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Employee protection laws in India
India’s employment landscape has undergone substantial reforms with the codification of various employment laws into four major codes: the Code on Wages, 2019, the Code on Social Security, 2019, the Industrial Relations Code, 2019, and the Occupational Safety, Health and Working Conditions Code, 2020. These reforms aim to streamline and simplify the regulatory framework surrounding employment and labour rights, consolidating multiple laws under these four codes.
For employers operating in India, it’s critical to understand and comply with these codes, as they cover key aspects of employment such as employee protection, benefits, wages, social security benefits, industrial relations, and worker safety. Here are some crucial points employers should keep in mind:
- Wages and payments: The Code on Wages establishes a statutory minimum wage and mandates timely wage payment to all employees.
- Social security benefits: The Code on Social Security expands the scope of social security to include a larger segment of the workforce, including gig and platform workers. Employers must contribute to national social security schemes, ensuring coverage for their employees.
- Industrial relations: The Industrial Relations Code introduces reforms to provide flexibility in hiring and layoffs for employers, while also stipulating the formation of trade unions and the process of dispute resolution. You need to navigate these regulations carefully, respecting the rights to collective bargaining and ensuring procedural compliance with employee terminations.
- Health and safety conditions: The Occupational Safety, Health, and Working Conditions Code consolidates and updates laws governing workplace safety and health standards. Employers are required to provide a safe working environment, appropriate working conditions, and periodic training to employees. This includes specific provisions according to the nature of the job, covering a wide range of industries and employment types.
Another aspect employers should be aware of is the employee protection laws for women. For instance, the Maternity Benefit Act, 1961 grants women employees a 26-week paid maternity leave for their first two children. They also have the right to receive the same pay as men for work of the same or similar nature.
Employers must ensure adherence to these employee protection laws and other relevant legislation to create a safe, equitable, and supportive work environment. Ignoring or violating these provisions can lead to serious legal consequences and can negatively impact the reputation and operational capabilities of your business.
Whistleblower in India
While there is no specific law that governs the protection of whistleblowers in the workplace, corporate whistleblower policy in India is formed under a legal framework that mandates listed companies to have a mechanism for their directors and employees to report concerns about unethical behaviour, actual or suspected fraud, or a violation of the company’s code of conduct or ethics policy.
These provisions are outlined in Sections 177 (9) & (10) of the Companies Act, 2013, which define the requirement for certain companies to establish a vigil mechanism.
In addition, the Securities and Exchange Board of India (SEBI) also mandates the establishment of a whistleblower policy for listed companies. This policy aims to protect the individuals who raise concerns, ensuring that they are able to report issues without fear of retaliation.
- The SEBI regulations are particularly relevant to publicly listed companies. However, the Companies Act is applicable to:
- Publicly listed entities;
- Organisations that accept deposits from the public;
- Enterprises that have secured loans from banks or public financial institutions exceeding INR 50 crores.
Corporate whistleblower policy in India
The corporate whistleblower policy in India may vary from one company to another; typically, companies will customise their policies taking into consideration the nature of their business, size, operations, etc.
Here are some key points that are typically included in a corporate whistleblower policy in India:
- Procedures for reporting concerns about unethical behaviour or violations.
- Protection of the whistleblower’s identity, subject to legal constraints.
- Protection from retaliation for individuals who report in good faith.
- A clear statement that encourages employees to report such concerns.
- The implementation of these policies is expected to foster a culture of transparency and integrity in the business environment.
Meanwhile, the Whistleblowers Protect Act, 2011 specifically targets complaints associated with entities in the government sector, including but not limited to government companies, public servants, and public sector organisations.
India's data protection law
India’s employee data protection policy is largely governed by the Information Technology Act 2000 (IT Act), specifically amended by the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011.
Under the current IT Act, companies are mandated to implement and maintain reasonable security practices when handling sensitive personal data, which includes financial information, health conditions, and more—categories that often encompass employee data.
Under this data protection law, the IT Act emphasises the importance of consent from individuals for data collection and necessitates a privacy policy outlining the handling, usage, and processing of such information.
If an organisation negligently handles the data, resulting in wrongful loss or wrongful gain, they are accountable and required to compensate the affected individuals.
India’s personal data protection law
A more comprehensive approach is set to come into effect with the new Digital Personal Data Protection (DPDP) Act, 2023, providing a regulatory framework for privacy and data protection, which includes employee data. This law has been passed by the Indian government and will come into force in 2024.
The upcoming DPDP Act seeks to further empower and protect individuals by reinforcing their rights concerning personal data and imposing strict obligations on data fiduciaries – entities that decide the means and purpose of data processing The Act expects organisations to appoint Data Protection Officers who will ensure compliance and address grievances related to data processing. Additionally, the Act establishes the Data Protection Board of India, which will provide redress when individuals’ data rights are infringed.
India’s data privacy rules and policies to keep in mind
With the implementation of the Digital Personal Data Protection (DPDP) Act, 2023, employers in India must adhere to new regulations concerning the handling of employee data. Here are some key pointers for employers regarding data protection rules in India:
- Consent requirement: Employers must obtain explicit consent from employees before collecting, processing, or storing their personal data. Consent should be free, informed, and specific to the context in which the data is used.
