Labour and Employment

The previous quarter witnessed numerous developments in employment and labour laws with the Supreme Court opining on prevention of sexual harassment and service conditions at workplace, various States finalising rules under the Labour Codes and measures geared to deal with the Omicron variant of COVID-19.

Atul GuptaPartner

Parvathy TharamelSenior Associate

Tania GuptaAssociate

The previous quarter started on a positive note with plans for reopening of workspaces well underway and employers balancing safety measures at the workplaces with employees' comfort. Simultaneously, the vaccination campaign for citizens across the country made a significant leap with many employers actively encouraging and facilitating employee vaccination. However, towards the end of December, employers as well as employees were forced to shift gears with the detection of the Omicron variant. In this update, we cover the COVID-19 prevention measures being taken in the light of the new wave with a special focus on Maharashtra. We also cover other developments in the labour and employment space such as the Supreme Court's orders on sexual harassment at the workplace and on industrial disputes, steps taken towards the enforcement of Labour Codes, etc.

Key Developments

  • Covid-19 prevention measures in Maharashtra

    The Government of Maharashtra issued an order on 26 October 2021 mandating the use of masks in private establishments and instructing the expedited completion of COVID-19 vaccination by the employees. This order mandated employers to ensure that all employees working in their establishments have received both doses of vaccination and maintain proof of such vaccination. In November, the government relaxed this requirement to instead strongly advise offices and other establishments to only allow persons who are fully vaccinated. Further, the government issued additional measures for international travelers in light of the Omicron variant.

    In a recent case in Maharashtra (Deepak Kumar Radheshyam Khurana v Mumbai Port Trust), unvaccinated employees challenged as discriminatory the conditions imposed by their employer that: (i) unvaccinated people will not be allowed to attend office without producing a negative RT-PCR test (at their own cost) every 10 days and (ii) they would be ineligible for reimbursement of medical expenses. The Bombay High Court upheld these conditions as reasonable restrictions since the employer was already providing vaccination free of charge and reimbursement of medical expenses for vaccinated employees who suffer from breakthrough infections. The court also held that the employer need not pay for the RT-PCR tests.

  • Supreme Court holds that service rules and statutory regulations on prevention of sexual harassment at workplace are not to be given a hyper technical interpretation

    In the case of Union of India v Mudrika Singh, the Supreme Court of India dealt with an appeal by the Central Government against an order of the Division Bench of the Calcutta High Court which had set aside the charges against the respondent officer who was senior to the complainant. The Calcutta High Court, while setting aside the charges, had taken into consideration a minor discrepancy regarding the date on which the incident occurred.

    The Supreme Court held that deeming such a trivial aspect to be of monumental relevance, while invalidating the entirety of the disciplinary proceedings against the respondent officer and reinstating him to his position renders the complainant's remedy naught. The court further held that the existence of a transformative legislation like the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 would not come to the aid of the aggrieved if the appellate mechanisms turn the process into punishment. It noted that while adjudicating on matters of sexual harassment at workplace, the power dynamics at the workplace have to be kept in mind. Hence, the Supreme Court directed courts to interpret the service rules and the statutory regulations on prevention of sexual harassment at the workplace in a manner that allows procedural and substantive justice to all the parties.

  • Supreme Court holds advance notice essential if transfer of employees results in change in service conditions

    The Supreme Court, in the case of Caparo Engineering India Ltd. v Ummed Singh Lodhi held that in the event of transfer of employees, if there is a change in the conditions of service of the employees without any notice, it would violate Section 9A of the Industrial Disputes Act, 1947 (ID Act) and be deemed as arbitrary and mala fide. Section 9A pertains to the requirement of giving prior notice to the workmen regarding any adverse change in the conditions of service.

    In this case, the employees were engaged as 'workmen' under the ID Act in Dewas factory and were transferred to the employer's Chopanki factory to work in the capacity of supervisor. By such change, after their transfer to Chopanki they would be deprived of the beneficial provisions of the ID Act and therefore, the nature of services would be changed. The employer could not justify the transfer of the workmen on evidence. Further, such transfer was sought to be done towards the end of their service thereby creating a situation in which the workmen were left with no other option except to leave their employment. The court observed that the issue in the present case was not only about the transfer, but also about the consequences of transfer. The transfer would result in the change of service conditions and the reduction of employees at Dewas factory, for which Section 9A will be attracted.

  • Rules under the new Labour Codes

    The Government of Kerala recently issued the Draft Kerala Code on Wages Rules, 2021 (Kerala Wage Rules) on 15 December 2021. The important provisions of the Kerala Wage Rules include the procedure for calculating minimum wages, calculating wages for part-time employees, procedure for maintenance of registers, etc.

    The Government of Gujarat notified the Draft Code on Social Security (Gujarat) Rules, 2021 on 16 November 2021. The draft rules provide the procedure of nomination by an employee for availing gratuity, filing an appeal in matters of maternity benefit and filing unified annual returns. They further stipulate the time limit for payment of building and other construction workers' welfare cess and the process of maintaining a register of women employees.

    Earlier in October 2021, the Government of Gujarat notified the Industrial Relations (Gujarat) Rules, 2021 (Gujarat IR Rules) and the Code on Wages (Gujarat) Rules, 2021 (Gujarat Wage Rules). The Gujarat IR Rules provide the process for constitution of the grievance redressal committee and the criteria for recognition of a trade union as a member of the negotiating council. The Gujarat Wage Rules provide the procedure related to payment of wages, maintenance of wage registers and issuance of wage slips.

  • Extension of deadline to link Aadhar with UAN

    The Employees' Provident Fund Organisation (EPFO) had passed a circular on 1 June 2021 making it mandatory for individuals to link their Aadhaar with their Universal Account Number (UAN). As per the EPFO circular, electronic filings regarding provident fund contributions can only be made in respect of those members whose UAN is linked with Aadhaar. The EPFO on 15 November 2021 extended the deadline for completion of this exercise to 30 November 2021. The Delhi High Court also extended the deadline to 30 November 2021 in the case of Association of Industries and Institutions v Union of India.

It is expected that there would be further developments on the implementation of the Labour Codes in 2022. While a number of states have already published draft rules under the Labour Codes, others are in the process of finalising their draft rules. Further, the new law on reservation for local candidates in Haryana which requires private employers to provide 75% reservation to locally domiciled candidates with gross salary of INR 30,000 or less has been passed. The constitutionality of this law has been challenged before the Punjab and Haryana High Court in writ petitions filed by several industry bodies in the state on the grounds that it is against the principles of meritocracy and competitiveness. The new law is being criticized for creating an exclusion policy by interfering with a private employer's ease of doing business and recruitment. It will be interesting to see the developments in this case over the course of the next quarter and beyond.

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