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Status of Draft Rules formulated by the States and Union Territories under the labour codes

Please click here to download the Prism as PDF.

This Prism provides a glance at the status of the draft rules formulated by the States and Union Territories[1] in accordance with the 4 (four) labour codes enacted by the Central Government to consolidate 29 (twenty nine) central labour legislations on wages, industrial relations, social security and occupational safety, welfare and working conditions. The 4 (four) labour codes are yet to be enforced and will come into effect from a date to be notified by the Central Government, barring the provisions which have already been enforced. For instance, certain sections under the Code on Wages, 2019 related to the Central Advisory Board, and the provision under the Code on Social Security, 2020 relating to establishment of an employee’s and his family members’ or dependents’ identities through respective Aadhaar numbers have already been enforced.

The Central Government has already issued the draft central rules under all the 4 (four) labour codes. While most of the States and Union Territories have published their draft rules under the labour codes, some major States and Union Territories such as West Bengal and Delhi are yet to come up with the draft rules under all the labour codes. It appears that West Bengal has started drafting the rules, but it intends to pass a notification for implementation after observing how the rest of the States are dealing with them.

According to the information available in public domain, all the States and Union Territories have been asked to formulate their draft rules by the end of 2023. Once that is achieved, it is anticipated that the labour codes will be enforced after the Lok Sabha elections of 2024, with certain modifications.

A. Summary

States and Union Territories which have not drafted rules under all 4 (four) labour codes.
- States: Meghalaya, Nagaland and West Bengal
- Union Territories: Dadra and Nagar Haveli and Daman and Diu and Lakshadweep
States and Union Territories which have not drafted rules under the Code on Wages, 2019
- States: Meghalaya, Nagaland and West Bengal
- Union Territories: Dadra and Nagar Haveli and Daman and Diu and Lakshadweep
States and Union Territories which have not drafted rules under the Code on Social Security, 2020
- States: Tamil Nadu, Meghalaya, Nagaland and West Bengal
- Union Territories: Delhi, Dadra and Nagar Haveli and Daman and Diu and Lakshadweep
States and Union Territories which have not drafted rules under the Industrial Relations Code, 2020
- States: Meghalaya, Nagaland and West Bengal
- Union Territories: Delhi, Andaman and Nicobar Islands, Dadra and Nagar Haveli and Daman and Diu and Lakshadweep
States and UTs which have not drafted rules under the Occupational Safety, Health and Working Conditions Code, 2020
- States: Sikkim Meghalaya, Nagaland and West Bengal
- Union Territories: Delhi, Andaman and Nicobar Islands Dadra and Nagar Haveli and Daman and Diu and Lakshadweep

B. Status of the States w.r.t issuance of rules under the labour codes

S. No.	State	Rules under Code on Wages, 2019	Rules under Code on Social Security, 2020	Rules under Industrial Relations Code, 2020	Rules under Occupational Safety, Health and Working Conditions Code, 2020
1.	Andhra Pradesh	✔	✔	✔	✔
2.	Arunachal Pradesh	✔	✔	✔	✔
3.	Assam	✔	✔	✔	✔
4.	Bihar	✔	✔	✔	✔
5.	Chhattisgarh	✔	✔	✔	✔
6.	Delhi	✔	Awaited	Awaited	Awaited
7.	Goa	✔	✔	✔	✔
8.	Gujarat	✔	✔	✔	✔
9.	Haryana	✔	✔	✔	✔
10.	Himachal Pradesh	✔	✔	✔	✔
11.	Jammu & Kashmir	✔	✔	✔	✔
12.	Jharkhand	✔	✔	✔	✔
13.	Karnataka	✔	✔	✔	✔
14.	Kerala	✔	✔	✔	✔
15.	Madhya Pradesh	✔	✔	✔	✔
16.	Maharashtra	✔	✔	✔	✔
17.	Manipur	✔	✔	✔	✔
18.	Meghalaya	Awaited	Awaited	Awaited	Awaited
19.	Mizoram	✔	✔	✔	✔
20.	Nagaland	Awaited	Awaited	Awaited	Awaited
21.	Odisha	✔	✔	✔	✔
22.	Punjab	✔	✔	✔	✔
23.	Rajasthan	✔	✔	✔	✔
24.	Sikkim	✔	✔	✔	Awaited
25.	Tamil Nadu	✔	Awaited	✔	✔
26.	Telangana	✔	✔	✔	✔
27.	Tripura	✔	✔	✔	✔
28.	Uttar Pradesh	✔	✔	✔	✔
29.	Uttarakhand	✔	✔	✔	✔
30.	West Bengal	Awaited	Awaited	Awaited	Awaited
31.	Arunachal Pradesh	✔	✔	✔	✔

C. Status of the Union Territories w.r.t issuance of rules under the labour codes (except Delhi and Jammu & Kashmir, which have been mentioned above)

S. No.	Union Territory	Rules under Code on Wages, 2019	Rules under Code on Social Security, 2020	Rules under Industrial Relations Code, 2020	Rules under Occupational Safety, Health and Working Conditions Code, 2020
1.	Andaman & Nicobar Islands	✔	✔	Awaited	Awaited
2.	Chandigarh	✔	✔	✔	✔
3.	Dadra and Nagar Haveli and Daman and Diu	Awaited	Awaited	Awaited	Awaited
4.	Ladakh	✔	✔	✔	✔
5.	Lakshadweep	Awaited	Awaited	Awaited	Awaited
6.	Puducherry	✔	✔	✔	✔

This Prism has been prepared by:

Minu Dwivedi
Partner

Shreya Chowdhury
Of-Counsel

For more details, please contact [email protected]

[1] Available in public domain

Tags JSA, Labour Code, Leading Law Firm, Leading Lawyers, Legal Updates

Disability inclusion in the workplace: the evolving landscape in India

Introduction

For organisations worldwide, building and maintaining an inclusive work environment is a crucial need. Though needless to mention, it is a constant and ever-evolving process.

The concept of ‘disability inclusion’ goes beyond mere compliance with legal requirements. It embodies a commitment to creating a workplace that celebrates the unique abilities and perspectives of differently abled individuals. Unfortunately, representation of persons with disabilities in India Inc has been sparce owing to multiple reasons, including the small pool of candidates with the requisite credentials, the nature of the role, difficulties in mapping talent with available vacancies, employers being unable to provide accessible facilities and a welcoming work environment, and the myth surrounding additional expenditure in the recruitment of persons with disabilities. These issues are compounded by a severe lack of awareness of disability inclusion.

Please click here to read the full article by Preetha Soman and Aishwarya Manjooran, published in IBA.

Tags Disability Inclusion, Employement, Employer, JSA, Leading Law Firm, Leading Lawyers

The 70-hour work week dilemma: Unraveling perspectives

In a recent interaction between Infosys founder Narayana Murthy and former Infosys CFO Mohandas Pai, Narayana Murthy suggested a 70-hour work week for youngsters. The suggestion has sparked wide debate.

Everyone seems to have a view on the suggestion of the 70-hour work week. Some are questioning the test of productivity vs. hours spent. Some are debating extreme work hours vs work-life balance. Some are deliberating on appropriate compensation if a 70-hour work week is adopted instead of a 48-hour work week. Neither is it a law that has come into effect, nor is it any different from a short-lived realization during covid that physical presence in offices is passe and remote working is the way to go.

Please click here to read the full article by Raj Ramachandran, published in ET Edge.

Tags Employement, Employment and HR, JSA, Leading Law Firm, Leading Lawyers

JSA Newsletter | Employment | October Edition 2023

Please click here to download the Newsletter as PDF.

This edition of the JSA Employment Newsletter provides a snapshot on key workplace compliances under the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017 and applicable notified rules (collectively, “HIV and AIDS Act”). We also discuss some recent regulatory updates and judicial precedents across several employment legislations.

Workplace compliances under the HIV and AIDS Act

The HIV and AIDS Act is a central legislation enacted to provide for prevention and control and of the spread of Human Immunodeficiency Virus (“HIV”) and Acquired Immune Deficiency Syndrome (“AIDS”) (collectively, “HIV and AIDS”) and for protection of human rights of persons affected by it. The HIV and AIDS Act prohibits discrimination of ‘protected persons’[1] on any ground[2], including, inter alia, matters of employment such as denial or termination from employment[3], unfair treatment in or in relation to employment or occupation[4], denial or discontinuation of or unfair treatment in, the opportunity to stand for or hold public or private office[5]. The statute also prohibits HIV testing as a pre-requisite for obtaining employment or accessing healthcare services or education or for accessing or using any other service or facility[6] and also prohibits compelled disclosure of HIV-positive status of self or any other person[7].

