Major workplace and HR developments in 2020
As the year began, nobody anticipated that 2020 will turn out how it has. COVID-19 has thrown up never-before-seen challenges in recent times, requiring individuals and organizations to adapt continuously. While 2020 has presented a wide palette of transformations (from continuously evolving regulations to deal with the pandemic to more long term - and long-pending - changes), here are the most noteworthy workplace and HR developments this year.
Work from Home - The new normal
Since the first phase of national lockdown announced in March 2020, a common feature in the guidelines issued by the government is “promotion of remote working arrangement”. To secure employee safety, employers were directed to facilitate work from home to the extent possible, which continues to be the case. Work-related travel at all levels – especially domestic and international – has almost entirely disappeared, with Zoom, Teams, etc. becoming staple ways to connect with colleagues and clients. Not unsurprisingly, several organizations are now realizing that WFH can potentially become a permanent feature even post-pandemic. WFH brings benefits to both the organization and the employee – in terms of saved real estate costs, saved commuting hours and associated stress, and unquantifiable softer benefits for employees (like better time spent with family, etc.). WFH was likely to gain wider acceptance in due course anyway, but the pandemic has now accelerated its adoption. No doubt, permanent or long term WFH may not suit every individual or organization and would essentially expect employees to use their personal home and space for the company’s work. Therefore, from a legal perspective, continued WFH after the COVID-19 directives have gone away will need employees to accept such arrangements. Further, employers will need to put into place special policies and agreements that duly address each party’s obligations towards confidentiality, productivity, and health and safety, amongst others.
At the same time, the government too should make specific provisions in the law that better enable WFH. This includes addressing grey areas such as whether an employer will be forced to comply with state-specific Shops Act, Professions Tax, and Labour Welfare Fund laws if it happens to have employees working remotely from a State that’s different from where it had traditionally maintained its physical office? Employers may not be able to control which city or state an employee chooses 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 / have their hometowns? These and similar issues need to be urgently addressed and unfortunately, the new labour codes don’t do much to iron out at least some of these issues. This brings us to the next big employment law development this year – the Labour Codes.
COVID related regulations took center 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, safety and sanitization protocols, etc., will have to be followed for many more months ahead. However, as the focus shifted to unlocking, various state governments tried to pass laws granting blanket exemptions from labour laws to industries in a bid to kick-start the economy. These 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 the Parliament, in its continued bid to ease doing business in India. The four Codes consolidate and revise (to some extent) 29 Central laws, regulating (i) Wages, (ii) Industrial Relations, (iii) Social Security, and (iv) Occupational Safety, Health, and Working Conditions. These Codes are targeted to become operational by April 2021 and draft rules are currently open for public comments.
While the Codes have certainly brought in some novel provisions and improvements, they have for the most part shied away from significant substantive changes. To that extent, it may be a stretch to view the Codes as reformative of India’s archaic labour laws. Changes and improvements are incremental at best. The overall labour law landscape won’t be very different from before – there’ll continue to be the different state and central laws (many of the record-keeping requirements and compliances flow from state laws), it’ll still be important to determine who is a “workman” and who isn’t (based on disputable subjective criteria instead of more easily determinable objective parameters), manufacturing units with 300 workers or more will still need to obtain elusive government permission to retrench workers or close undertakings, etc. However, there’ll also be greater clarity on union recognition and relations, the potential ease of compliances associated with fewer registrations, and an ability to compound certain offenses rather than suffer criminal prosecution for smaller infractions. National floor minimum wage will help the labour market, and a common ‘wage’ definition will also take away some of the ambiguities under current laws, although this will also come with a higher cost burden for employers. For e.g. gratuity payments may now have to be made on gross wages instead of basic salary alone, and PF 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’ll also be much harder to engage contract staff in core activities, barring certain exceptions. There’ll also be greater acceptance of fixed-term employment engagements and gig workers/platform workers are being promised access to social security.
Overall, 2020 has proven to be a watershed year for employment and HR laws, and the upcoming year will see many of these changes being formalized and implemented. Employers should actively start reviewing their contracts and policies to adapt to the updated regime at the earliest opportunity.