Atul GuptaPartner
Parvathy TharamelPartner
Tania GuptaAssociate
Key Developments
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Delhi High Court rules special incentives paid during Covid-19 pandemic cannot be treated as part of wages under the Employees State Insurance Act, 1948
In Ms Godambari Raturi v Employee State Insurance Corporation (ESIC) & Anr., the Delhi High Court ruled that special incentives granted to employees during Covid-19 pandemic cannot be treated as part of wages under the Employees State Insurance Act, 1948 (ESI Act) to deprive any individual of the relief under the ESIC Covid-19 Relief Scheme (Scheme).
The case involved the widow of an employee who was insured under the ESI Act. The widow claimed relief under the Scheme after the employee’s death due to Covid-19. This claim was rejected by the ESIC on the ground that the deceased employee did not fall within the definition of “employee” under the ESI Act as he drew wages in excess of INR 21,000. ESIC also included a special incentive paid to the deceased employee in the calculation of wages. However, this incentive was temporary, paid only for four months in 2020, and the employer continued making ESI contributions during this period. Therefore, the Delhi High Court observed that due to the benevolent nature of the Scheme and the temporary and special nature of the incentive, it could not be added to the monthly wages to exclude the deceased employee from receiving relief under the Scheme.
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Jharkhand High Court stays law extending 75% reservation for locals in private sector jobs
The Jharkhand High Court has recently stayed the implementation of the Jharkhand State Employment of Local Candidates in Private Sector Act, 2021. This law mandates 75% domicile reservation for local residents in private sector jobs with salaries below INR 40,000 in establishments employing ten or more individuals.
The Court said that the State cannot direct private employers to do what has been forbidden under the Constitution of India. Accordingly, it held this legislation to be prima facie unjust, discriminatory and violative of Part III of the Indian Constitution of India (fundamental rights) and that its implementation would not be in public interest.1
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Delhi High Court rules that new employer cannot deny employment once resignation has been accepted by previous employer
In the case of Matthew Johnson Dara v Hindustan Uravak and Rasayan Ltd., the Delhi High Court held that a new employer cannot revoke a prospective employee’s job offer if the employee’s resignation was accepted by their previous employer only because the employee failed to secure a relieving letter within a particular timeframe.
In this case, the petitioner resigned from their previous employment during their probation period (requiring a 15-day notice). However, their services were retroactively confirmed, necessitating a 30-day notice period. After completing the notice period, the petitioner joined the respondent as a Vice President, submitting an undertaking to provide the relieving letter within 30 days.
However, the respondent revoked the job offer to the petitioner due to a show cause notice threatening disciplinary action against the petitioner from their previous employer. The Delhi High Court ruled in favour of the petitioner and directed the respondent to honour the job offer, as the relieving letter was issued during the pendency of the writ petition filed against the show cause notice, and the position of Vice President remained vacant.
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Haryana government issues compliance checklist under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
On 12 December 2024, the Additional Deputy Commissioner of Gurugram issued a circular requiring the Internal Committees (IC) of all companies to submit an annual report to the District Officer on their compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SH Act).
The circular includes a checklist of questions including:
- Confirmation of the implementation of an internal policy on prohibition, prevention and redressal of sexual harassment.
- Whether information about the organisation’s stance on sexual harassment and details of the IC are displayed prominently.
- Whether workshops, awareness programs, etc., are conducted at regular intervals to sensitise employees about sexual harassment.
- Whether the organisation has mechanisms to assist individuals affected by sexual harassment in dealing with psychological and other effects.
- Proof of the IC constitution and details of IC members.
- Compliance with the recommendations of the IC or the Local Committee (as applicable).
While most questions are expected and derived from the current legislation, the inclusion of mechanisms to help victims deal with psychological effects is a new requirement and does not flow from the current requirements under the SH Act. While some large organisations voluntarily offer Employee Assistance Programs that could satisfy this requirement, many do not. The inclusion of this requirement may create challenges for some organisations and lead to disputes, if strictly enforced.
As per a previous notification dated 4 November 2024, the annual report for the year ended 31 December 2024 must be submitted by 28 February 2025 by companies in Gurugram.
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Supreme Court reinforces the importance of properly constituted Internal Committees under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
A recent order of the Supreme Court reinforces the importance of proper constitution and functioning of ICs across workplaces, with detailed directions for government bodies.2 While the order mostly focusses on public sector entities, it signals increased scrutiny on IC compliance in private organisations as well. Employers are encouraged to ensure that the IC composition, procedures, and documentation meet statutory requirements to avoid potential liabilities.
News reports as well as the Labour Ministry’s year-end report indicate that the central government is closely monitoring and pushing state governments to publish state-specific rules under the Labour Codes, and this exercise is anticipated to be completed by 31 March 2025 across the country. The stage would then be set for implementation of the Labour Codes. Given the number of years that have already elapsed since the Codes were created in 2019 and 2020, it is expected that implementation will to be prompt once the rules are in place. Organisations potentially affected by the Codes would be well advised to assess all potential areas of impact such as wage structures, policies, etc.
[1] Jharkhand Small Industries Association and Ors. v State of Jharkhand and Ors.
[2]Aureliano Fernandes v State of Goa