Employers and establishments[8] are generally required to ensure a conducive working environment devoid of stigma, discrimination and unfair treatment towards protected persons. Set out below are key obligations placed on employers and establishments under the HIV and AIDS Act:

Dismissal from employment: The HIV and AIDS Act prohibits termination from employment or occupation of a protected person who is otherwise qualified, except in cases where termination is supplemented with (a) a written assessment of a competent, qualified and independent healthcare provider that the protected person poses a significant risk of transmission of HIV to other person at the workplace, or is unfit to perform duties of the job; and (b) a written statement of the employer stating nature and extent of administrative or financial hardship for not providing the protected person with reasonable accommodation[9].
Adoption of data protection measures: Every establishment keeping records of HIV-related information of protected persons is required to adopt adequate data protection measures to ensure protection of such information from disclosure. In addition to measures for protection of information disclosure, establishments should implement procedures for accessing information and provision for security systems[10].
Provision for safe working environment: In the interest of ensuring a safe working environment, every establishment engaged in healthcare services with 20 (twenty) or more persons and other establishments with 100 (one hundred) or more persons, where there is a significant risk of occupational exposure to HIV (collectively, “Specified Establishments”), are required to provide prescribed universal precautions, training and post exposure prophylaxis to all persons working in such establishments[11].
Compliance and grievance redressal mechanism: Persons in charge of a Specified Establishment are responsible for ensuring compliance of the HIV and AIDS Act. Further, every Specified Establishment is required to designate a person as it deems fit as a ‘complaints officer’ to dispose complaints relating to violations of the HIV and AIDS Act[12].
Adoption of HIV and AIDS Policy: The Ministry of Health and Family Welfare, Government of India vide notification dated May 13, 2022, notified the ‘HIV and AIDS Policy for Establishments 2022’ (“Model Policy”) under the HIV and AIDS Act, which mandates employers to use this policy framework to implement an HIV and AIDS policy at their respective workplaces (“HIV and AIDs Policy”). Broadly, the Model Policy is aimed at generating awareness on HIV and AIDS amongst employees, prevention of transmission of HIV infection amongst employees, protection of rights of protected persons, ensuring a safe, non-stigmatised and non-discriminatory environment assuring equity and dignity at establishment, and maintaining confidentiality of HIV-related data for protected persons. The Model Policy additionally sets out a robust grievance redressal mechanism to be adopted at Specified Establishments for protected persons.

For more details on the Model Policy, please refer to JSA Prism of July 20, 2022.

Miscellaneous responsibilities: Chapter VII of the Model Policy sets out additional roles and responsibilities of employers and employees, as set out below:
- Employer responsibilities: Other than implementing guiding principles of the Model Policy, employers are required to ensure access by the broader public to the adopted HIV and AIDS Policy, by uploading it on their website, train employees on the basics of HIV and AIDS and related matters, train the designated complaints officer to carry out responsibilities under the policy (if applicable), organise workshops and awareness programs to sensitise employees on the HIV and AIDS Act and the HIV and AIDS Policy, and provide reasonable accommodations where minor adjustments at work would enable protected persons to enjoy equal benefits at work.
- Employee/co-worker responsibilities: Employees have been encouraged to, inter alia, refrain from discriminating against colleagues based on HIV status, maintain confidentiality with respect to HIV-status and information in relation to HIV-positive persons, and advise persons to file complaints with the complaints officer if they witness any form of discrimination against persons on the basis of HIV-status.

In a recent case, CPL Ashish Kumar Chauhan (Retd.) v. Commanding Officer & Ors.[13] the Supreme Court outlined several directives to ensure effective implementation of the HIV and AIDS Act, and directed the Seceretary, Department of Labour of every state to ensure collection of information and data relating to compliance of Specified Establishments with requirements of providing a safe working environment and grievance redressal mechanism under the HIV and AIDS Act within 10 (ten) weeks of the judgement (issued on September 26, 2023) to the Union Labour and Employment Secretary. Additionally, it has directed the Union Labour and Employment Secretary to file an affidavit of compliance with respect to implementation of provisions of the HIV and AIDS Act within 16 (sixteen) weeks of the judgement. In this judgement, the Supreme Court has also reiterated compliances to be observed by establishments under the HIV and AIDS Act. In light of this, going forward, employers can expect an increased scrutiny of compliances by establishments under the HIV and AIDS Act by the Indian government.

Regulatory Updates

Payment of minimum wages, maintenance of separate toilets and pay parity for male and female construction workers in Delhi mandated

The Labour Department, Government of National Capital Territory of Delhi vide its circular dated October 18, 2023, has directed that all employers/contractors/establishments of a construction site under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 and Delhi Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Rules, 2002 are required to (a) ensure payment of minimum wages to construction workers as notified from time to time by the Labour Department, GNCT of Delhi; (b) pay same wages to a female worker as paid to a male worker, as mandated under the Equal Remuneration Act, 1978; and (c) maintain separate toilets for male and female construction workers on a construction site.

Standard Operating Procedure (“SOP”) notified for establishments exempted from the Employees’ Provident Fund Scheme, 1952 (“EPF Scheme”)

Establishments may, by way of government approval, be exempted from the EPF Scheme (“Exempted Establishments”) and allowed to operate a private trust for self-management of provident fund contributions made by employees and employers, subject to compliance with prescribed conditions. The Employees’ Provident Fund Organisation has, vide notification dated October 6, 2023, issued an SOP for management and regulation of provident fund contributions in Exempted Establishments, including the compliance process to be undertaken by Exempted Establishments in managing their own trust and regulations thereof. This SOP can be accessed here.

Enhancement of limit for non-claiming of interest amount payable on delayed payment of contributions Employees’ State Insurance Act, 1948 (“ESI Act”)

The Employees’ State Insurance Corporation, Government of India (“ESI Corporation”) vide notification dated October 10, 2023, has instructed that with effect from November 1, 2023, interest payable due to delayed contributions under the ESI Act for any reason in any contribution period (taken as a whole), where such contributions do not exceed INR 300 (Indian Rupees three hundred), may not be claimed by ESI Corporation field offices. The contribution threshold has been enhanced from the earlier notified amount of INR 100 (Indian Rupees one hundred).

Paid holidays declared on account of state assembly elections in Rajasthan and Telangana

The Government of Rajasthan and Government of Telangana, vide notifications dated October 16, 2023, have declared November 25, 2023, and November 30, 2023, respectively, as paid holidays on account of upcoming state legislative assembly elections.

Aadhar authentication a pre-requisite for availment of benefits under welfare schemes implemented by Delhi Building & Construction Workers Welfare Board

The Government of National Capital Territory of Delhi, Labour Department vide notification dated October 20, 2023 has notified that individuals desirous of availing benefits under welfare schemes implemented by the Delhi Building & Other Construction Workers Welfare Board, Government of National Capital Territory of Delhi (including maternity benefit, financial assistance in case of miscarriage, pension benefit and advance for purchase or construction of house) are required to furnish proof of possession of Aadhar, or undergo Aadhar authentication for availment of such benefits. Those not in possession of Aadhar number are required to apply for Aadhar enrolment, by visiting any Aadhar enrolment centre.

Case Law Ratios

Woman employed on contractual basis entitled to maternity benefits

In Neelam Kumari v. The University of Delhi & Ors. ^[14], the petitioner was denied maternity rights by her employer under the Maternity Benefit Act, 1961 on grounds of being a contract worker, and was terminated without notice. Placing reliance on the Supreme Court’s judgement in Kavita Yadav v. Ministry of Health & Family Welfare Department[15], the Delhi High Court reiterated that female employees employed on a contractual basis are entitled to maternity benefits, even if it exceeds their contract period and noted that “denial of the said benefits is inhumane and in violation of fundamental rights”. Taking note of the illegality of her termination, the court passed an order directing the respondent to reinstate the petitioner along-with payment of maternity benefits.

Non-wilful and non-negligent absence from work, though unsanctioned does not amount to misconduct

In Amrutamma v. Managing Director, APSRTC^[16], the petitioner claimed inclusion of the period between her husband’s (employee) dismissal from service till his death, in computation of attendant benefits. The employee was dismissed from service by his employer on account of his unauthorised absence from service prior to his demise. The Telangana High Court evaluating the petitioner’s claim noted that though the employee’s absence was unauthorised, absence was on account of “severe health setback” suffered by the employee and not “wilful or by negligence”. Based on this, the court held that the employee’s absence would not amount to misconduct warranting punishment of dismissal and upheld the petitioner’s claim.

