



principle under Indian jurisprudence that anemployerhas full andexclusiveownershipof theinformation that the employee comes in contactwith during the course of employment, includinganyandallinformationcontainedintheemployee’sofficial email accounts. Also, employers can,subject to obtaining employee consent, monitoremployees’activitiesonsocialmediaduringworkhoursforthereasonsoutlinedabove.



viii. termination of emPloyment contracts 1. grounds for termination There are various modes of termination ofemploymentthatarerecognisedinIndia,including:i)expiryofafixedtermcontract/mutualseparation;ii) resignation by an employee; iii) retirement orsuperannuation; iv) layoffs, termination due totransfer of business/closure of an undertaking/organisational restructuring; andv) terminationbyanemployerfor‘cause’.Terminationfor‘cause’mayinvolveoneormoreofthefollowing:

•establishedbreachofemploymentcontractand/orinternalpolicies;

•employee having committed any criminaloffence / authorities having initiated criminalproceedings;

•employee’sinabilitytofulfillmaterialobligationsofhisjob;

•misconduct;•inefficiency/poorperformance,afterundertakingsufficient processes such as a performanceimprovementplan;

•lossofconfidencebymanagement;and•abandonment of employment / continuousabsenteeism.

2. collective dismissals‘Collectivedismissal’ofemployeesispermittedunderIndian labour laws, only in certain circumstancesanduponsatisfactionofspecifiedconditions.Inthiscontext,theIDActdescribesthefollowingprocesseswith respect toworkmen: i) ‘retrenchment’,whichis defined as termination of workmen’s servicesfor any reason whatsoever, otherwise than aspunishment inflictedbywayofdisciplinary action;ii)‘layoffs’,whichisdefinedasthefailure,refusalorinabilityofanemployertoemployaworkman,on

accountofshortageofpower,rawmaterials,break-down ofmachinery, natural calamity or any otherreason beyond the employer’s control. The IDActalsoprescribesconditionsfortransfer/closureofanundertakingthatwouldresultinredundancies.

Incaseofretrenchment,dependingonthenumberof workmen engaged, employers are required toeithernotify/seekpriorapprovalof theconcernedlabourdepartment.Also,employersarerequiredtoprovideemployeeswhohavebeeninserviceforatleast1year,anoticeof1or3months(orequivalentpay)and‘retrenchmentcompensation’calculatedat15days’wagesforeverycompletedyearofservice.Itisimportanttonotethatincaseofretrenchment,employers must follow the “last in, first out”principle,whereintheemploymentoftheshortest-servingemployeeswillbethefirsttobeterminated,unlesstheemployerhas justifiablereasonsfornotdoingso.

Inalayoffsituation,priorapprovaloftheconcernedGovernment may be required, and compensationwould have to bepaid, in themanner prescribed.Laid off workmen can also be retrenched in themanner prescribed under the IDA. Provisionswithrespect to layoffs under an organisation’s certifiedStandingOrders (asmaybeapplicable)or internalpolicies,willalsoneedtobetakenintoconsideration.

The above stipulations are all in the context ofworkmen–incaseofmanagerialemployees,therearenospecificrequirementsunderstatute,andanydismissalwouldbeasperthetermsoftheircontract.

3. individual dismissalsAs per the IDA, any dismissal of an individualworkmanwouldalsobeconsidered‘retrenchment’asdescribedabove.Accordingly,(dependingonthenumberofworkmenengagedattheestablishment),the employer would have to provide prior notice



of termination of either 1 month or 3 months,or equivalent wages in lieu thereof. In addition,‘retrenchmentcompensation’wouldhavetobepaid,at the rateof15days’wages foreverycompletedyearofservice.

However, in caseofemployeeswhoaredismissedfor misconduct (provided the employer conductsaninternalinquirypriortosuchdismissal)nopriornoticeofterminationorretrenchmentcompensationwouldberequired.

Inthecaseofemployeesotherthanworkmen(i.e.managerial cadre), provisions of the employmentcontract and the relevant S&EActswouldhave tobeconsidered.SinceIndiadoesnotrecogniseat-willemployment, termination of employment withoutprovidinganypriornoticeatall(orequivalentpay)wouldtypicallyrenderthecontractofemploymentasan‘unconscionablebargain’,andhence,illegal.

