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Asia-Pacific employment law bulletin 2024


Training Repayment Agreement Provisions

In India, there is growing enforcement of Training Repayment Agreement Provisions (TRAPs), commonly referred to as employee bonds. Employers are increasingly investing into comprehensive training programs for their employees, with the aim of upskilling their workforce. However, this can be a double-edged sword for employers – as their employees become more skilled, competitors are also more likely to poach them.

TRAPs are designed to instill a sense of commitment on employees who have benefited from the training provided by their employees and, more importantly, to impose a financial incentive on employees to continue their employment. If employees resign from the company, they can be required to repay to their employer the relevant training costs.

COVID-19 triggered a wave of resignations, which was particularly prominent in the information technology sector where employees were lured away with offers of better remuneration / incentives. TRAPs made employees think twice about leaving.

Courts have evaluated the enforceability of TRAPs on a case-by-case basis. Employment bonds have been deemed unreasonable in cases where employers fail to prove any actual loss. As part of their assessment, courts typically assess whether the relevant training was genuinely provided, whether the cost sought to be recovered directly correlates with the training provided and whether it reasonably aligns with the actual cost of the training.

Where the TRAPS present a genuine pre-estimate of damages, employers are relieved of the burden of proving actual losses. Some courts have even recognized the benefits of TRAPs, emphasising that training enhances employee skills and departing employees may be allowed to leave after paying unrecovered costs. Therefore, employers seeking repayment of training costs must meticulously document such expenses, ensuring they are not punitive in nature. Additionally, employers should base their claimed damages on actual losses, or the quantified cost of the training delivered, rather than arbitrary figures. Striking a delicate balance between employee development and safeguarding organisational interests remains pivotal in navigating the evolving landscape of TRAPs in the post-COVID employment landscape.

Menstrual leave and paternity leave

Discussions surrounding menstrual and paternity leave policies have taken centre stage in India recently, raising fundamental questions about inclusivity, equality, and the awareness of women’s health in the workplace. At present, there are no federal laws mandating menstrual leave for employees and the Supreme Court of India also dismissed a nationwide petition seeking menstrual leave for employees.

However, at a regional level, the Legislative Assembly of the state of Maharashtra introduced a bill which includes a provision entitling every female employee working in an establishment in the state to paid leave during their menstrual period. There are opposing views to this, including from the Indian Minister for Women and Child Development, who asserted that menstruation should not be considered a “handicap” and questioned the necessity of having dedicated menstrual leave. It remains to be seen whether the bill will be implemented in its current form and, if so, whether other states follow suit.

Some organisations in India, including leading tech companies, have started including menstrual leave in their workplace policies. Under these policies, an employee is typically entitled to one day of leave per month for reasons related to menstruation, menopause, and any associated conditions.

Simultaneously, the call for paternity leave has also gained momentum, challenging the traditional gender roles in India and paving the way for a more gender-balanced approach to parental responsibilities. There is currently no law governing paternity leave in the private sector in India and many organisations do not have a paternity leave policy. Organisations which do have a policy typically offer paternity leave ranging from five days to three weeks.

Looking ahead

Non-poaching agreements have also been a topic of serious discussion in India recently. Such arrangements have typically been examined from an Indian contract law and employment law perspective, but increased scrutiny from competition regulators globally has raised the question of whether they should also be evaluated from an antitrust standpoint. Indian contract law has traditionally viewed such agreements as a restraint of trade and therefore making them difficult to enforce in court.

The Indian antitrust regime and legislation does not include any specific references to non-poaching agreements or arrangements. Any agreements between competing entities not to poach each other’s employees could, however, potentially breach cartel-related restrictions. These restrictions prohibit agreements between competitors that, amongst others, limit or control production, supply, markets, technical development or provision of services.

However, the Indian antitrust regime allows a carve-out from cartel-related restrictions for efficiency-enhancing joint ventures between competitors. An argument can be made to include non-poaching agreements that are ancillary to a joint venture arrangement in this carve-out.

It is currently not clear what position would be adopted by the Indian competition regulator in relation to non-poaching agreements - employers are advised to watch this space as practice in this area continues to evolve.

Touchstone Partners: Gaurav DesaiYashita Sharma, and Mahak Goyal