ESI Act will continue to apply even after number of persons employed falls below specified limit

In Beldih Club Jameshdpur v. State of Jharkhand[17], the Jharkhand High Court while evaluating applicability of ESI Act provisions on the petitioner, relied on judgement of the Supreme Court in ESI Corporation v. Radhika Theatre[18] to reiterate that the “ESI Act shall be applicable irrespective of the number of persons employed or notwithstanding that the number of persons employed at any time falls below the limit specified by or under the ESI Act”. The court noted that “the obligation to pay the contribution commences from the date of the application of the Act to such factory or establishment”.

Employer’s duty to lead evidence during inquiry not absolved upon employee’s failure to respond to charges

In Devendra Prasad v. State of Bihar[19], the petitioner was dismissed by his employer without any evidence being adduced during disciplinary proceedings to find the employee’s guilt. The Patna High Court held that the petitioner-employee’s failure to respond to charges levelled against him did not absolve his employer from “responsibility to lead evidence at the inquiry”. The court also noted that disciplinary inquiries are required to be held in “strict compliance of principles of natural justice; affording ever opportunity to the delinquent employee to controvert his charges, if the delinquent employee does not cooperate, findings can be entered into on the evidence led” and on account of failure thereof in the present case, set aside the disciplinary inquiry and punishment imposed on the petitioner-employee.

This Newsletter has been prepared by:

Gerald Manoharan
Partner

Sonakshi Das
Principal Associate

Sandhya Swaminathan
Associate

For more details, please contact [email protected]

[1] Defined under Section 2(s) of the HIV and AIDS Act as a person who is (a) HIV-positive; or (b) ordinarily living, residing or cohabiting with a person who is HIV-positive person; or (c) ordinarily lived, resided or cohabited with person who was HIV-positive.

[2] Section 3, HIV and AIDS Act.

[3] Section 3(a), HIV and AIDS Act.

[4] Section 3(b), HIV and AIDS Act.

[5] Section 3(h), HIV and AIDS Act.

[6] Section 3(l), HIV and AIDS Act.

[7] Section 8, HIV and AIDS Act.

[8] Defined under Section 2(f) of the HIV and AIDS Act, as a “a body corporate or co-operative society or any organisation or institution or 2 (two) or more persons jointly carrying out a systematic activity for a period of 12 (twelve) months or more at one or more places for consideration or otherwise, for the production, supply or distribution of goods or services”

[9] Section 3(a), HIV and AIDS Act.

[10] Section 11, HIV and AIDS Act.

[11] Section 19, HIV and AIDS Act.

[12] Section 21, HIV and AIDS Act.

[13] CA 7175/2021 (SC)

[14] WP(C) 2959/2023 (Delhi HC)

[15] 2023 SCC OnLine SC 1067 (SC)

[16] 2023 SCC OnLine TS 3023 (Telangana HC)

[17] L.P.A. No. 187/2023 (Jharkhand HC)

[18] CA 312/2023 (SC)

[19] Civil Writ Jurisdiction Case No. 934/206 (Patna HC)

Tags Employment Law, HIV and AIDS Policy, JSA, Leading Law Firm, Leading Lawyers, Legal Updates

JSA Newsletter | Employment | September Edition 2023

Please click here to download the Newsletter as PDF.

This edition of the JSA Employment Newsletter provides a snapshot on the validity of enforcement of key post-termination restrictive covenants in employment contracts in India. We also discuss some recent regulatory updates and judicial precedents across several employment legislations.

Enforceability of post-termination restrictive covenants in employment contracts

In the interest of protecting and maintaining market advantage, client relationships, trade secrets and other sensitive data, it is common for employers in India to have employees sign employment contracts which include several post-termination restrictive covenants, particularly relating to non-compete, non-solicit and confidentiality. These restrictions typically extend for specific durations, and in some instances, also have territorial limitations.

Enforceability of restrictive covenants operative both during and after the employment term has often been challenged from time to time as being a restraint on an individual’s right to exercise lawful profession, trade or business of any kind, and to that extent, void, as discussed under Section 27 of the Indian Contract Act, 1872. Indian courts have generally upheld the validity of non-compete, non-solicit and confidentiality obligations operational during an employment term, unless unconscionable, excessively harsh, unreasonable or one-sided.[1] However, validity of these restrictions in a post-termination context has been examined on a case-to-case basis, factoring several considerations such as protection of proprietary information, reasonability of restrictions imposed and the balance of convenience between contracting parties. Discussed below are some considerations adopted by Indian courts on key post-termination restrictive covenants.

Non-compete obligations: Post-termination non-compete clauses have generally not been held to be enforceable in India based on the rationale that the right to livelihood of an employee must prevail over interests of an employer. For instance, the Bombay High Court in VFS Global Services private Limited v. Mr. Suprit Roy[2] laid down that “to obstruct an employee who has left service from obtaining gainful employment elsewhere is not fair or proper.” Reasonableness of such a clause is generally not relevant and could be unenforceable even if restricted by factors such as geography, duration, etc. Further, the Delhi High Court in Wipro Limited v. Beckman Coulter International S.A.[3] held that “negative covenants between employer and employee contracts pertaining to the period post termination and restricting an employee’s right to seek employment and/or to do business in the same field as the employer would be in restraint of trade and, therefore, a stipulation to this effect in the contract would be void. In other words, no employee can be confronted with the situation where he has to either work for the present employer or be forced to idleness.” In the same vein, the Delhi High Court in Affle holdings Pte Limited v. Saurabh Singh[4] held that a negative covenant in the employment contract, prohibiting carrying on a competing business beyond the tenure of the contract, is void and unenforceable.
Non-solicit obligations: Unlike non-compete clauses, post-termination employee non-solicit clauses have not been expressly held to be unenforceable under Indian law. Notably, in E-merge Tech Global Services Private Limited v. M. R. Vindhyasgar and Ors.,[5] the Madras High Court upheld the validity of a non-solicitation clause operational for a period of 3 (three) years post termination taking into consideration losses suffered by the employer on account of an employee’s breach of non-solicit obligation. Having said that, asserting a non-solicit right often proves demanding as it could be challenging to demonstrate through evidence that an employee was solicited away, as opposed to having them moved away from their own free will.
Confidentiality: In a landmark case, Zee Telefilms Limited v. Sundial Communications Private Limited,[6] the Bombay High Court recognized that maintenance of confidence is in public interest. The court noted that no one should be allowed to profit from the wrongful use of information received in confidence. As such, post-employment confidentiality obligations have generally been held to be enforceable. Even where confidentiality obligations are not specifically spelt out in the terms of employment, employees have an implied duty to protect confidential information even post-employment. Courts have upheld this position in numerous cases. For instance, in the case of Diljeet Titus, Advocate v. Mr. Alfred A. Adebare & Ors.,[7] the Delhi High Court restrained ex-employees of a law-firm from using the confidential information post their employment. The court observed that “the defendants are free to carry on their profession, utilize the skills and information they have mentally retained and they are being restrained only from using the copied material of the plaintiff in which the plaintiff alone has a right”. Similarly, the Calcutta High Court in the case of Hi-Tech Systems & Services Ltd. v. Suprabhat Ray ad Ors.,[8] prevented ex-employees from utilizing the database and trade secrets of their erstwhile employer after employment cessation.

Enforcing post-termination obligations in India can be challenging, primarily due to the tendency of Indian courts to protect an individual’s right to pursue their livelihood. To increase chances of enforcement, employers may ensure that such obligations, if incorporated into an employment contract, are drafted in a manner that takes into consideration contextual reasonability, designed to protect the legitimate business interests of the employer, and strikes the right balance between protecting the employer’s interests and respecting the employee’s rights.

Regulatory Updates

Partial stipend support under National Apprenticeship Promotion Scheme – 2

The Ministry of Skill Development and Entrepreneurship, Government of India, vide notification dated August 25, 2023, issued ‘Guidelines for Implementation of National Apprenticeship Promotion Scheme-2’ (NAPS-2) under the Apprentices Act, 1961, to replace the previous version of the scheme, with effect from August 25, 2023. An establishment participating in the said scheme is eligible to avail from the Government of India, partial stipend support of up to 25% of the stipend paid to apprentices, subject to a maximum of INR 1,500 (Indian Rupees one thousand five hundred) per month. Once an establishment confirms payment of 75% of the stipend to an apprentice, the government’s share of stipend will be transferred to the apprentice’s designated bank account, within 72 (seventy two) working hours. Upper age limit for apprentices for whom such partial stipend support can be availed is 35 (thirty five) years. Under the earlier scheme, the stipend cost-sharing model required establishments to pay the full stipend amount, and later seek reimbursement of 25% of the stipend paid. ‘Large private organisations’ have been encouraged to voluntarily give up such partial stipend support.