Several States, such as Andhra Pradesh, Bihar,Punjab, Rajasthan and Karnataka have issuedordinances to relax the applicability of the ID Actto certain establishments, such that provisionsrelatingtolayoffs,retrenchment,closureofcertainestablishments, wherein the number of workmenemployedisnotlessthanonehundred,hasrecentlybeen increased to three hundred workmen. Inadditiontotheabove,someStateshaveintroducedchanges intheretrenchmentcompensation,whichwas previously calculated as fifteen days’ averagepayforeverycompletedyearofcontinuousservice,oranypartthereofinexcessofsixmonths.

a. iS SeveranCe pay reQUired?

Yes,aseverancepaymentwouldhavetobemadebytheemployer.However,thequantumoftheamountand the processes followed would be different,dependingonspecificcircumstances.Forinstance:

Voluntary resignation: If the employee voluntarilyresigns, the employer must accept the same andcommunicatewhether the employee has to servethe notice period / the notice period has beenwaived.Insuchaninstance,theemployerwouldberequired topay the followingaspartof severancepay:

•allaccruedandunpaidwages;•wagesinlieuofaccruedearnedleave;

•gratuity inaccordancewithPGAct (i.e.15dayswages for every completed year of service),subject to a maximum of INR 2 million (~USD27270);and

•anyothercontractualdues,suchasvariablepay,performancebonus,etc.

Termination initiated by employer: In case oftermination for misconduct (which is establishedaspertheclearprocessessetoutintheemployeehandbook,policies,andemploymentcontract),theemployerwouldberequiredtomakethefollowingpayouts:

•allaccruedandunpaidwages;•wagesinlieuofaccruedearnedleave;•gratuity in accordance with PG Act, exceptwhere(i)anywillfulact,omissionornegligenceof the employee has caused damage toemployer property; (ii) the employee has beenterminated for riotous or disorderly conduct orany other act of violence; or (iii) the employeehas been terminated for an offence involvingmoral turpitude committed in the course ofemployment;and

•anyothercontractualdues.

4. seParation agreements

a. iS a Separation aGreement reQUired or ConSidered BeSt praCtiCe?

While a separation agreement is not mandatoryunderIndianlaws,itisincreasinglybeingfollowedbyIndiancompanies,especiallyincasesofcontentiousseparations/separationofseniorexecutives.

B. wHat are tHe Standard proviSionS of a Separation aGreement?

Thekeyclauses inaseparationagreementpertainto the employee releasing the company from allpresent and future liabilities with reference tothe employment relationship, assignment by theemployee of any and all IP created in the courseof employment to the employer, the employee



agreeingtoadheretoconfidentialityobligationsandtheemployeereturningallcompanypropertyinhis/herpossessionorcontrol.Thereasonsforseparationandthetermsandconditionsofseverance,includingany separation consideration paid out and anybenefitsprovided,shouldbeaccuratelycaptured.

C. doeS tHe aGe of tHe employee make a differenCe?

No,therearenorestrictionsregardingage.However,theemployeemusthaveattainedtheageofmajority(18years)asrequiredundertheContractAct.

d. are tHere additional proviSionS to ConSider?

Yes, separation agreements should be customisedbasedonspecificcircumstancesandshouldcloselyreflect the terms of the employment contract /employee handbook and internal policies. Suchcustomisationmaybeundertakenbasisthefollowingconsiderations:

•Istheterminationpartofaworkforcereduction?•Is the termination part of a transfer ofundertaking? If so, is there any change to theemployment terms?Areanyemployeebenefitsbeingcarriedover?

•Is the termination part of a disciplinaryproceeding?

•Istherecompanyinformationorequipmentthattheemployeeneedstoreturn?

•Arethereanystockoptionrelatedqueriestobeaddressed?

•Does the employee have any specificconfidentialityobligations?

•Isthereapossibilityoftheemployeedisparagingtheemployeranditsotheremployees?

•Shouldtheemployeebeoffered‘gardenleave’?

Dependingontheresponsestotheabovequestions,corresponding provisions should be added to theseparationagreement.

