To improve ease of doing business in India, various steps have been taken by the government in 2018 to simplify labour laws and provide better benefits to employees. This update summarises some of the key developments in the past year and gives a brief overview of what can be expected in 2019.
THE YEAR THAT WAS
Over the past few years, the government has been making a concerted effort under its 'Reform to Transform' initiative to streamline, simplify and update existing laws.
2018, also saw significant focus on employee rights and benefits which enhanced certain obligations on employers. Amendments to the Payment of Gratuity Act, 1972 doubled the maximum gratuity payable to employees, while a new law to protect the rights of persons suffering from AIDS prohibits employers from discriminating against such persons at the time of selection as well as during employment.
MAJOR DEVELOPMENTS IN 2018
1. Payment of Gratuity (Amendment) Act, 2018
The Payment of Gratuity (Amendment) Act, 2018 (Amendment Act) was notified on 29 March 2018. Some of the key changes pursuant to the Amendment Act are:
- The maximum gratuity payable to an employee has been increased from INR 10,00,000 to INR 20,00,000. Employees are also allowed a tax exemption on the payment of gratuity up to INR 20,00,000.
- The entire duration of 26 weeks of maternity leave is to be considered for calculating the period of continuous service of a female employee.
2. Kerala Shops & Commercial Establishments (Amendment) Ordinance, 2018
The Kerala Shops & Commercial Establishments (Amendment) Ordinance, 2018 was notified on 4 October 2018. Some of the key changes relevant to employers are:
- Seating facilities to be provided to all workers in every shop and establishment.
- Persons younger than 17 years and women cannot work between 9 pm and 6 am. But, a female employee may work during this time if the employer obtains that employee's consent and fulfills the prescribed requirements.
- Registers and records can also be maintained electronically.
3. Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017
The Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017 (Act) was brought into force on 10 September 2018. Some of the key obligations on employers under this new law are:
- Making HIV testing a pre-requisite for providing employment is not permitted.
- Denial or termination of employment of a person protected under the Act is unlawful except in certain prescribed situations.
- Healthcare establishments having twenty or more persons and other establishments under the Act having 100 or more persons must appoint a Complaints Officer.
- Every establishment that maintains HIV related records of a person protected under the Act is obligated to adopt data protection measures to ensure confidentiality of such records.
4. Board of Directors Report to include a statement on compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Companies (Accounts) Amendment Rules, 2018 were notified on 31 July 2018. All companies, other than one-person companies or small companies, are required to include a statement in their board reports, confirming that the company is compliant with the provisions relating to the constitution of an Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (SH Act).
The introduction of this amendment casts a responsibility on companies to report on the implementation of the SH Act for each office having 10 or more employees.
5. Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018
The Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 (Rules) were notified on 16 March 2018. The Rules amend the Industrial Employment (Standing Orders) Act, 1946 (SO Act) and Industrial Employment (Standing Orders) Central Rules, 1946, to introduce fixed term employment across all industrial establishments within the ambit of the SO Act.
Fixed term employees with written employment contracts will be entitled to the same hours, wages and benefits as permanent workmen. All statutory benefits shall be pro-rated according to the length of the period of employment.
Recent steps taken to simplify India's labour laws demonstrate the government's intent to improve the ease of doing business in India while providing a safe workplace and better benefits to employees.
One of the most awaited measures to help achieve this objective is the consolidation of the various labour laws into the Code on Wages, Code on Industrial Relations, Code on Social Security & Welfare and the Code on Occupational Safety, Health & Working Conditions. These Codes seek to expand the scope of application of existing labour laws while simplifying procedures. The Wage Code is currently placed before a Parliamentary Standing Committee.
In 2019, clarity is expected on the standards for establishing and maintaining crèches under the Maternity Benefit (Amendment) Act, 2017 under various State rules. Currently, only Karnataka and Haryana have released draft rules on this obligation.