Exemption of factories in Punjab from prescribed limitations on working hours

The Department of Labour, Government of Punjab vide notification dated September 20, 2023, has exempted factories in Punjab from compliance with Section 51 (weekly hours), Section 52 (weekly holidays), 54 (daily hours), and Section 56 (spread over) of the Factories Act, 1948 (“Factories Act”), subject to conditions, including, inter alia, that (a) daily working hours should not exceed 12 (twelve) hours; (b) weekly working hours, including overtime should not exceed 60 (sixty) hours; (c) the spread over time, inclusive of intervals for rest, should not exceed 13 (thirteen) hours in any 1 (one) day; (d) no worker should be allowed to work overtime for more than 7 (seven) days at a stretch and the total number of hours overtime work in any quarter should not exceed 115 (one hundred fifteen) hours; (e) minimum wages for overtime work will be paid to the workers in accordance with Section 59 of the Factories Act as well as the wage fixed for overtime under the Minimum Wages Act, 1948, and the Punjab Minimum Wages Rules, 1950; and (f) a proper logbook/register should be maintained of all overtime undertaken by the workers and such logbook/register will be open to inspection by the officers of the labour department.

Maharashtra Legislative Assembly proposes new Bill on adding menstrual leave to the Maharashtra Shops and Establishment (Regulation of Employment and Conditions of Service) Act, 2017

The Maharashtra Legislative Assembly introduced the Maharashtra Shops and Establishment (Regulation of Employment and Conditions of Service) (Amendment) Bill, 2023 which proposes entitlement for female employees working in an establishment in Maharashtra to paid leave during their period of menstruation. In the absence of clarity, determination of the manner in which such menstrual leave is to be recognized and granted, is awaited.

Case Law Ratios

Employee on probation can be dismissed without disciplinary proceedings

In State of Punjab v. Jaswant Singh,[9] the Supreme Court examined validity of dismissal order passed against an employee on probation. In this case, the employee respondent contended that his dismissal order was in violation of principles of natural justice as it was passed without holding fact-finding inquiry and proceedings. The court noting that the termination order of the probationary employee was not on any “serious allegation or act of misconduct” and was passed on account of unsuitability for job position, held that such termination was not punitive in nature, and was termination simpliciter. Upholding the validity thereof, the court relied on earlier judicial precedents in the matter to hold that the requirement of holding fact-finding inquiry, departmental proceedings and opportunity for hearing, would not be triggered in cases of termination simpliciter and also reiterated that if an employee is found unsuitable during the probationary period, an employer retains the right to terminate their service without the need for a punitive inquiry.

Suspension order passed against employee cannot be extended endlessly

In The Director General of Police v. D Jayakumar,[10] the Madras High Court noted that a suspension order passed merely on the basis of pendency of criminal cases against an employee, without initiation of disciplinary proceedings, cannot be extended endlessly without reason. While the employer argued that it may not be conducive to revoke the suspension on account of the criminal case pending against the employee, the court rejecting this argument, noted that the employer is required to review the necessity for extension of suspension in every quarter of a year.

Deference of promotion on account of prolonged pendency of disciplinary proceedings invalid

In Dhaemaseety Shiva Kumar vs. Principal Secretary, Municipal Admin & Anr.,[11] considering that the employer had failed to conclude disciplinary proceedings against the employee for a period of almost 14 (fourteen) years, the Telangana High Court noted that the employee should not be denied promotion on grounds of pending disciplinary proceedings. The court placed reliance on the judgement in K. Sai Ram Vs. State of Andhra Pradesh,[12] to note that “a person cannot be penalized by keeping disciplinary proceedings pending for unduly long periods and by not considering his case for promotion on purported ground of pendency of disciplinary proceedings.”

Industrial Employment (Standing Orders) Act, 1946 supersedes contractual arrangement between employer and workmen

In Bharatiya Kamgar Karmachari Mahasangh v. Jet Airways Limited,[13] the Supreme Court reiterated the position that employers and workmen cannot enter into a contract which would override a statutory prescription in accordance with the certified standing orders issued under the Industrial Employment (Standing Orders) Act, 1946 (“IESO Act”). The Supreme Court ruled that in industrial establishments, standing orders exclusively govern workmen’s service conditions, and stipulates a contractual framework between the parties. It held that “the standing order implies a contract between the employer and the workmen. Therefore, the employer and workmen cannot enter into a contract overriding the statutory contract embodied in the certified standing orders.” The court emphasized that the IESO Act, being a beneficial legislation, provides that any agreement/contract/settlement wherein rights of workmen are waived off would not supersede the certified standing orders.

Order for dismissal from services on account of unauthorised absence to be passed after examination of relevant factors including gravity of misconduct, past conduct

In Union of India v. Yashpal,[14] the Allahabad High Court examining a challenge to a termination order passed by an employer on account of the employee’s prolonged absence from work, noted that “In the context of absence from duty without leave, all factors should have been examined by the disciplinary authority before award of major punishment of dismissal could be made”. The court noted that, inter alia, gravity of misconduct, past conduct, nature of duties, position in organization, previous penalty, if any and requirement of discipline to be enforced were relevant to be considered by the disciplinary authority before awarding a major punishment such as dismissal from service. In the present case, the court set aside the termination order observing that the disciplinary authority (employer) had failed to take into consideration material aspects of the matter while passing the termination order, including past records of the employee.

This Newsletter has been prepared by:

Gerald Manoharan
Partner

Sonakshi Das
Principal Associate

Sandhya Swaminathan
Associate

For more details, please contact [email protected]

[1] In a landmark case, Niranjan Shankar Golikari v. The Century Spinning and Mfg. Co (1967 AIR 1098), the Supreme Court noted, “Negative covenants operative during the period of the contract of employment when the employee is bound to serve his employer exclusively are generally not regarded as restraint of trade and therefore do not fall under section 27 of the Contract Act.”.

[2] 2008 (2) BomCR 446 (Bombay HC)

[3] 131 (2006) DLT 681 (Delhi HC)

[4] 2015 SCC OnLine Del 6765 (Delhi HC)

[5] Civil Suit No. 258 of 2020 (Madras HC)

[6] 2003 (5) BomCR 404 (Bombay HC)

[7] 130 (2006) DLT 330 (Delhi HC)

[8] AIR 2015 Cal 261 (Calcutta HC)

[9] CA 11871/2014 (SC)

[10] WA 1657/2019 (Madras HC)

[11] WP 38953 of 2017 (Telangana HC)

[12] 2017(6) ALD 623 (Telangana HC)

[13] CA No. 4404 of 2023 (Madras HC)

[14] WA 15295/2023 (Allahabad HC)

Tags Employment Law, JSA, Leading Law Firm, Leading Lawyers, Legal Updates, Newsletter

Arbitrability of employment disputes in India

Arbitration has often been the preferred method of dispute resolution in most commercial contracts in India, including employment contracts. Indian law places a restriction on arbitrating ‘certain disputes’ on account of public policy considerations. Through this article, we evaluate and explore complexities surrounding arbitrability of disputes arising out of employment contracts in India through various judicial precedents, with an aim to decode the scope of employment disputes that can be adjudicated through arbitration.

In recent years, arbitration has often been the preferred method of dispute resolution in most commercial contracts in India, including employment contracts. Factors including privacy, flexibility, cost and time effectiveness of arbitration have been some of the key driving contributors to such growing preference of arbitration over traditional court-driven and other dispute resolution methods. That said, however, Indian law does place a restriction on arbitrating ‘certain disputes’ on account of public policy considerations. Through this article, we evaluate and explore the complexities surrounding arbitrability of disputes arising out of employment contracts in India through various judicial precedents, with an aim to decode the scope of employment disputes that can be adjudicated through arbitration.

Please click here to read the full article by Gerald Manoharan, Sonakshi Das, and Sandhya Swaminathan, published in Lexology

Tags Arbitration, Dispute Resolution, Employement, JSA, Leading Law Firm, Leading Lawyers

JSA Newsletter | Employment | August Edition 2023

Please click here to download the Newsletter as PDF.

This edition of the JSA Employment Newsletter provides an overview of key compliances on handling employee personal data and corresponding obligations under the newly enacted Digital Personal Data Protection Act, 2023 (“DPDP Act”). We also discuss some recent regulatory updates and judicial precedents across several employment legislations.

Processing of employee personal data under DPDP Act

The DPDP Act enacted on August 11, 2023 is a new data protection legislation that regulates the processing of digital personal data (personal data in digital form). Applicability of the DPDP Act extends to personal data processed: (a) within the territory of India, where such personal data is collected in digital form; and non-digital form, which is subsequently digitised; and (b) outside the territory of India, if such processing is in connection with any activity related to offering of goods or services to ‘data principals’ within the territory of India.[1] ‘Data Principal’ under the DPDP Act means an individual to whom the personal data relates.