5. remedies for emPloyee seeKing to cHallenge wrongful terminationThe remedies available for employees seeking tochallengeawrongfulterminationinclude:

•reinstatementofemployment;•backpay;•lossofwagesandearningcapacity;•allotherexpenses.

Workmencanapproachthelabourdepartmentandtheindustrialtribunalinthisregard.

6. wHistleblower laws Currently, legislation in India concerningwhistleblowersmainlypertainstolistedcompaniesand the public sector. In terms of regulationsprescribed by the Securities and Exchange Boardof India (SEBI), companies listed on a recognisedstock exchange in India have to devise aneffective whistleblowing mechanism that enablesstakeholders, including individual employees andtheirrepresentativebodies,tofreelycommunicatetheir concerns about illegal or unethical practices.Under the (Indian) Companies Act, 2013, certaincategories of companies are also required toconstitutea‘vigilmechanism’fortheirdirectorsandemployeestoreportgenuineconcernsorgrievances.

The Whistleblowers Protection Act, 2014 (whichhas not yet seen the light of day, with furthercontroversialamendmentsbeingproposed)mainlygovernsallegedcorruptionandmisuseofpowerbypublic servants and seeks to protect personswhoexposeallegedwrongdoingsingovernmentbodies,projectsandoffices.

It isalso important tonote that Indiahas recentlyamended its Prevention of Corruption Act, 1988,wherein the giving of a bribe by any person(includingtheprivatesector)toapublicservantforan improper performanceof public duty, has nowbeenmadeanoffence(penaltiesextendtofinesandimprisonment),whereaspreviously,onlythereceiptofabribebyapublicservantwascovered.



ix. restrictive covenants 1. definition of restrictive covenantsCompanies in the ‘knowledge industry’ place highvalue on their intellectual and human capital. Keyemployeeswhodeveloptheintellectualpropertyofthecompany,andthosewhohavecloseinteractionswith customers and suppliers (such as sales staff),are critical to the growthanddevelopmentof thecompany,andonmanyoccasions,thecompanymaybe reliant on the personal attributes and marketknowledgeofsuchemployeesinordertoimproveitsmarketbase.Therefore,companies looktoprotecttheir business interests by prescribing certainrestrictions for their employees – these clauses inemployment contracts which place restrictions oncertain activities of employees, either during oraftertheiremployment,areordinarilyreferredtoas‘restrictivecovenants’.

2. tyPes of restrictive covenants

A. non-comPete cLAuses

Anon-competeclauseistypicallyarestrictionplacedbytheemployeronanemployee,pursuanttowhichthe employee cannot indulge in any activity thatwouldbeindirectcompetitionwiththebusinessofthe employer. In nearly all employment contracts,such restrictions are stipulated for as long as theemployee is employed by the company; however,some employment contracts may also containclauseswhichwillpreventtheemployeefromjoininga competitor company, or starting a competingbusinessforacertainperiod,aftertheemploymentwiththecompanycomestoanend.Theseclausesattaingreatersignificanceincaseofpromoterand/orfounder’sseparationfromthecompany.

b. non-soLicitAtion of CUStomerS and SUpplierS

A non-solicitation clause is intended to ensurethat an employee does not induce the employercompany’s customers, suppliers, or clients awayfrom the company, typically after such employeeleaveshis/heremployment.

c. non-soLicitAtion of employeeS

A non-solicitation clause may also prevent an ex-employeefrominducinganycurrentemployeestoresignfromemploymentwiththecompanyandjointhecompanywhere suchex-employee is currentlyemployed (or any other company), at his/herdirection(includinganycompetitorofthecompany).

3. enforcement of ReStRiCtiVe COVenAntS – Process and remediesAsdescribedintheearliersections,theConstitutionguaranteeseveryIndiancitizen,afundamentalrighttopracticeatradeorprofession.Further,aspertheContract Act, any contract which restrains trade,business or profession of any kindwill be void. Inlight of this, any restrictive covenant that extendsbeyondthetenureofemploymentwillnotbelookeduponfavourablyby IndianCourts (but inanycase,are often incorporated into employment contractsas a deterrentmeasure). The courts are generallyguidedbythepresumptionthattheemployeris inastrongerbargainingpositionincomparisontotheemployee,andtheemployeehasnochoicebuttotypicallyaccepttheemployer’sterms.



