GCs will need to increasingly focus on HR strategies and HR lawyerswill have to be more proactive, responsive, accessible, businessorientedand innovativeIndia stands on the cusp of a new HR law era. Thegovernment has proposed replacing several majornational labor legislations with four codes - codes onwages, industrial relations, social security & welfare,and safety & working...
GCs will need to increasingly focus on HR strategies and HR lawyers
will have to be more proactive, responsive, accessible, businessoriented
and innovative
India stands on the cusp of a new HR law era. The
government has proposed replacing several major
national labor legislations with four codes - codes on
wages, industrial relations, social security & welfare,
and safety & working conditions.
With globalization, the labor market in India has undergone
tremendous changes; however, labor laws have failed to
keep pace. Presently, labor laws in India are a hotchpotch
of almost 140 legislations (besides all rules, regulations,
orders, and circulars issued under each of these legislations)
at the national & state levels. Several of these laws were
enacted during or prior to India’s independence, and were
meant for the industrial sector. While this may feel like a
paradise for us HR lawyers, it is not conducive to commerce
or growth. In fact, it is unfortunate that while labor laws in
India were designed to promote progress, they have ended
up becoming a stumbling block. The rise of the informal
(unorganized) sector, is the fallout.
The government’s vision and effort to rationalize and
consolidate the plethora of labor laws, is commendable. It
may direct us towards a utopian economy. The proposed
codes will make it easier for employers to comply with
the law and for authorities to regulate it. They will also
eliminate the confusion caused by differences in definitions
and applicability provisions. Lesser number of laws to
comply with along with better implementation, should
help position India as a business-friendly destination and
increase its rankings in the World Bank’s Ease of Doing
Business survey.
Care must be taken to ensure that the codes strike a balance
between making labor laws business-friendly while not
compromising workers’ welfare and safety. The codes should
focus on fostering employment, increasing productivity
and reducing unemployment, rather than simply being
a consolidation of current laws - else the medicine may
be worse than the disease! Ensuring this balance in our
political economy will continue to remain a challenge for
the government.
While employers and employees in India, and the
international community closely track these changes to
the legal landscape, we discuss
select HR law issues that, in our
experience, GCs must focus on:
- Sexual harassment
allegations:
The SupremeCourt’s judgment in the case of
Vishaka vs. State of Rajasthan
(1997) is considered a landmark
ruling on employers’ obligations
in relation to sexual harassment.
The Sexual Harassment of
Women at the Workplace
(Prevention, Prohibition and
Redressal) Act, 2013, has
helped increase awareness and
bolstered confidence among
female employees to report
incidents of sexual harassment.
The media has also helped the
cause by actively reporting these
allegations, especially those
involving founders and senior
management.
News reports of the
organization’s inability to
prevent or redress sexual
harassment at the workplace,
leads to serious reputational
risks - all the good work and
culture built over the years
could be jeopardized. Therefore,
GCs must ensure that a culture
of gender sensitivity and zero
tolerance is instilled in their
organizations, and help drive
this message from the top. The
sexual harassment policy and
processes should be simple
and easy to understand, and
complaints must be dealt with quickly and with the
utmost confidentiality. Training to sensitize employees
(and the ICC) on sexual harassment must be conducted
regularly. Further, adequate safety and security of
female employees must be ensured while at work and
travel during the graveyard shift.
India still has a long way to go in terms of sexual
harassment law. In the recent case of Doyle v. Zochem
Inc. (2017 ONCA 130), the Ontario (Canada) court
awarded three types of damages against the employer
for terminating an employee for raising a complaint
of sexual harassment - normal damages for wrongful
dismissal, moral damages and damages for the
employer’s violation of human rights. While this
jurisprudence in India is still developing, GCs should help
build an anti-harassment culture by ensuring that the
first part of the law on ‘prevention’ is comprehensively
complied with.
- Confidentiality breaches and
employee fraud:
GCs are aware thatextensive use of technology, flexible
working arrangements, bring your
own device culture, and increased job
mobility, have resulted in increased
instances of confidentiality breaches
and employee fraud. Further, certain
job functions might lead employees
to inevitably disclose proprietary
information to new employers.
While confidentiality clauses
in employment contracts are
fairly generic, it is advisable to
ensure that such clauses are
comprehensively drafted and that
the obligations persist in perpetuity
post-employment. Since prevention
is better than cure, especially in
such matters, it is advisable to
restrict physical access, require
authorization, monitor systems’
usage, etc. GCs may also do well to
set up robust processes, including
confidential and anonymous ethics
hotlines and whistle-blowing
channels (in the absence of a codified
law), to help detect such incidents.
