Evolving HR Law Giving GCs Sleepless Nights?

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:

1. Sexual harassment

   allegations: The Supreme

   Court’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.
   
   

2. Confidentiality breaches and

   employee fraud: GCs are aware that

   extensive 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.
   
   

3. Disparagement on social

   media: Employees have started

   resorting 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.
   
   

4. 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.
   
   

5. (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.
   
   

6. 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.