Provisions of DPDP Act will come into force on date(s) notified by the Central Government. Relevant rules under DPDP Act are also yet to be formulated and notified. Employers, as processors of employee personal data, are likely to be classified as ‘Data Fiduciaries’ under the DPDP Act and therefore, it becomes crucial for them to be prepared in advance for adoption of systemic changes in data processing mechanisms as required for compliance with the DPDP Act, when enforced. Employees are likely to be classified as Data Principals under the DPDP Act.

Notice and consent requirements

DPDP Act broadly sets out the framework for consent-based processing of personal data; and non-consent based processing of personal data for certain ‘legitimate uses’, both for lawful purposes.[2] Among other prescribed ‘legitimate uses’ is processing carried out “for the purposes of employment or those related to safeguarding the employer from loss or liability, such as prevention of corporate espionage, maintenance of confidentiality of trade secrets, intellectual property, classified information or provision of any service or benefit sought by a Data Principal who is an employee.”[3] As such, employers may not be required to obtain express consent to process personal data of employees, for, inter alia, purposes of employment. DPDP Act presently does not qualify or define the terms ‘for the purposes of employment’.

Processing of employee personal data for lawful purposes other than ‘legitimate uses’ including employment purposes, however, will require employers to obtain from employees or Data Principals, consent that is (a) free, specific, informed, unconditional, and unambiguous with a clear affirmative action; and (b) signifying agreement to processing of personal data for specified purposes.[4] For example, employers seeking employee personal data for provision of medical insurance should be cautious that employee consent for processing of personal data collected for this purpose would be valid till the extent the consent relates to processing of personal data for making available medical insurance coverage and related services, and only if consent is procured in line with requirements specified above. A request for such consent, is required to be accompanied or preceded by a notice (format of which is yet to be prescribed under DPDP Act) informing the Data Principal of, inter alia, personal data to be processed, and the purpose for such processing, procedure to revoke consent, raise grievances, and file complaints with the Data Protection Board of India.[5] The notice and request for consent are required to be presented in clear and plain language, providing the Data Principal with an option to access such notice and request for consent in English language or any other language as specified in the Eighth Schedule of the Indian Constitution, i.e., in a total of 22 (twenty two) languages.[6] Further, with respect to personal data of persons with disability, employers will have to obtain verifiable consent of the parent or legal guardian of such person with disability in the manner as yet to be prescribed under DPDP Act.[7]

For consents received prior to the enforcement of DPDP Act, employers will have to notify employees of the processing of personal data based on past consent as soon as reasonably practicable, in the prescribed manner; and can continue processing such personal data until consent is revoked.[8]

Revocation of consent

DPDP Act provides Data Principal with a right to withdraw consent earlier given, and requires Data Fiduciaries to cease processing the personal data within a reasonable time upon withdrawal of consent, unless such processing is required or authorised under DPDP Act or any other law.[9]

Key obligations of Data Fiduciaries

DPDP Act requires Data Fiduciaries to, inter alia, ensure:[10] (a) compliance with DPDP Act, and compliance by Data Processors (i.e., persons processing personal data on behalf of Data Fiduciaries) with provisions of DPDP Act; (b) completeness, accuracy and consistency of personal data that they process, if it is to be used to make a decision that affects a Data Principal; or is to be disclosed to another Data Fiduciary; (c) implementation of appropriate technical and organisational measures for compliance with DPDP Act, and adoption of reasonable security measures to prevent personal data breaches; (d) notification to the Data Protection Board and each affected Data Principal of personal data breach; (e) erasure of personal data upon withdrawal of consent by a Data Principal; or specified purpose for collection no longer being served by its retention; and (f) establishment of effective grievance redressal mechanism to redress Data Principal grievances.

Further, Data Fiduciaries can engage Data Processors to process personal data on their behalf for any activity related to offering goods or services to Data Principals, only under a valid contract.[11] As such, employers engaging or intending to engage third party payroll service providers and other service providers for processing employee personal data, can now do so, or continue to do so only under valid contracts. As liability linked with processing of personal data by third-party data processors or service providers is now on employers appointing such parties, it becomes essential for underlying contracts to, inter alia, provide adequate safeguards to ensure such third-party data processor or service provider’s compliance with DPDP Act.

Noteworthy to see that a Data Fiduciary can be identified by the Central Government as a ‘Significant Data Fiduciary’, based on evaluation of factors including volume and sensitivity of personal data processed and risks to a Data Principal’s rights. Significant Data Fiduciaries are subject to additional obligations and compliances under DPDP Act, including, inter alia, (a) undertaking periodic data protection impact assessment and audits; and (b) appointment of data protection officer based in India, to act as the point of contact for grievance redressal mechanism.[12]

Presently, DPDP Act is silent on implementation timelines for ensuring the above-mentioned compliance requirements.

Rights of Data Principals

Data Principals have the right to, inter alia:[13](a) seek access to information, including a summary of their personal data being processed, processing activities undertaken and information relating to Data Fiduciaries and Data Processors with whom their personal data has been shared; (b) request the Data Fiduciary to correct, complete, update personal data; and to erase personal data in the prescribed manner; (c) grievance redressal; and (d) nominate an individual to exercise rights under DPDP Act in the event of their death or incapacity. Employers are likely to establish adequate internal mechanisms for personal data retrieval, updating, erasure and grievance redressal to facilitate such requests of employees.

Penalties

Prescribed penalties for non-compliance with DPDP Act, including failure to take reasonable security safeguards to prevent personal data breach may range up to INR 2,50,00,00,000 (Indian Rupees two hundred and fifty crore).[14]

Being prepared

While clarity is awaited on the implementation and enforcement of DPDP Act, pending notification of rules and establishment of the Data Protection Board, employers may consider revisiting and reviewing existing data protection systems and documentation, in order to transition seamlessly to the new regime on its enforcement. For employers, it may particularly be relevant to classify and evaluate purposes for which employee personal data would typically be collected, and consequently, ensure deployment of adequate notice and consent mechanisms for employee personal data processed for non-employment purposes.

Regulatory Updates

Notification of Punjab Building and Other Construction Workers (Regulation of Employment and Conditions of Service) (Amendment) Rules, 2023

The Department of Labour, Government of Punjab, vide notification dated August 7, 2023 has notified the Punjab Building and Other Construction Workers (Regulation of Employment and Conditions of Service) (Amendment) Rules, 2023, to amend certain rules of the Punjab Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Rules, 2008 with effect from August 11, 2023. Key highlights of the amendment include:

Certification for individuals applying for membership to the welfare fund can now be issued by “any person or authority or officer, who is authorised by the Board”, in addition to the individual’s employer or contractor. The prescribed format for such certificate, i.e., Form XXVII in the Rules has also been amended accordingly.
Contributions to the welfare fund are required to be remitted by members of the welfare fund in advance for a period of 1 (one) year, at the time of application for registration or renewal of registration in prescribed banks or in cash receipts, in the newly notified format of Form XXXIV appended to the Rules. Earlier, contributions to the welfare fund were required to be remitted in advance once in 3 (three) months in prescribed banks, and there was no provision to make such remittance in cash receipts.

Notification of accessibility standards for health care sector under the Rights of Persons with Disabilities Rules, 2017

The Ministry of Social Justice and Empowerment, Department of Empowerment of Persons with Disabilities, Government of India vide notification dated August 9, 2023 amended the Rights of Persons with Disabilities Rules, 2017, notifying the accessibility standards for the healthcare sector, titled ‘Accessibility Standards for Healthcare’, published by the Ministry of Health and Family Welfare vide notification dated May 4, 2023, which can be accessed here.