However, therearecertainprinciples laiddownbyIndia’s judiciary that enable employers to protecttheirlegitimatebusinessinterests:

•employers can contractually restrict theiremployees from misusing or disclosing theemployer’stradesecretsorconfidentialbusinessinformationandpractices(andtheenforceabilityconcernswithrespecttorestrictivecovenantsasoutlinedabove,will typicallynotapply in theseinstances). Similarly,where theemployeehasamotivetocheatorcauseirreparableharmtotheemployer,arestrictivecovenantbeyondthetermofemploymentwouldbeenforceable.

•non-solicitationclausesmaybevalidifreasonablerestrictions (such as distance, time limit andlocation) regarding non-usage of trade secretsandgoodwillareimposedonformeremployees,depending on their designation and access toconfidential information. Courts have also heldthatmerelyapproachingcustomersofapreviousemployerwouldnotamountto‘solicitation’untilorders are placed by customers based on suchapproach.

4. use and limitations of garden leave Theconceptof‘gardenleave’isbecomingcommoninIndia.Typically,gardenleaveinvolvesasituationwhereinanemployeegivesnoticeorisgivennoticeof termination, and during such notice period isdirected to stayaway fromworkand/or theofficepremises, whilst continuing to receive his normalremuneration.Courtshaveheldthatwhileitisnotpossibletostopanemployeefromleaving,hecanbe restricted from joininga competitorduring theterm of employment (i.e. during the garden leaveperiod).However,thegardenleaveprovisionshouldnotbeunreasonableandshouldtypicallynotextendtoinappropriatelylongperiodsoftime.



x. transfer of undertaKings There are specific provisions under ID Act, thatprotect‘workmen’incasesoftransferofbusinessundertakings. These however do not extend tonon-workmen;thus, incaseofnon-workmen,theterms of the employment contract and/or theinternalpoliciesofthecompanywouldhavetobeexamined.

1. emPloyees’ rigHts in case of a transfer of undertaKingIntermsofSection25FFoftheIDAct,wheretheownership or management of an undertaking istransferred,whetherbyagreementorbyoperationoflaw,everyworkmanwhohasbeenincontinuousservice with that undertaking for not less than1 year, would be entitled to onemonth’s notice,or payment in lieu thereof, and to compensationcalculatedattherateof15days’wagesforeverycompletedyearofservice.

However, Section 25 FF of the ID Act,would notapplytoworkmenif:

•the service of the workmen has not beeninterruptedbysuchtransfer;

•thetermsandconditionsofserviceapplicabletotheworkmenafterthetransferarenotinanywayless ‘favourable’ than those applicable to themimmediatelybeforethetransfer;and

•the new employer is, under the terms of suchtransferorotherwise,legallyliabletopaytotheworkmen, in the event of their retrenchment,compensationonthebasisthattheirservicehasbeencontinuousandhasnotbeeninterruptedbythetransfer.

2. requirements for Predecessor and successor PartiesThe requirements mentioned above relate tothe obligations of the old employer (i.e. onewhosebusinessundertaking isbeingtransferred).However, if Section 25FF of the ID Act does notapplytothetransferoftheundertakinginquestion(i.e. for instance, the services of the employeesarenot‘interrupted’onaccountofthetransferoralternatively, the employees resign and join thenew employer), then the successor entity wouldhave to ensure that the salary and benefits thatthe employees were entitled to under the oldemployer(suchasprovidentfund,employeestateinsurance, gratuity)will continue to be paid. TheEPFActandESIActspecificallyprovideforliabilityofthesuccessorentity,wherethepredecessorhasdefaulted in remitting provident fund and stateinsurance contributions, prior to the date of thetransferoftheundertaking.



xi. trade unions and emPloyers associations 1. brief descriPtion of emPloyees’ and emPloyers’ associations TheIDActandtheTradeUnionsActhaveprovisionsrelatingtoemployerandemployeeassociationsatanindustrialestablishment.

