As 2020 began, nobody anticipated that things would turn out the way that they have. The COVID-19 pandemic has caused never-before-seen challenges of late, requiring individuals and organisations to adapt continuously. While 2020 has seen a wide range of transformations – from continuously evolving regulations to deal with the pandemic to more long-term and long-pending changes – this article highlights the most noteworthy workplace and HR developments.
Since the first phase of national lockdown was announced in March 2020, a common feature in the government's guidelines has been the "promotion of remote working arrangement[s]". To ensure employee safety, employers were directed to facilitate working from home (WFH) to the extent possible, which continues to be the case. Work-related travel at all levels – especially domestic and international – has almost entirely ceased, with Zoom, Microsoft Teams and other online platforms becoming staple ways to connect with colleagues and clients.
Not unsurprisingly, several organisations are now realising that WFH can potentially become a permanent feature even post-pandemic. WFH brings benefits to both organisations and employees, including:
- saved real estate costs;
- saved commuting hours and associated stress; and
- unquantifiable softer benefits for employees (eg, better time spent with family).
WFH was likely to gain wider acceptance in due course anyway, but the COVID-19 pandemic has now accelerated its adoption. No doubt, permanent or long-term WFH may not suit every individual or organisation and would essentially expect employees to use their personal home and space for a company's work. Therefore, from a legal perspective, continued WFH after the COVID-19 directives have ended will need employees to accept such arrangements. Further, employers will need to establish special policies and agreements that duly address each party's obligations towards confidentiality, productivity and health and safety, among other things.
At the same time, the government should make specific legal provisions that better enable WFH. This includes addressing grey areas such as whether employers will be forced to comply with state-specific shop, professions tax and labour welfare fund laws if they have employees working remotely from a state that is different from where they had traditionally maintained their physical office. Employers may be unable to control which city or state employees choose to work remotely from and compliance with such laws throughout the country would be impractical. Would employers run the risk of being dragged into labour disputes throughout the country, depending on where remote employees may choose to work from? These and similar issues must be urgently addressed and unfortunately the new labour codes do little to resolve at least some of these issues.
COVID-19-related regulations took centre stage during the height of the lockdowns and have had a lasting impact on workplaces, at least for the foreseeable future. Social distancing norms, health and safety and sanitisation protocols will have to be followed for many more months ahead. However, as the focus shifted to ending lockdown, various state governments tried to pass laws granting blanket exemptions from labour laws to industries in a bid to kick-start the economy. These laws were met with severe criticism from labour and trade unions, resulting in some of them being rolled back.
The central government also lost little time in passing the long-pending labour codes in Parliament, in its continued bid to ease doing business in India. The four codes consolidate and revise (to some extent) 29 central laws, regulating:
- wages;
- industrial relations;
- social security; and
- occupational health and safety and working conditions.
These codes aim to become operational by April 2021 and draft rules are currently open for public comment.
While the codes have certainly introduced some novel provisions and improvements, they have for the most part shied away from significant changes. To that extent, it may be a stretch to view the codes as reforming India's archaic labour laws. Changes and improvements are incremental at best. The overall labour law landscape will be little different from before – for example:
- there will continue to be different state and central laws (many of the record-keeping requirements and compliances flow from state laws);
- it will still be important to determine who is a 'worker' and who is not (based on disputable subjective criteria instead of more easily determinable objective parameters); and
- manufacturing units with 300 workers or more will still need to obtain elusive government permission to retrench workers or close undertakings.
However, there will also be:
- greater clarity on union recognition and relations;
- potential ease of compliance associated with fewer registrations; and
- an ability to compound certain offences rather than suffer criminal prosecution for smaller infractions.
National floor minimum wage will help the labour market and a common 'wage' definition will also remove some of the ambiguities under current laws, although this will also come with a higher cost burden for employers (eg, gratuity payments may now have to be made on gross wages instead of basic salary alone and provident fund and other contributions will have to be on at least 50% of the remuneration). Changes to the 'contract labour' definition are a mixed bag – while fewer categories of vendor supplied staff will be covered under the definition of contract labour, it will also be much harder to engage contract staff in core activities, barring certain exceptions. There will also be greater acceptance of fixed-term employment engagements and gig and platform workers are being promised access to social security.
Overall, 2020 has proven to be a watershed year for employment and HR laws in India and 2021 will see many of these changes being formalised and implemented. Employers should actively start to review their contracts and policies to adapt to the updated regime at the earliest opportunity.
Parvathy Tharamel assisted in the preparation of this article.
An earlier version of this article was first published in People Matters.