Notification of Factories (Karnataka Amendment) Act, 2023

The Government of Karnataka, vide notification dated August 7, 2023, has notified the Factories (Karnataka Amendment) Act, 2023, to amend provisions of the Factories Act, 1948 in its application to Karnataka. Key highlights of the amendment include:

State government may, by way of notification in the official gazette, now extend (a) daily work hours to up to 12 (twelve) hours inclusive of intervals of rest, subject to a maximum of 48 (forty eight) hours; (b) total number of hours of work without intervals up to 6 (six) hours; (c) spread-over up to 12 (twelve) hours inclusive of intervals of rest; in respect of any group or class or description of factories in Karnataka, on conditions as it may deem expedient.
Workers working in any factory (a) for more than 9 (nine) hours a day, or 48 (forty eight) hours in any week, in a 6 (six) day working week; (b) for more than 10 (ten) hours in a day or 48 (forty eight) hours in any week, in a 5 (five) day working week; (c) for more than 11.5 (eleven point five) hours in a day, in a 4 (four) day working week; or (d) on paid holidays, are, in respect of overtime work, entitled to payment of wages at the rate twice their ordinary rate of wages.
State government, or the Chief Inspector may, by written order exempt any or all adult workers in any factory or group or class or description of factories from provisions under the Factories Act, 1947 relating to working hours, subject to ensuring, inter alia, that (a) total hours of overtime work in any quarter do not exceed 140 (one hundred and forty) hours (as against the earlier prescribed 75 (seventy five) hours); and (b) any worker will be required to work overtime “subject to written consent of such worker for such work”.
Women employees may now be allowed to work in a factory between 7:00 PM to 6:00 AM, subject to written consent being obtained from women employees interested to work in night shifts, and other conditions, including inter alia, (a) employer and other responsible persons at the work places preventing or deterring commission of acts of sexual harassment, and provision of procedures for resolution, statement or prosecution of acts of sexual harassment by taking necessary steps; and express prohibition of sexual harassment in any form, including unwelcome physic, verbal or non-verbal contact of sexual nature; (b) provision of appropriate working conditions with respect to work, leisure, health and hygiene to ensure an environment free from hostility against women employees; (c) employer’s maintenance of complaint redressal mechanism at the factory and ensuring time-bound remedial of complaints; provision of complaints committee, special counsellor and other support services including maintenance of confidentiality; (d) allowing women employees to raise issues of sexual harassment to workers at workers meetings and other appropriate forums; (e) provision of proper lighting and CCTV coverage, both inside the factory and places surrounding the factory where women may move out of necessity in the course of work, with CCTV coverage being stored for not less than 45 (forty five) days; (f) employment of women employees in batches of not less than 10 (ten), and having not less than 1/3rd of the strength of supervisory staff as women; (g) provision of sufficient security during night shift at entry and exit points; rest rooms to accommodate women employee arriving in advance and leaving after working hours; (h) provision of transportation facilities from residence and back for women employees working in night shifts, security guards, including female security guards, and equipping transportation vehicles with CCTV camera and GPS; vetting of bio-data of drivers by establishment/service provider (for outsourced drivers); selection of transportation routes in a manner that women employees are not picked up first and dropped last; (i) provision of not less than 12 (twelve) consecutive hours of rest or gap between last shift and night shift; and (j) non-disclosure of mobile phone numbers, e-mail ids and address of women employees to unauthorised persons.

Establishments in Meghalaya permitted to remain open 365 (three hundred and sixty five) days a year

In continuation of its earlier notification dated March 10, 2004, the Government of Meghalaya, Labour Department, has vide notification dated July 19, 2023, permitted all establishments under the Meghalaya Shops and Establishments Act, 2003 to remain open on all 365 (three hundred and sixty five) days of the year for a further period of 1 (one) year, i.e., till December 31 2023, subject to conditions stated therein. Some key conditions include, inter alia, (a) provision of 1 (one) holiday in a week to every employee working in the establishment, without deductions from wages; (b) advance display of list of holidays on notice board for each month; (c) adherence to prescribed working hour limits of 9 (nine) hours per day and 48 (forty eight) hours per week; provision of rest period of 1 (one) hour after every 5 (five) hours of continuous work, with total spread over of work hours not exceeding 11 (eleven) hours a day (for hours worked in excess of these stipulations, applicable overtime provisions apply); (d) provision of adequate safety and security arrangements at establishments remaining open after 10:00 PM; (e) provision of separate locker, security and rest rooms for women employees; (f) consent letter to be taken from employees and kept as record at establishment; written consent of female employees to be taken for work after 7:00 PM; (g) provision of adequate safety and security arrangements for women employees during working hours, and ensuring female employees safely reach home after their work is over; and (h) compliance with provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Prevention of the Child and Adolescent Labour (Prohibition and Regulation) Act, 1986.

Case Law Ratios

Right to paternity leave stems from fundamental right to life of pre-natal/post-natal child

In B. Saravanan v. The Deputy Inspector General of Police, Tirunelveli Region, Tirunelveli,[15] the Madras High Court upholding the petitioner’s right to seek paternity leave, observed that a child’s fundamental right to protection of life under the Indian Constitution, culminates in the “fundamental human right of biological parents/adopting parents seeking maternity/paternity/paternal leave”. The court highlighted the importance of providing maternity/ paternity/ paternal leave to biological and adoptive parents in ensuring proper pre-natal and post-natal care of the child, and consequently protecting the child’s fundamental right to life. The court noted that “the role of both the mother and father during the pre-natal and post-natal care days gains importance from the perspective of the child’s right to survive” and that it is “high time for the policy makers to recognise right to paternity leave/paternal leave to the biological/adoptive parents, as the basic human right of the respective pre-natal/post-natal child”.

Period of entitlement to maternity benefit not co-terminus with employment term

In Dr. Kavita Yadav v. Secy, Ministry of Health and Family Welfare,[16] the Supreme Court upheld a contractual employee’s entitlement to maternity benefit beyond the term of her employment contract and noted that entitlement to maternity benefit is not co-terminus with the term of employment. The court observing that the Maternity Benefit Act, 1961, contemplates entitlement even for an employee who is dismissed/discharged during her pregnancy, who, if but for such discharge would have been entitled to maternity benefits, noted that “continuation of maternity benefits is in-built in the statute itself, where the benefits would survive and continue despite the cessation of employment”.

Women entitled to maternity benefits irrespective of nature of employment, whether contractual or otherwise

In Anwesha Deb v. Delhi State Legal Services Authority,[17] the Delhi High Court noting that the Maternity Benefit Act, 1961 “certainly does not discriminate on the basis of nature of employment of the beneficiaries”, upheld the entitlement of a woman employee in contractual employment to maternity benefits at par with regular or permanent employees. The court observed that both, the choice to carry or not carry a child is a constitutionally guaranteed fundamental right and highlighted the importance providing conducive work environments, “to ensure that a woman who chooses to have both, a career and motherhood is not forced to make an ‘either-or’ decision”.

Provisions of Industrial Disputes Act, 1947 inapplicable to apprentices

In Indian Oil Corporation Limited v. Shri Nagendra Singh Shekawat,[18] the Rajasthan High Court dismissing the challenge instituted by respondents against termination of their apprenticeship contracts under the IDA, upheld the inapplicability of provisions of Industrial Disputes Act, 1947 (“IDA”) to apprentices engaged under the Apprentices Act, 1961 (“AA”). The court noted that AA being a special legislation, would prevail over provisions of the IDA. The court also cited Section 18 of the AA, to highlight that an apprentice under the AA “shall be a trainee and not a worker”, and that “provisions of any law with respect to labour shall not be applicable”.

Employees’ ‘right to vent’; and WhatsApp ‘group privacy’ recognised

In A. Lakshminarayanan v. The Assistant General Manager – HRM,[19] the Madras High Court recognising employees’ right to privacy and ‘group privacy’, noted that posting of objectionable messages mocking administration/higher authorities in a private WhatsApp group with restricted access, cannot be construed as disciplinary infraction by an employee so long as such messages do not fall foul of the law. Coining the term ‘right to vent’ of employees, the court noted the interest of organisations in complaints of employees finding “expression and ventilation”. Further, it noted that if in the process of such expression “the image of the organisation is affected, then the management can step in but not until then”.

This Newsletter has been prepared by:

Gerald Manoharan
Partner

Sonakshi Das
Principal Associate

Sandhya Swaminathan
Associate

For more details, please contact [email protected]

[1] Section 3, DPDP Act.

[2] Section 4, DPDP Act.

[3] Section 7(i), DPDP Act.

[4] Section 6, DPDP Act.

[5] Section 5(1), DPDP Act.

[6] Section 6(3), DPDP Act.

[7] Section 9(1), DPDP Act.

[8] Section 5(2), DPDP Act.

[9] Section 6(4), DPDP Act.

[10] Section 8, DPDP Act.

[11] Section 8(2), DPDP Act.

[12] Section 10, DPDP Act.

[13] Section 11, Section 12, Section 13 and Section 14, DPDP Act.

[14] Section 33(1), DPDP Act.

[15] WP (MD) 19561/2023

[16] CA 5010/2023 (SC)

[17] WP (C) 11016/2017 (Delhi HC)

[18] WP (C) 8182/2005 (Rajasthan HC)

[19] WP (MD) 9754/2023 (Madras HC)

Tags Employment, Employment Law, JSA, Leading Law Firm, Leading Lawyers, Legal Updates

San Quirico acquires Minerva Hub

JSA advised San Quirico S.p.A., the Garrone-Mondini family office, on the India leg of its acquisition of 75% of Minerva Hub, a leading Italian group in the luxury accessories finishes and materials sector with a portfolio of over 1,000 clients including 20 of the top luxury brands. Minerva Hub is the holding company of two Indian subsidiaries, namely, Jato India Private Limited and Jato Garments Private Limited.