a. trade UnionS aCt

TheTradeUnionsActdefinesatradeunionas‘anycombination, whether temporary or permanent,formed primarily for the purpose of regulatingthe relations between workmen and employersor betweenworkmen andworkmen, or betweenemployersandemployers,orforimposingrestrictiveconditionsontheconductofanytradeorbusiness’.AsdescribedunderSection1herein,atleast10%oftheworkmenor100workmenattheestablishment(whicheverisless,subjecthowevertoaminimumof7)mustbemembersof thetradeunionat thetime of making an application for registration.Theregistrationofa tradeunionunder theTradeUnionsActmustbedistinguishedfromtheprocessof ‘recognition’ of a trade union. Recognition istheprocessthroughwhichanemployeragreestonegotiatewithrepresentativesofatradeuniononaspectssuchasworkingconditions,wages,etc.onbehalfofaparticulargroupofworkers.TherearecertainStatelevelruleswithrespecttorecognitionoftradeunions;howevertheTradeUnionsActitselfdoesnothaveextensiveprovisions in this regard.Refusal by an employer to collectively bargain ingoodfaithwitharecognisedtradeunion(andviceversa) qualifies as an ‘unfair labour practice’ asdefined under the IDA, attracting consequencesthat include imprisonment and/or monetarypenalties.

B. key aSSoCiationS Under tHe id aCt

In terms of the ID Act, establishments with 100or more workmen have to constitute a ‘workscommittee’.Theworkscommitteeshouldpromotemeasures for securing and preserving amity andgoodrelationsbetweentheemployerandworkmenand, to this end, can comment upon matters ofcommon interest / concern and compose anymaterialdifferencesofopinionthatarisebetweenemployersandworkmen.

Establishmentswith20ormoreworkmenhavetosetupagrievanceredressalcommitteetoaddressindividual employee grievances. However, if theestablishment already has a grievance redressalmechanism in place for its workmen, it may notestablishaseparategrievanceredressalcommittee.

Thesettingupoftheworkscommitteewillnotaffectthe right of workmen to raise industrial disputesunder the IDAct.Anyworkmanwho isaggrievedbythedecisionofthiscommitteecanappealtotheemployer,andtheemployershall,within1monthfromthedateofreceiptofsuchappeal,disposeofthe sameand senda copyof thedecision to theworkmanconcerned.

There are other committees that have to be setupasperState rules framedunder the IDAct. InGujaratforinstance,a‘jointmanagementcouncil’hastobeformedinindustrialestablishmentsthatemploy500ormoreworkmen.



2. rigHts and imPortance of trade unionsThe Constitution of India guarantees thefundamentalrightofallcitizenstoformassociationsorunions,includingtherighttoformorjointradeunions. Some of the rights of registered tradeunionsareasfollows: •immunity is granted to office bearers andmembers from proceedings relating to criminalconspiracy, in instances where the trade unionhasbeenengagedinfurtheringitsobjects.

•trade unions can maintain a separate fund forpolitical purposes from which payments maybemadeforthepromotionofcivicandpoliticalinterestsofitsmembers.

•trade unions can amalgamate with other tradeunionsinthemannerprescribed.

•agreements between members of a registeredtradeunionshallnotbevoidorvoidablemerelyonaccountofthefactthatanyofitsobjectsareinrestraintoftrade.

•no suit or other legal proceeding can bemaintainedinanycivilcourtagainstanyregisteredtrade union or any office-bearer ormember inrespect of any act done in contemplation of atradedispute towhichamember isaparty,onthe ground that such act induces some otherperson to break a contract of employment, orthat it interferes with the trade, business oremploymentofsomeotherpersonorinterfereswiththerightofsomeotherpersontodisposeofhiscapitalorlabourashewillsit.

Trade unions have immense significance both forthewellbeingof the industrial establishment andforthesocietyatlarge.Tradeunionsplayamajorrole in negotiating better work conditions foremployees, settlementofexistingdisputesand inreducing instances of industrial disputes, therebymaintaininganamicablerelationshipbetweentheemployerandtheworkforce.Theycanalsoassistintherecruitmentandselectionofworkersandhelpthemadjustbettertotheorganisationalstructureandhierarchy.