- Data minimisation: Collect only the data that is necessary for the defined purpose. Employers should not process employee data beyond what is explicitly stated and consented to.
- Data protection measures: Implement and maintain reasonable security practices and procedures to protect employee data from unauthorised access, alteration, disclosure, or destruction.
- Transparency: Employers must be transparent about their data processing activities. This involves informing the employees about the specifics of data collection, processing purposes, storage periods, and any data sharing with third parties.
- Rights of employees: Employees have rights regarding their data, such as the right to access their personal data, correct inaccuracies, and request deletion or restriction of processing in certain circumstances.
- Breach notification: In the event of a data breach, employers are required to promptly notify the affected employees and relevant authorities, according to the severity and nature of the breach.
- Accountability and compliance: Employers must document compliance efforts and maintain records to demonstrate adherence to the DPDP Act. This includes appointing a Data Protection Officer where applicable and conducting regular audits.
- Cross-border data flow: If employee data is transferred outside India, employers must ensure that the data is transferred to countries or territories that ensure an adequate level of data protection or that sufficient safeguards are in place.
Equal treatment for temporary agency workers in India
There are no direct laws tailored specifically for temporary agency workers regarding equal treatment in comparison to similar directives in some other countries. However, the rights of temporary or contract workers, including issues concerning their equal treatment, are covered under broader labour laws such as the “Equal Remuneration Act, 1976.
This Act mandates that all workers, whether permanent or temporary, must receive equal pay, regardless of their gender, for the same kind of work or work of a similar nature.
The Supreme Court of India has supported this idea multiple times, making it clear that it applies to everyone, including those in temporary positions.
Staffing agency agreement when engaging with temporary workers in India
In India, engaging temporary workers through staffing agencies is a common practice across sectors. A staffing agency agreement for temporary workers outlines the terms under which temporary staff are provided by the staffing agency to the employer. Such agreements cover various aspects, including the roles and responsibilities of both parties, the duration of employment, payment terms, and compliance with local labour laws.
The agreement should clearly delineate the responsibilities of the staffing agency, especially concerning recruitment, remuneration, and statutory benefits for the workers. This would typically include provident fund contributions, Employees’ State Insurance (ESI), and other applicable benefits under Indian labour laws.
Anti-discrimination law in India
Anti-discrimination policy in the workplace in India
Employers in India should establish and enforce clear anti-discrimination and harassment policies to ensure a safe and inclusive workplace.
India has several laws in place that provide guidance for employers when crafting their internal anti-discrimination policies. However, it does not have a unified anti-discrimination law as seen in some other countries.
The Constitution of India provides for the fundamental right against discrimination on the grounds of religion, race, caste, sex, or place of birth.
There are specific laws that address workplace discrimination issues, such as
- The Equal Remuneration Act, 1976: This act ensures equal pay for equal work for both men and women and prohibits discrimination in recruitment and service conditions.
- The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act: Passed in 2013, it defines and addresses sexual harassment at work, to provide a safe working environment for women.
Despite these specific laws, a comprehensive anti-discrimination law encompassing all forms of discrimination, such as those based on sexual orientation, gender identity, and other such factors, does not exist and has yet to pass. There have been continuous discussions and calls from various bodies, including the United Nations, for India to establish a more comprehensive code to tackle all forms of workplace discrimination.
Equal pay in India
Equal pay for equal pay work law in India
In India, the legal principle of equal pay for equal work mandates that all workers, regardless of their gender, caste, or any other similar factor, should receive equal pay for work of the same or similar nature. Employers must adhere to this principle to ensure that there is no wage discrimination in their organisations.
The Code on Wages, 2019, was introduced to consolidate the laws relating to wages and bonus and matters connected therewith, which seeks to universalize the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling. The code subsumed four previously existing laws: the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.
Equal pay rights in India
Employers in India must ensure that for the same work or work of a similar nature, they pay their employees equally without discrimination. The legislation mandates that employers cannot discriminate between employees on the grounds of gender while recruiting or providing employment, which includes considerations of pay for tasks of similar nature.
Employers should keep in mind the following obligations:
- Ensure a non-discriminatory approach in terms of wages among all genders.
- Maintain a transparent wage policy that complies with the Code on Wages, 2019.
- Establish and regularly update their practices according to the relevant labour laws and regulations.
- Draft clear job descriptions that determine the nature of the work, helping to assess jobs that are of equal value and hence should be remunerated equally.
- Regularly audit payroll to ensure compliance with the equal pay principle.
- Address any gaps or disparities in pay immediately and ensure that any instances of inequality are rectified.
Failure to comply with equal pay for equal work principles can expose employers to legal consequences, including fines, penalties, and potential litigation. Thus, staying informed and ensuring fair wage practices are essential for employers operating in India.
Protect your business with our compliance expertise
Understanding and adhering to India’s labour laws and regulations while growing your operations can be overwhelming, but it doesn’t have to be.
By partnering with CXC, you’ll have a dedicated team of experts and handy compliance tools to protect your organisation from various workforce risks, such as tax, benefits, immigration, and worker misclassification. You can now hire top-tier talent in India or anywhere in the world with confidence.
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