Our Transaction Team Partner – Rohitashwa Prasad and Associate – Adil Khan

Our due diligence team comprised partners – Minu Dwivedi and Anup Kulkarni, associate – Sathyanarayanan V.S, and company secretary – Alisha Chawla.

Tags Acquisition, Employement, JSA, Leading Law Firm, Leading Lawyers

Employee Incentive Schemes | Zain Pandit

In this edition of JSA Live, our partner Zain Pandit shares the insight on employment incentive schemes.

Zain says, incentive schemes like PIPs, Phantom Stocks, and SARS can reshape employee motivation and rewards in India. While traditional shares might suit certain cases, these tools can be ineffective for motivating founders or investors. These schemes offer ownership feelings without actual ownership, align interests, and reward performance, thereby fostering business success and a dynamic environment.

Tags Employee Benefits, JSA, Leading Law Firm, Leading Lawyers

JSA Newsletter | Employment Law | July Edition 2023

Please click here to download the Newsletter as PDF.

This edition of the JSA Employment Newsletter discusses the ‘useless formality’ theory as an exception to due process in conducting disciplinary proceedings. We also discuss some recent regulatory updates and judicial precedents across several employment legislations.

Exception to due process in conducting disciplinary proceedings: ‘useless formality’ theory

In the context of workforce discipline and sanctions, several judicial precedents have established that disciplinary proceedings should be conducted in accordance with the principles of natural justice. As envisioned under Article 14 and Article 21 of the Constitution of India (“Indian Constitution”) and upheld by Indian courts from time to time, the principles of natural justice propound, inter alia, that every individual must be granted a reasonable opportunity to be heard before any disciplinary sanction is levied against them. Consequently, decision making authorities are required to adopt a fair and just process prior to issuing disciplinary sanctions against an employee, which includes providing the accused with an opportunity to be heard and to defend themselves. Due process is aimed at ensuring fairness, transparency and integrity while handling complaints of alleged misconduct, in the interest of preventing consequences such as unfair penalization, discrimination and arbitrariness. In certain instances, however, an accused may admit guilt to the alleged misconduct, leaving disciplinary proceedings seemingly redundant and merely a formality. In other words, when there is a voluntary admission of guilt and the outcome of a proceeding is almost certain, the necessity to adopt due process throughout such proceedings becomes what is commonly known as a ’useless formality’.

Indian courts have generally upheld the ‘useless formality’ theory as an exception to the principles of natural justice, applicable only in exceptional cases of admitted and undisputed facts[1]. Discussing the ‘useless formality’ theory, the Supreme Court in M C Mehta v. Union of India[2] held that “if on the admitted or indisputable factual position, only one conclusion is possible and permissible, the court need not issue a writ merely because there is violation of principles of natural justice.” In a similar vein, the Supreme Court in M/s. Escorts Farms (Ramgarh) Ltd. v. Commissioner, Kumaon Division, Nainital, U.P. & Ors.[3], observed that “rules of natural justice are to be followed for doing substantial justice and not for completing a mere ritual of hearing without possibility of any change in the decision of the case on merits”. As such, the ‘useless formality’ theory revolves around the idea that in cases where there are admitted or undisputed facts, procedures and formalities may lose their relevance or serve no meaningful purpose, since the outcome may be no different in the absence thereof.

In the context of disciplinary proceedings for misconduct, Indian courts have consistently held that inquiry may not be necessary where an accused admits their guilt. In Central Bank of India v. Karunamoy Banerjee[4], the Supreme Court noted that “if the workman admits his guilt, to insist upon the management to let in evidence about the allegations, will, in our opinion, only be an empty formality”. Similarly, in Instrumentation Ltd. v. P.O. Labour Court[5], the court held that “where the facts are admitted and those are sufficient to make out a case of misconduct, etc., any further departmental inquiry would have been an empty formality”. In the recent case of Kuldeep Singh v. Shiromani Gurudwara Parbhandhak Committee[6], the court noted that “once the delinquent employee admits his guilt, he cannot be allowed to turn back and plead violation of principles of natural justice”.

Having said the above, courts have time and again cautioned that the ‘useless formality’ theory “is an exception and must not be readily resorted in all cases”[7]. The Supreme Court in Jagadish Prasad Saxena v. State of Madhya Pradesh[8] noted that in the absence of clear and unambiguous admission of guilt by an employee, failure to hold formal inquiry would constitute a serious infirmity in the order of punishment passed by the decision making authority. Employers must also be mindful of instances where there is an admission of guilt, and subsequent withdrawal of such admission. In such circumstances, it may become important to establish relevant facts of misconduct by way of inquiry conducted in accordance with due process, to avoid potential challenges. It also becomes imperative for employers to tread with caution while handling complaints of alleged misconduct on a case to case basis, striking a balance between efficiency and fairness.

Regulatory Updates

Notification of sector specific accessibility standards under the Rights of Persons with Disabilities Rules, 2017

The Ministry of Social Justice and Empowerment, Department of Empowerment of Persons with Disabilities, Government of India vide notifications dated May 10, 2023, July 13, 2023, July 18, 2023 and July 21, 2023, amended the Rights of Persons with Disabilities Rules, 2017, notifying the below sector specific accessibility standards to be complied with, by (all) establishments:

For sports sector: ‘Guidelines on Accessible Sports Complex and Residential Facilities for Sports Persons with Disabilities’, published by the Ministry of Youth Affairs and Sports (Department of Sports), Government of India vide notification dated October 13, 2022; can be accessed here.
For culture sector (monuments/sites, museums, libraries): ‘Culture Sector Specific Harmonised Accessibility Standards/guidelines’, published by the Ministry of Culture, Government of India vide notification dated January 18, 2023; can be accessed here.
For information and communication technology-based products and services: ‘Indian standards IS 17802 (Part 1), 2021’ and ‘IS 17802 (Part 2), 2022’, published by the Bureau of Indian Standards vide notifications dated December 24, 2021 and May 4, 2022, respectively; and can be accessed through their website here.
For civil aviation sector: ‘Accessibility Standards and Guidelines for Civil Aviation’, published by the Ministry of Civil Aviation, Government of India vide notification dated January 9, 2023; can be accessed here.

Establishments in Punjab permitted to remain open on all 365 (three hundred sixty five) days of the year

In continuation of its earlier notification dated June 8, 2022[9], the Department of Labour, Government of Punjab, vide notification dated June 8, 2023 extended permission to all establishments under the Punjab Shops and Commercial Establishments Act, 1958 to remain open on all days of the year, for a further period of 1 (one) year, i.e., up to May 31, 2024, subject to certain conditions. Some key conditions include: (a) a minimum of 1 (one) day weekly holiday to all employees; (b) display in advance of holidays timetable for each month in the establishment; (c) compliance with provisions on intervals of rest (1 (one) hour of rest after every 5 (five) hours of continuous work), limits on working hours (9 (nine) hours in a day, 48 (forty eight) hours in a week), and spread over of total hours (11 (eleven) hours in a day); (d) provision of adequate security arrangements for employees and visitors for establishments remaining open after 10:00 PM; and (e) compliance with other measures as prescribed to ensure the safety of women working in night shifts.

Exemption of certain classes of persons from payment of tax under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976

The Government of Karnataka, vide notification dated July 13, 2023 exempted certain classes of persons from payment of tax under the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976, with effect from the date of publication of the said notification in the state gazette, i.e., July 13, 2023.