3. tyPes of rePresentation

a. nUmBer of repreSentativeS

The rules pertaining to each of the associationslisted above, have detailed provisions regardingtheir roles and responsibilities as well as theappointment of members. For instance, in caseof aworks committee, the IDAct prescribes thatit shall have an equal number of both employerandemployeerepresentativesandshallnotexceed20 members. Further, if the establishment hasregistered tradeunions, then theywouldhave tobe consulted by the employer before finalisingrepresentatives from the workmen fraternity. Agrievanceredressalcommitteeontheotherhand,shallalsoconsistofanequalnumberofemployerandworkmen representatives; however, the totalnumber of members constituting the grievanceredressalcommitteeshallnotexceed6.

B. appointment of repreSentativeS

In relation to a works committee, the employerrepresentatives shall be nominated by theemployerandshall,as faraspossible,beofficialswho are in direct touch with the working of theestablishment.Employeerepresentativesmustbechosenbywayofvotinginthemannerprescribed.In case the establishment has registered tradeunions workmen representatives on the workscommittee should be divided into thosewho aretradeunionmembersandthosewhoarenot.Theworks committee should have a chairman, vicechairman and two joint secretaries, who term ofofficeshallbe2years.Theworkscommitteeshouldmeetatleastonceeveryquarter.

The chairperson of the Grievance RedressalCommittee shall be selected from among theemployer representatives and from theworkmenrepresentatives alternatively, on rotation basisevery year. There shall, as far as practicable, beone female member on the grievance redressalcommittee, and depending on the total numberof members on the grievance committee, thenumber of female members may be increasedproportionately.



4. tasKs and obligations of rePresentativesThough trade unions, works committees andgrievance redressal committees are all envisagedto ensure greater participation of workmen intherunningofanestablishment, therearesubtledifferences in relation to each of their terms ofreference.TradeUnionsaretheprincipalcollectivebargaining agents and can enter into settlementagreements with employers. A works committeeontheotherhand,aimsatpre-emptingindustrialdisputes, smoothening working relationshipsand addressing any differences by way of directnegotiations between employer and workmenrepresentatives. A works committee functions asa recommendatory body that addresses, at thefirst instance, problems arising in the day to dayfunctioning of the industrial establishment. Agrievancecommitteelooksintoindividualemployeegrievances-unliketheothertwocommitteeswhichare concernedwith employer-employee relationsasawhole.

5. emPloyees’ rePresentation in managementThenatureandextentofemployees’representationeventuallydependsonthekindofestablishmentinquestion and the number of employees engagedat such establishment. It may be noted that theworksandgrievanceredressalcommitteesareonlyrequiredwhere the requisite employee thresholdis satisfied, as described above. Also, tradeunionisationinIndiaisentrenchedprimarilyinthetraditional manufacturing sectors, though the ITsectorhasrecentlyseensomeunionisationaswell.Inaddition,certainothercommitteesmayalsoberequireddependingonthenatureofthe industryandanyStatespecificrequirements.

6. otHer tyPes of emPloyee rePresentative bodies AspertheFAAct,ineveryfactorywhereahazardousprocesstakesplaceorwherehazardoussubstancesare used or handled, the occupier shall set up a‘safetycommittee’consistingofanequalnumberofrepresentativesofworkersandthemanagementto promote co-operation in maintaining propersafety and health at work, and to periodicallyreviewthespecificmeasurestaken inthisregard.Also, in factories where there are 250 or moreemployees, a canteen is required to be providedbytheemployer,whichisthentobemanagedbyacommitteethatwouldalsohaverepresentativesofworkmen.Furthermore, safety committeesarerequiredtobesetupinmineswherethereare100ormorepersonsemployed.



xii. emPloyee benefits 1. social securityThekey legislationgoverningemployees’benefitsinIndiainclude:

a. employeeS’ State inSUranCe aCt, 1948

Benefits of this ESI Act extend to establishmentswhere10ormoreemployeesareengaged(subjectto any State rules), and to all employees earningless than INR 21,000 (~USD 286) per month.Employers are required to contribute an amountequivalent to 4.75% of the employees’ wagesmonthly to an Employees’ State Insurance Fund(“InsuranceFund”),whiletheemployeeisrequiredto contribute 1.75% of his/her wages to theInsurance Fund. Theemployees are thenentitledtocertainmedicalbenefits(includingmedicalcare,sickness benefit, disablement benefit, etc.) fromaccumulationsintheInsuranceFund.

