Introduction
Local leave and state specific benefits
Health and safety
Equipment
Tracking attendance and monitoring employees
Employee versus employer preference
Comment
Workplaces have not been the same since the covid-19 pandemic began in early 2020. Both employers and employees have faced unprecedented struggles to keep businesses in operation, dealing with staff illness, lockdowns, and social and psychological concerns. Due to the constant state of uncertainty, it has become imperative to develop a dynamic workplace that can adapt to a range of situations. Organisations have come to realise, often as a result of state-mandated orders to facilitate remote work, that the future of business depends on such flexible arrangements. With repeated waves and new variants of covid-19 emerging every few months, as well as increased employee expectation around flexibility, the remote and/or hybrid working style is more likely to become the new standard. In order to make this model sustainable in the long run, these arrangements should not expose employers to risks of non-compliance with the law.
Although remote working has certain identified benefits, such as lowering real estate footprints and associated cost savings, and providing access to a wider talent pool, it can also pose intricate legal challenges.
Currently, there are no prima facie restrictions on remote working and work from home models in India. In fact, government guidance associated with the pandemic has always been to facilitate working from home as far as possible. However, a primary issue in India is that there are differences in benefits from one state to another due to local shop and establishment acts and other statutes. Therefore, the question arises as to which law applies to remote workers, who may work outside the state where their primary office is located.
This article discusses the legal challenges associated with remote work in India.
Local leave and state specific benefits
Typically, employment laws (such as the Shops Act) apply when an employer has a "physical establishment" in a particular state. However, as labour legislation has historically been pro-employee, the courts often extend benefits under state-specific labour laws to employees in other locations, even if there is no physical establishment there. Such rulings do exist for employees in sales and similar roles, who are deployed to work in areas where their employer does not have a physical establishment.
Thus, employers need to be wary of extending substantive benefits under the law to remote workers, based on where they work (as opposed to the employer's physical office location), even though technical and procedural compliances may not be possible to complete without a registered physical office or address.(1) For example, leave encashment in Bangalore is permitted for up to 45 days, yet the maximum in Hyderabad is 60 days. Similarly, variations in accumulation limits and annual entitlements vary from one state to another, as do the rules around working hours, daily allocation and overtime limits.
The courts should make a distinction in such cases where remote work and choice of such location is chosen by an employee voluntarily, as should any future laws on this subject. For example, if an employee voluntarily chooses both to work remotely and where they will be based, as opposed to being sent elsewhere by an employer for their own commercial and business needs, the employer should not be required to comply with the laws of the location of the employee's choice. However, the jurisprudence on this subject is yet to fully develop. Even today, such a distinction can be legitimately made, but it would require careful planning as regards how an organisation approaches and implements a remote working arrangement.
If a remote working law comes to fruition, as the government has hinted, it should necessarily address this. There is one recent ruling of the Kerala High Court(2) that appears to align with the view and distinction we've taken above. The case relied on US jurisprudence and found that an employee whose choice to work from a different state (in this case, Kerala) was merely accommodated by the employer (who was based in Mumbai, Maharashtra) without the intention of promoting its business interests in Kerala, would not have the right to bring an employment claim in Kerala.
Ensuring the health and safety of employees is another employer responsibility that can arguably continue to prevail in case of remote work – especially where the employee has not been given the option to work in the company's regular office on a full-time basis. The general statutory requirement for commercial establishments is that the employer must provide for and maintain a safe and clean workplace. However, in case of remote work, as the physical control of the employer over the employees' home (and workplace) is limited, the application of such obligations can differ. In case of workplace accidents, the key test to determine employer liability is to see whether an injury arose "during the course of employment". Where employees are directed or expected to work remotely on a full- or part-time basis by the employer, the company could be held responsible for injuries that occurred during the course of employment. For example, an electric shock from a malfunctioning laptop supplied by the employer could expose them to liability. Therefore, as a general risk mitigation measure for any kind of remote work, the employer should put in place a robust guidance for employees to follow so that employees take measures to ensure that their home is a safe workplace.