Employees should be reminded of
their confidentiality obligations
upon separation and an undertaking
be obtained, since Indian law does
not prevent the departing employee
from joining a competitor or working
on a project for the same client.
- Disparagement on social
media:
Employees have startedresorting to venting their ire on
social media even before utilizing their employers’
grievance redressal mechanism. Organizations today
face tremendous reputational risks from misinformed
social media crusaders.
Therefore, it is imperative that GCs issue clear guidelines
on employees’ social media use that include the do’s &
don’ts, while representing the organization in an official
capacity or when using its name. Exit documentation
should mention the employee’s obligation not to
disparage or defame the organization. While the
Indian Penal Code may treat defamation as a criminal
offense, in a country where there are millions of active
social media users, damage is usually done in a few
minutes.
- Dealing with trade unions: The relationship between
employers and trade unions in India remains cordial
and peaceful, barring a few (one-off) incidents. In the
services sector, there has not been any significant trade
union activity. GCs in these sectors have not had the
need to deal with trade unions as yet; however, that
may soon change.
In May 2016, the Tamil Nadu labor authorities clarified
that employees of IT & ITeS organizations can form
trade union to seek redressal of their grievances.
Previously, employees in these sectors never felt the
need to unionize or bargain collectively. In the event of
an economic downturn, employees may quickly unionize
themselves and institute class action suits for unfair
labor practices, unlawful termination, wage and hour
claims, social security (provident fund) contributions,
discrimination, misclassification, contract labor
permanency, etc.
GCs should ensure that their organizations have a
robust and responsive grievance redressal mechanism
to help employees resolve their concerns. As part of
the management, GCs should help foster a culture of
transparency and an inclusive approach to potentially
fend off trade union activity.
- (Never-ending) compliances and increasing penalties: Most labor laws require the employer to maintain
numerous registers, display information, file forms, etc.
Considerable efforts have been made by the government
to rationalize these compliances and to allow employers
to maintain files electronically, including by way of the
recent Ease of Compliance to Maintain Registers under
various Labor Laws Rules, 2017. But more needs to
be done since certain non-compliances could trigger
criminal implications - hopefully, the labor codes will
help resolve this problem.
In addition to providing 26 weeks of maternity leave,
the Maternity Benefit Act, 1961 requires the employer
to provide for crèche facilities. Maternity leave has now
been extended to adopting mothers and commissioning
mothers. The Rights of Persons with Disabilities Act,
2016 currently only requires a private employer to
implement an equal opportunities policy.
Monetary penalties for non-compliances continue to
increase. For example, the Employees’ Compensation
Act, 1923 has recently increased the penalty to '50,000,
which amount may be extended to '100,000. The Sexual
Harassment Act goes a step further by canceling the
business license or registration in case of repeat noncompliance.
Given the increased vigilance by labor enforcement
authorities, compliance remains a major cause of worry
for GCs. Directors and CEOs can be held responsible
for non-compliance of labor laws. The Companies
Act, 2013 requires the Board of Directors to certify
compliance. GCs must implement appropriate systems
and use compliance checklists and experts. They should
conduct compliance audits including of their third-party
contractors and staffing services agencies for their
contract laborers.
- Robotics at the workplace: The ‘job killer’ robots
are coming, whether or not they will be regulated or
taxed! Industrialization 4.0, consisting of self-learning
software, advanced analytics, algorithms, cloud
computing, 3D printers, drones and of the Internet of
things, will render several repetitive tasks redundant,
especially in labor intensive countries like India.
Technology is displacing jobs everywhere - even we
lawyers are at risk. While we continue to search for
what humans can do that robots cannot, the pace with
which the transformation may occur will leave many
unprepared.
GCs will need to help embrace technology and anticipate
re-skilling needs and potential layoffs. Given that in
industrial establishments, over 100 (or 300 in certain
states) workmen require government permission for
lay-offs and closure, it remains a challenge in India.
The dynamics of functioning in this evolving HR landscape
will require GCs to increasingly focus on HR legal strategies.
It will require us HR lawyers to be more proactive,
responsive, accessible, business-oriented, research-focused
and innovative. And with those robots around, we may
never work alone!
Disclaimer
– The views expressed in this article are the personal views of the authors and are purely informative in nature.