B. employeeS’ provident fUnd and miSCellaneoUS proviSionS aCt, 1952

Benefits under this Act typically extend toestablishments where there are 20 or moreemployees. Employees earning less than INR15,000permonth(~USD204)havetocompulsorilycontributetoschemesundertheEPFAct,whereasthoseearningabovethislimitmayoptout,subjectto certain conditions. Further, in cases wheremonthly wages exceeds INR 15,000 per month,employers and employeesmay either agree to i)make contributions on the entiremonthlywagesin themannerprescribedor ii)capwages for thepurposesofcontributiontoINR15,000permonth.There are threemain schemes framedunder theEPFAct,namely:

•Employees’ Provident Fund Scheme, 1952(“ProvidentFundScheme”).

•Employees’ Pension Scheme, 1995 (“PensionScheme”);and

•Employees’ Deposit Linked Insurance Scheme,1976(“DepositLinkedInsuranceScheme”).

Employeesarerequiredtocontribute12%oftheirbasic wages, dearness allowance and retainingallowance to the Provident Fund Scheme - thisis undertaken by the employer (on behalf of theemployee)asamonthlydeductionfromwagesanddepositedintotheprovidentfund.Anemployeristhenrequiredtomatchthisemployeecontribution– however, out of the 12% of the employer’scontribution:8.33%isdirectedtothepensionfundsetupunderthePensionScheme;0.5%isdirectedtothedeposit linkedinsurancefundsetupunderthe Deposit Linked Insurance Scheme; and theremaining 3.17% is deposited into the providentfund.

In light of the COVID-19 crisis, the Governmentof India temporarily reduced the above rate ofcontribution from12% to 10% for themonths ofMay, June and July 2020 (for both employer andemployees), to decrease the financial liability oftheemployerandalsoto increasethetakehomesalaryoftheemployees.

c. PAyment of grAtuity Act, 1972

The PG Act contemplates payment of gratuity toallemployees(whetherworkmenornot)engagedin establishments (including factories, shops andother commercial establishments) in which 10or more persons are employed. An employeeis entitled to gratuity if he/she has renderedcontinuousservicefornotlessthan5years(exceptinthecaseofdeathordisability)underanyofthefollowingcircumstances,namely:superannuation,retirementorresignation,ordeathordisablementduetoaccidentordisease.Thegratuitypayabletoanemployeeiscalculatedat15days’wagespayable



multipliedbythenumberofyearsofservice(apartofayearinexcessof6monthscountedas1year).Aformulaforcomputationhasbeenprescribedinthisregard.

2. HealtHcare and insurancesThe main legislation applicable to the privatesector,theESIAct,contemplatesmedicalbenefitsfor employees in contingencies such as sickness,maternity, disablement, and death due toemployment injury and providesmedical care toinsured persons and their families. Additionally,theECA requiresemployers topay compensation(computed in themanner prescribed) in cases ofdeath/disablementofemployeesowingtoinjuriessustainedattheworkplace.

The Government also launched an ambitiousuniversal health scheme (the ‘Pradhan MantriJan Arogya Yojana’) to ensure that the poorand vulnerable populations are provided healthinsurancecoverageuptoINR5lakh(~USD6818)per family, per year, for secondary and tertiaryhospitalisation.Inadditiontotheabove,mostlargeemployers in the private sector provide medicalinsurance benefits to their employees and theirimmediatedependents,andbearthecostsinthisregard.

3. required leave

a. HolidayS and annUal leave

ProvisionsrelatingtoholidaysandleavearemainlyprescribedintheStatespecificS&EActs(forshopsandcommercialestablishments)andundertheFAAct(forfactories).

The FA Act and some of the S&E Acts state thatestablishmentsshallremainclosedonatleast1dayofeveryweek (this is typicallySunday).However,theS&EActsofcertainStates (e.g.,Maharashtra,KarnatakaandTamilNadu)contemplatethatsomeestablishments may remain open on all days oftheweek, subject to themallowingeveryworkeraweeklyholidayofat least24consecutivehours(andotherconditionsbeingsatisfied).

