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Workforce Structuring and Terms of Employment


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Is your organisation compliant? Structuring your corporate workforce raises a number of regulatory matters which require careful consideration. IndusLaw’s Namita Vishwanath discussed best practices with general counsels at a workshop in Gurgaon recently.

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Workforce Structuring and Terms of Employment

  1. 1. Workforce Structuring & Terms of Employment Namita Viswanath Partner 23 March 2018
  2. 2. OVERVIEW Labour & Employment Law: Key Considerations Common Forms of Workforce Engagement & Employment Documentation Key Laws Governing Conditions of Employment Best Practices 2
  3. 3. 3 LABOUR & EMPLOYMENT LAW: KEY CONSIDERATIONS | Definition of workman - A fundamental principle in Indian labour and employment law is that it distinguishes between employees who are “workmen” and those in managerial or administrative roles (“non- workmen”) | Nature of work undertaken - Is key to ascertaining whether a particular employee is a workman or non-workman - Workmen have statutory protection with respect to terms of service, and especially in case of termination of employment - On the other hand, service conditions of non-workmen are mainly governed by contract
  4. 4. 4 LABOUR & EMPLOYMENT LAW: KEY CONSIDERATIONS | Nature of Industry - Within the Indian labour and employment framework, there are industry specific laws such as those relating to building and construction, mines, factories, beedi workers, and others - Most of these pieces of legislation are restricted to the traditional industrial and manufacturing sector - Additionally, the nature of the industry is relevant to understand the extent of compliance under the shops and establishments legislation - For example Karnataka prescribes certain relaxations for the IT sector and under the Industrial Employment (Standing Order) Act, 1946 - Typically, the services sector is subject to fewer pieces of labour law legislation - However, in a recent significant development, sweeping changes to the Indian IT sector has led to trade unions being registered in Karnataka and Tamil Nadu
  5. 5. 5 LABOUR & EMPLOYMENT LAW: KEY CONSIDERATIONS | Impact of State Specific Laws - Under India’s constitutional structure, labour and employment laws in India are subject to both Central laws and State rules - Several Central pieces of legislation have State-specific amendments - Ffor instance, under the Contract Labour (Regulation and Abolition Act), 1970, States have different applicability requirements - In addition, there is standalone State legislation to be examined - For instance, the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981, in terms of which workmen who have been engaged for 480 days in 24 calendar months have to be made permanent
  6. 6. 6 LABOUR & EMPLOYMENT LAW: KEY CONSIDERATIONS | Recent Efforts at Simplifying Labour Law Compliance - Proposed consolidation of 38 Central laws into 4 labour codes • Code on Wages Bill, 2017 • Labour Code on Social Security and Welfare • Code on Industrial Relations • Code on Health, Safety and Working Conditions - Introduction of the Shram Suvidha Portal – where returns under various legislation can be filed online - Proposal to raise industrial disputes online - New shops and establishments legislation in Maharashtra – where registration can be obtained online, and all compliances can be maintained online
  7. 7. COMMON FORMS OF WORKFORCE ENGAGEMENT & EMPLOYMENT DOCUMENTATION Permanent employees Temporary employees Contract Labour Independent contractors Interns and apprentices Fixed term contracts? 7
  8. 8. 8 COMMON FORMS OF WORKFORCE ENGAGEMENT & EMPLOYMENT DOCUMENTATION | Standard Employment Documentation - Offer letter - Detailed employment contract, along with non-disclosure and IP assignment provisions - Internal policies & employee handbook - Senior employee contracts - promoter employment contracts could have elaborate provisions, - specially with respect to remuneration, confidentiality and non-compete
  9. 9. 9 COMMON FORMS OF WORKFORCE ENGAGEMENT & EMPLOYMENT DOCUMENTATION | Employment documentation typically include the following - Location, description and job title, salary details and other benefits - Date of commencement, duration (whether fixed term or unlimited term) and type (whether part-time or full-time) of employment - Trial or probationary period - Consent from the employee regarding collection of sensitive personal data - Employee representations, warranties, covenants and obligations - Confidentiality and Intellectual Property Rights - Terms governing termination of employment - Conflict of interest - Governing law and disputes (arbitration only for senior employees)