In addition, organisations should also ensure employees are duly trained to understand that sexual harassment in the workplace can also occur in a remote setting, when employees are primarily using audiovisual tools to communicate. If necessary, policies should also be updated to cover sexual harassment in a virtual setting.
It is an established principle that an employer is responsible to supply the necessary equipment that employees require to perform their job functions. What those tools would be in the remote working context would greatly depend on the nature of the job and associated responsibilities. As a minimum, employers would be expected to provide or facilitate items such as a computer, an internet connection and a table and chair for most jobs. India does not have any established regulations around matters such as workplace ergonomics for regular office jobs; the extent to which specialised equipment needs to be provided to employees varies from company to company.
Tracking attendance and monitoring employees
As mentioned, substantive requirements around working hours and overtime can continue to apply even to remote workers. Organisations that adopt a full remote and/or hybrid model may need to invest in appropriate tools to monitor working hours, especially for staff who may be entitled to overtime payments. Employees must also be obliged to ensure that they are available during their regular working hours and that they maintain an interference-free work environment. It is important for companies to reiterate that employees who work remotely would continue to have a duty of due care and responsibility to their employers and towards their tasks. Employees would need to be reminded, therefore, that remote work does not suspend obligations towards:
- confidentiality;
- exclusivity;
- non-solicitation; and
- conflict of interest.
Employees should comply with these obligations, irrespective of the work model.
Employee versus employer preference
As there are currently no express statutory provisions or restrictions that govern remote work, such working models would largely be governed through contractual arrangements. In the absence of any government mandates linked with the pandemic that require working from home, employees would need to request or consent to a continued remote working arrangement.
Employers are considering various options to mitigate some of the compliance risks discussed earlier. Some facilitate remote work only from the state in which it already has a registered office, so that compliance under statutory regulations, such as professional tax and employee state insurance, can continue; others permit remote work from a wider geographic area, but on the understanding that the choice of location is the employee's personal preference and therefore, the employee has no claims for local benefits. Such arguments are not well-tested, given the fledging jurisprudence on this subject in India, but they can be an effective way to mitigate risk. Various permutations and combinations of such models have already begun to emerge.
Whatever the approach, except where an employer mandates remote work for certain functions and determines the location based on its commercial needs, remote working contracts and policies should be carefully structured to try and alleviate some of the compliance issues discussed earlier. For example, employees can agree to continue to be governed by the policies and benefits of their original office location in exchange for the flexibility to work from a location of their choice. These special policies and agreements should duly address each party's obligations towards, for example, confidentiality, productivity and health and safety.
Flexible working options can make workplaces and organisations attractive to employees and future candidates. When they are well-implemented, they can offer a win-win outcome for both organisation and employee. In order to clarify the uncertainties and risks associated with remote working, however, there is need for a more comprehensive legislation on the subject. Until such a law is prepared and passed, employers should take the following minimum measures when facilitating remote working:
- establish which of the following is motivating flexible working and tailor a policy accordingly:
- organisational needs (eg, to save costs or limit real estate footprints);
- employee requests (eg, seeking the benefits of not commuting, a better work-life balance); or
- a mix of both;
- consider what jobs and activities are conducive to remote working and how employee expectations in various groups will be addressed;
- consider the geographic extent to which remote work will be permitted. Will employees be allowed to move out of the city or state, or will they been expected to work from the same city, albeit from their homes? Will they be permitted to work from abroad (this will entail regulatory tax and foreign exchange concerns)?;
- assess pay and benefits practices to consider if:
- pay will be revised based on the market standards in the employee's location of choice; and
- any compensation will be offered towards routine expenses and infrastructure costs for remote working; and
- formulate appropriate remote working agreements to mitigate the various risks and compliance considerations discussed in this article.
For further information on this topic please contact Atul Gupta at Trilegal by telephone (+91 80 4343 4646) or email ([email protected]). The Trilegal website can be accessed at www.trilegal.com.
Endnotes
(1) For example, to comply with state-specific professions tax laws, an organisation would first need to register its physical establishment under the local Shops Act. Without an office and an address, such compliance will not be possible when it comes to depositing professions tax for remote working employees.