Across India, there are certain national holidaysnamely:RepublicDay(26thJanuary);IndependenceDay (15th August); and the birth anniversary ofMahatma Gandhi (2nd October). In addition tothese,everyemployeewouldbeentitledtootherholidays, as may be declared by the concernedState Governments. In case an employee isrequired to work on any of these holidays, he/shewillbeentitledtotwicethewagesandalsoacompensatoryoffday.

The S&E Acts prescribe different privilege leave/earned leave requirements, and in some States,employeesmayavailprivilegeleaveonlyafterbeinginserviceforacertainperiod(suchas3monthsor1year).TheS&EActsalsoallowunutilisedprivilege/earned leave tobe carried forwardat theendoftheyear(subjecttoalimit),andalsocontemplatethatanyunutilised leavemaybeencashedat thetimeofseparationfromemployment.

B. maternity and paternity leave

Withrespecttomaternityleave,femaleemployeeswhohavebeeninservicefor80daysareentitledtopaidmaternity leaveof26weeks. In caseofamiscarriage ormedical termination of pregnancy,femaleemployeesareentitledtoleavewithwagesfor a period of 6 weeks, immediately followingthedayofthemiscarriageormedicalterminationof pregnancy. Leave requirements are alsospecifiedforwomenhavingundergonetubectomyoperations,or incaseofany illnessarisingoutofpregnancy, premature birth, delivery, miscarriageormedicalterminationofpregnancy.

There is no separate category of paternity leaverecognisedunderIndianlaw,thoughabillhasbeenintroducedinthisregardseekingpaternityleaveof15daysacrossallsectors.Currentlyhowever,somecorporate and public sector departments providepaternityleavetotheiremployees,asprescribedintheconcernedleavepolicy/rules.

C. SiCkneSS and diSaBility leave

Typically, sick leave cannot be carried forward orencashedandisnotsubjecttoanyminimumservicerequirements. However, in certain States likeGujarat,AndhraPradeshandTelanganaemployeescouldbeeligible toencash their sick leaveat the



time of their discharge from employment. NospecificcategoryofdisabilityleaveisrecognisedinIndia.

d. any otHer reQUired or tyPicALLy ProViDeD LeAVe(s)

Some of the S&E Acts also recognise casualleave, which can be availed by employees inunforeseen situations, subject to the approval ofanorganisation.Thiscategoryof leave isalsonottypicallycarriedforwardorencashed.

4. Pensions: mandatory and tyPically Provided EmployeeswhofallwithinthepurviewoftheEPFActwill be entitled to amonthly pension, as pertherulesofthePensionScheme.Otherthanthat,employees in thepublic sectorwillbeentitled tosuchpension(s)asprescribedintheirservicerules.

5. any otHer required or tyPically Provided benefitsIn addition to the above, various employersprovide other benefits to employees (which alsohave certain tax benefits) such as food coupons,a conveyance allowance and reimbursement ofmobile phone and Internet expenses. There arealso specificbenefitprogramsand labourwelfarefundsprescribedforcertainsectors.

AvikBiswasPartner,[email protected]+918040726686

http://www.induslaw.com

mailto:avik.biswas%40induslaw.com?subject=



IndusLawisamultispecialtyIndianlawfirm,withofficesin Bangalore, Delhi, Hyderabad and Mumbai. TheEmploymentLawpracticegroupofIndusLawadvisesemployersonallaspectsofemploymentlawincludinglitigation, transactionalandadvisorymatters.Clientsapproach the firm for assistance inmanagement ofemploymentrisksatalllevelsinadditiontoprovidingstrategic, board-level advice on crucial employmentandcomplianceissues,aswellasday-to-daysupportfortheirhumanresourcesdepartmentandin-housecounselteams.

WhatsetsIndusLawapartfromotherfirmsinIndiaisthediversityoftheattorneys,intermsofbackground,experience and international education, in additiontothe fact that IndusLawhasapartner toassociateratio significantly below that of other Indian firms.Furthermore, IndusLaw advises a wide range ofinternational and domestic clients across a varietyof sectors includinge-commerce,education,energy,infrastructure, natural resources, financial services,healthcare, hospitality, manufacturing, real estate,social enterprises and technology. The employmentpractice at IndusLaw has been recognised forexcellence by industry insiders, including Chambersand Partners, AsiaLaw,Who’sWho Legal, The Legal500andAsianLegalBusiness.

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