  10. 10. 10 Common Contents for Internal Policies • Anti- Sexual Harassment Policy – compulsory requirement under law • Hire and Exit Formalities • Working Hours and Compensatory Leave Policy • Protection of non-public information • Whistle-blower policy • Leave policy • Equal opportunity policy – compulsory requirement under the Rights of Persons with Disabilities Act, 2016 • Policy on non-compete and non-solicit (includes conflict of interest) • Policy on confidentiality COMMON FORMS OF WORKFORCE ENGAGEMENT & EMPLOYMENT DOCUMENTATION
  11. 11. 11 Common Contents for Internal Policies • Policy on protection and assignment of intellectual property rights • Travel and reimbursement policy • Relocation/secondment policy • Stock options • General harassment policy • Disciplinary proceedings • Policy on dealing with business partners • Asset protection policy • Performance planning and evaluation COMMON FORMS OF WORKFORCE ENGAGEMENT & EMPLOYMENT DOCUMENTATION
  12. 12. 12 KEY LAWS GOVERNING TERMS OF EMPLOYMENT | The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 | The Employees State Insurance Act, 1948 | The Industrial Disputes Act, 1947 | The Minimum Wages Act, 1948 | The Payment of Wages Act, 1936 | The Industrial Employment (Standing Orders) Act, 1946 | The Contact Labour (Regulation and Abolition) Act, 1970
  13. 13. 13 KEY LAWS GOVERNING TERMS OF EMPLOYMENT | Payment of Gratuity Act, 1972 | Payment of Bonus Act, 1965 | The Equal Remuneration Act, 1976 | The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 | Apprentices Act, 1961 | State Specific Shops and Establishment legislation
  14. 14. 14 | Background checks - Employers are increasingly conducting background checks to guard against inaccurate resumes, overstated work experience and any employee behavioural issues - Typically employers issue an offer letter, conduct the background check and expressly state that the person's employment with the organisation is contingent upon clearing the background checks and vetting of educational and job qualifications | Formulate overtime policies - In order to discourage employees from routinely ‘hanging out’ in the office post work hours and claiming overtime payments, it is recommended that the company formulates a clear overtime policy indicating that employees are required to finish work deliverables and leave as per office timings - In case any employee is to stay back, prior approval of his supervisor would be required, and the employee is required to provide a clear statement of the work he will undertake during this time BEST PRACTICES
  15. 15. 15 | Employee severance - A Separation Agreement should be executed between the company and the employee - This is specially recommended for senior employees and long serving employees - Separation agreements should include clauses such as • upon receipt of the settlement, the employee discharges the company from all present and future claims • not disparaging the company; and treatment of confidential information and intellectual property of the company. - Ensure that agreements with independent contractors and contractors are drafted in a way that minimises ‘deemed employment’ risks - Ensure consonance between global employee handbooks and Indian law requirements - Employee transfers during asset or business purchase transactions BEST PRACTICES
  16. 16. BANGALORE DELHI 101, 1st Floor, “Embassy Classic” 2nd Floor, Block D, The Mira #11, Vittal Mallya Road Mathura Road, Ishwar Nagar Bangalore, 560 001 New Delhi 110 065 T: +91 80 4072 6600 T: +91 120 472 8100 E: E: HYDERABAD MUMBAI 204, Ashoka Capitol 1002A, Tower 2, Indiabulls Financial Center Road No.2, Banjara Hills Senapati Bapat Marg, Lower Parel (W) Hyderabad, 500 034 Mumbai, 400 013 T: +91 40 4026 4624 T: +91 22 4920 7200 E: E: DISCLAIMER This presentation is for information purposes only. Nothing contained herein is, purports to be, or is intended as legal advice and you should seek legal advice before you act on any information or view expressed herein. Although we have endeavored to accurately reflect the subject matter of this presentation, we make no representation or warranty, express or implied, in any manner whatsoever in connection with its contents. No recipient of this presentation should construe it as an attempt to solicit business in any manner whatsoever. CONTACT