Exempted categories of persons include: (a) owners of transport vehicles (other than autorickshaws) not exceeding 2 (two) in number, run on their own or through others under permits granted; (b) holders of permits of 2 (two) or less taxies or 3 (three) wheeler goods/passenger vehicles; (c) persons who are physically challenged having total permanent disability of not less than 40% of both upper and lower extremity deformities subject to production of a certificate obtained from the head of orthopaedic department of government civil hospital in the state; (d) individual person having single child and who has undergone sterilisation operation, subject to production of a certificate from the district surgeon, government of civil hospital, for having undergone such surgery; (e) ex-servicemen other than those salary or wage earners whose salary or wage or both, as the case may be, for a month is INR 25,000 (Indian Rupees twenty five thousand) and above; (f) persons who are blind and deaf other than those salary or wage earners whose salary or wage or both, as the case may be, for a month is INR 25,000 (Indian Rupees twenty five thousand only) and above; (g) foreign technicians employed in the state, provided their appointments are approved by the government for the purpose of exemptions from payment of income tax, subject to a maximum of 2 (two) years from the date of their joining duty; (h) charitable and philanthropic hospitals; or nursing homes, situated in places below the taluk level in all districts of the state, except Bengaluru, Ramanagara, and Bengaluru Rural districts; (i) directors of companies registered in Karnataka and nominated by financing agencies owned or controlled by the state government or by other statutory bodies; (j) combatant and civilian non-combatant members of the armed forces governed under prescribed legislations; (k) institutes teaching Kannada or English shorthand or typewriting; (l) persons running educational institutions, tutorial colleges, excluding professional and technical educational institutions; (m) central para-military forces (CPMF) personnel; and (n) persons running educational institutions in respect of their branches teaching classes up to twelfth standard or pre-university education.

Modification in requirement to display notice of shift schedule and weekly holidays of workers in shops and establishments in Maharashtra

The Industries, Energy and Labour Department, Government of Maharashtra, vide notification dated June 27, 2023, amended the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Rules, 2018, to allow establishments to display notice of shift schedule and weekly holidays of workers engaged in shifts on either the website of the establishment, or at a conspicuous place of the premises of the establishment on the notice board. This in modification of the erstwhile requirement display of such schedule on both the website and notice board of the establishment.

Factories in Andhra Pradesh to comply with prescribed safety measures for work in “confined spaces”

The Labour Factories Boilers & Insurance Medical Services Department, Government of Andhra Pradesh, vide notification dated July 7, 2023 issued detailed guidelines/instructions applicable to factories in Andhra Pradesh to prescribe safety measures to be adopted by occupiers and managers of factories with respect to workers required to work in “confined spaces”. Some key compliances for factories under the said guidelines include, inter alia, (a) identification of confined spaces, and nature of hazards that are encountered in such spaces, both normally and abnormally in the prescribed manner; (b) adoption of “work permit system” in the prescribed manner for entry of workers into confined spaces; and (c) conducting hazard assessment of confined spaces and making necessary forced ventilation and other arrangements as detailed under the guidelines to render confined spaces safe for work.

Aadhar authentication requirement for labour schemes in Chhattisgarh

The Department of Labour, Government of Chhattisgarh, vide 3 (three) notifications dated June 30, 2023 notified that individuals desirous of obtaining worker registrations and benefits under schemes to be implemented by the (a) Chhattisgarh Building and Other Construction Workers Welfare Board; (b) Chhattisgarh Labour Welfare Fund Board; and (c) Chhattisgarh Unorganised Workers State Social Security Board, will be expected to furnish proof of possession of Aadhar, or undergo Aadhar authentication. It has advised individuals to get themselves enrolled for Aadhar at the nearest enrolment centre available in their area in case they are not already enrolled.

Revision in rate of labour welfare fund contribution in Haryana

The Haryana Labour Welfare Board, Government of Haryana, vide notification dated July 27, 2023, increased the upper limit of contribution payable by each employee to the labour welfare fund under the Punjab Labour Welfare Fund Act, 1965 (“LWA”) to INR 31 (Indian Rupees thirty one) from the earlier INR 25 (Indian Rupees twenty five) with effect from January 1, 2023. As such, each employee under the LWA is required to contribute to the Haryana Labour Fund an amount equal to 0.2% of their salary or wages or any remuneration, subject to a limit of INR 31 (Indian Rupees thirty one), and each employer in respect of such employee is required to contribute to the Haryana Labour Welfare Fund, an amount equivalent to twice the amount contributed by such employee.

Case Law Ratios

Internal committee has jurisdiction to initiate inquiry under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”) against respondent employed with another employer

In Dr. Sohail Malik v. Union of India[10], the Delhi High Court relying on rules of purposive interpretation upheld the applicability of the POSH Act where complaints of sexual harassment are instituted against respondents employed with different employer(s). The court further held that an internal committee duly constituted under the POSH Act is not foreclosed from inquiring into complaints of sexual harassment instituted against persons outside of the “disciplinary control” of the complainant’s employer, and that it may forward its inquiry report to the respondent’s employer for further action. For a detailed overview of this case, please click here.

Unauthorised absence from service of an employee to be proved as wilful by employer

In Dr. S.C. Asthana v. State of U.P. Through Principal Secy. Medi. And Hel. And Another[11], the Allahabad High Court held that the burden of proving unauthorised absence as ‘wilful’ rests with the disciplinary authority, and that in the absence of such finding, unauthorised absence does not amount to misconduct. In the present case, the court considering the plea filed by an employee facing disciplinary action for being absent from duties during a foreign assignment in Nigeria, noted that absence from duty without any application or prior permission may amount to unauthorised absence, but such absence may not always be wilful, and may be because of compelling circumstances and as such, may not amount to misconduct.

Employer cannot deny employment or promotion solely based on HIV positive status of employee

In XYZ v. Union of India Thru. Secy. Ministry of Home Affairs New Delhi and Others[12], the Allahabad High Court held that an individual who is otherwise fit, cannot be denied employment or promotion solely based on their HIV status. Noting that protection against discrimination is a fundamental right guaranteed to citizens of India, the court emphasised that such denial of employment or promotion is discriminatory and would violate principles of equality, right to non-discrimination, and the right to life as enshrined in Articles 14, 16, and 21 of the Indian Constitution. The court quashed all directions and orders that denied or deprived the appellant the right to occupy promotional posts by virtue of his HIV positive status and declared that the appellant would be entitled to full benefits of promotions as extended otherwise.

Maternity leave an inherent right of every woman employee and cannot be denied on technical grounds

In Swornolata Dash v. State of Odisha and Ors.[13], the Orissa High Court held that maternity leave cannot be compared or equated with any other leave, as it is an inherent right of every woman employee which cannot be denied on technical grounds. Here, the petitioner was denied maternity leave on grounds that legislations governing the school (an ‘aided educational institution’ under the Orissa Education Act, 1969) where the petitioner was employed, did not recognize maternity leave entitlement and were silent on the same. The court noted that denial of maternity leave to a woman employee would be “an assault on her dignity as an individual” and deprive her of her fundamental right to life with dignity as guaranteed under Article 21 of the Indian Constitution. The court also noted that its observations “would be equally applicable to whom the Act does not apply”

Assessment of dominant nature of duties and responsibilities of an employee necessary to determine whether employee is a ‘workman’ under the Industrial Disputes Act, 1947 (“IDA”)

In Abott India Limited v. Dipak[14], the Bombay High Court held that an employee who is appointed as a “Therapy Business Manager”, with the job profile of business development by deployment of marketing strategies cannot be classified as a ‘workman’ under the IDA. The court noted that the employee was not employed to do any “manual, unskilled, technical, operational, clerical or supervisory work”, and that the dominant nature of one’s duties need to fall within one of the stipulated categories to be classified as a ‘workman’ under the IDA.

This Newsletter has been prepared by:

Gerald Manoharan
Partner

Sonakshi Das
Principal Associate

Sandhya Swaminathan
Associate

For more details, please contact [email protected]

[1] Shifa-ur Rhehman v. State of NCT of Delhi, WP (CRL) 1347/2020

[2] WP (C) 4677/1985 (SC)

[3] CA 1584 of 1998 (SC)

[4] AIR 1968 SC 266

[5] 1988 II LLJ 492 (Andhra Pradesh HC)

[6] CWP No.27281 of 2017 (Punjab and Haryana HC)

[7] Shifa-ur Rhehman v. State of NCT of Delhi, WP (CRL) 1347/2020

[8] AIR 1961 SC 1970

[9] To read more, click here

[10] WP (C) 8624/2023 (Delhi HC)

[11] WA 2000264/2022 (Allahabad HC)

[12] Special Appeal Defective No. 430/2023 (Allahabad HC)

[13] WP (C) 620/2015 (Orissa HC)

[14] WP 2101/2023 (Bombay HC)

Tags Employment, Employment Law, JSA, Leading Law Firm, Leading Lawyer, Legal Updates

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A. Summary

B. Status of the States w.r.t issuance of rules under the labour codes

C. Status of the Union Territories w.r.t issuance of rules under the labour codes (except Delhi and Jammu & Kashmir, which have been mentioned above)

Introduction

Workplace compliances under the HIV and AIDS Act

Regulatory Updates

Case Law Ratios

Enforceability of post-termination restrictive covenants in employment contracts

Regulatory Updates

Case Law Ratios

Processing of employee personal data under DPDP Act

Regulatory Updates

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Exception to due process in conducting disciplinary proceedings: ‘useless formality’ theory

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