Skip to main content

Asia employment law bulletin 2021

India

Developments in the light of COVID-19

The changing definition of “workplace”

During the COVID-19 lockdowns, various advisories and directions were issued by both the central and state level governments, directing employers to allow their employees to shift work bases to their homes. Indian labour laws did not really contemplate or legislate the working conditions for work-from-home (WFH) models and hence businesses were seen scrambling to put in place appropriate WFH policies and business continuity plans. The sectors in India which saw a tectonic shift over the last year are the information technology (IT), information technology enabled services (ITES) and the business process outsourcing (BPO) industries in India which currently employs more than 3 million Indians.

Picking up the cue quite early on, the Department of Telecommunications (the DoT- the sectoral regulator for the BPO industry), first rolled out temporary relaxations to enable the shift to the WFH model. Witnessing the positive impact of these exemptions, the DoT came out with a revised set of guidelines for service providers of voice-based BPO services in November 2020, expressly recognizing the concept of “work from anywhere” in India and incorporating the relaxations provided earlier in the year into these guidelines - lending permanence to them. A study by the National Association of Software and Service Companies (the industry association for the IT sector in India) suggests that over the next three to five years, up to 60 per cent of the IT industry’s work and up to 40 per cent of the ITES work could shift to a WFH model.  It appears that the “world’s back office” (the moniker India had “earned” due to its prolific BPO sector) is now migrating to Indian homes!

Whilst the WFH model was put in place involuntarily, it is expected to continue even in the post-pandemic era for the above-mentioned sectors with companies finding it a viable and more cost-effective model. Recognising this, the Indian labour ministry has for the very first time incorporated the ‘work from home’ concept as part of its draft model standing orders for the service sector. Standing orders are essentially rules of conduct of an establishment (relating to inter alia, classification of workers, leaves, and termination) and employers (engaging more than a certain number of workers) are required to prepare and adopt these in line with the model standing orders issued by the government.

Other developments

Parliament approves the labour law codes

After almost five years of discussions, four new labour codes relating to industrial relations, wages, social security and safety  were finally passed by the Indian parliament (the code on wages was approved in 2019 and the remaining three in September 2020).  They are expected to be finalised and brought into force by April 2021 and once enacted, these codes are expected to make navigating the labyrinth of Indian regulatory frameworks simpler for employers and therefore, potentially also making it easier to do business in India. 

Key changes include the introduction of the concept of “fixed term” employment with a view to provide employers the flexibility to directly employ workers for a fixed duration on the one hand and ensuring that wages, benefits and conditions of work as are available to permanent workers are made available to the fixed term employees on the other.  In a first, gig and platform workers have also now been recognised under the Indian Social Security Code and have been defined to mean persons who are engaged in a work arrangement outside of a traditional employer-employee relationship.

Palak Chadha, Touchstone Partners

Karam Daulet-Singh, Touchstone Partners

Gaurav Desai, Touchstone Partners

Amiya Mehra, Touchstone Partners