Labour and Employment Law Newsletter May 2024

Part A: Supreme court judgments

1. Employees Performing Similar Work Can Not be Discriminated with respect to Regularization:

Title: Ushaben Joshi vs. Union of India and Others (2024 SCC OnLine SC 2277)

Facts: Ushaben, who was the Appellant in the case, was appointed as a cleaner in the postal department in 1986. After working for sixteen years, she reached out to the postal department for regularization of her job in the light of the Hon'ble Supreme Court's ("the SC") judgement titled Daily Rated Casual Workers vs. Union of India. However, the department rejected her claims.

Aggrieved by this, she moved to the Central Administrative Tribunal and then to the Hon'ble High Court ("the HC"). However, her claims were rejected by both the forums. Ultimately, Ushaben approached the Hon'ble SC. Ushaben argued before the SC that the department had regularized the services of another woman (K.M. Vaghela), who was appointed in 1991 and performing the exact same services as Ushaben, and that the department discriminated between two similarly placed employees in regularizing their services.

Observation of the SC:

The SC observed that the regularization of KM Vaghela was an independent decision of the department, which substantiated the argument of discrimination raised by Ushadevi. Further, the department failed to prove that the nature of work of KM Vaghela was any different from that of Ushadevi.

Subsequently, the SC held that Ushadevi has been working with the department for over three decades now as a contingency worker, and keeping in view that KM Vaghela, who is a similarly placed worker, has been regularised by the department, Ushadevi is entitled to regularization. The SC directed the department to regularize the services of Ushadevi from the date on which the services of KM Vaghela were regularized.

2. Resignation is Not Final Until the Communication of its Acceptance to the Employee:

Title: S.D. Manohara vs. Konkan Railway Corporation Limited & Ors (2024 SCC OnLine SC 2546)

Facts: The Employee, in the present case, was employed with the Konkan Railway since 1990. In December 2013, he served his resignation with a one-month notice to the Konkan Railway. The resignation was accepted in April 2014, but was never communicated to the Employee. In May 2014, the Employee withdrew his resignation but was relieved from employment in July 2014.
Although the resignation was accepted in May 2024, the Employee was called on to report to work on various occasions.

The Employee argued that his resignation never attained finality as its acceptance was never communicated to him, and thus, he could not be relieved from the employment. The Employee reached the HC, which upheld his contention. However, the Division Bench of the HC reversed the order. Aggrieved by this, he appealed to the SC.

Observation of the SC:

The Hon'ble SC held that it cannot be said that the Employee has resigned from the employment since he was made to report to work on multiple occasions and was in constant touch with Konkan Railway. Further, there was no communication of acceptance of the resignation.

Consequently, the SC ordered Konkan Railways to reinstate the Employee and pay him 50% of the salary for the period he is said to have been relieved from service, i.e. from July 2014 till date.

Part B: High Court Judgements

1. Right of Female Employees of 180 Days of Paid Maternity Leave

Title: Minakshi Chaudhary vs. Rajasthan State Road Transport Corporation & Anr (2024 SCC OnLine Raj 2779)

Facts: Minakshi Chaudhary was working as a conductor with Rajasthan State Road Transport Corporation ("RSRTC"). During her pregnancy, she applied for maternity leave for a period of 180 days under the provisions of the Maternity Benefit Act of 1961 ("the Act of 1961"). However, she was only granted 90 days' leave, as per the Regulation 74 of Service Regulations of RSRTC, 1965 ("the Regulations"). Aggrieved by this, the Petitioner approached the Hon'ble Rajasthan HC praying for a grant of 180 days of maternity leave.

Observations of the HC:

The Hon'ble HC held that the Regulations do not overrule the amended provisions of the Maternity Benefits (Amendment) Act, 2017, and the Petitioner is entitled to 180 days of maternity leave as per the provisions of the Act of 1961. The HC referred to a catena of cases such as Municipal Corporation of Delhi vs. Female Workers & Anr and Bandhua Mukti Morcha vs. Union of India in which the Hon'ble Supreme Court has categorically held that the provisions of the Act of 1961 are applicable to working women in all types of employment, including the unorganized sector and maternity relief is a fundamental right.

2. Employment Disputes Arising out of Negative covenants are Arbitrable

Title: Lily Packers Private Limited vs. Vaishnavi Vijay Umak and connected matters (2024 SCC OnLine Del 4725)

Facts: The Petitioners ("the Company") and the Respondent ("the Employees") have entered into an employment agreement during 2021-2022. The employment agreement contained a lock-in period clause which says that the employees could not leave the employment before a period of three years. Further, the agreement provided for arbitration as mode of dispute resolution for any dispute arising out of the employment agreement. However, some of the employees left the employment only after one year. The Company sent a notice to such employees to invoke arbitration, to which the employees did not agree. Aggrieved by this, the Company reached to the Hon'ble Delhi HC under Section 11 of the Arbitration and Conciliation Act, 1996 ("the Act of 1996") to appoint an arbitrator.

Issues before the HC:

i. Whether a lock-in period in employment contracts is valid in law, or does it violate the fundamental rights enshrined in the Constitution of India?

ii. Whether disputes relating to a lock-in period in employment contracts are arbitrable in terms of the Act of 1996?

Observations of the HC:

The Hon'ble HC referred to a 2006 judgement of the Hon'ble SC titled Niranjan Shankar Golikari vs. Century Spinning And Manufacturing Co., wherein, the Hon'ble SC had observed that a negative covenant providing for exclusive service during the course of employment is generally not contrary to law. Further, the Hon'ble HC held that similar observations were also made in the judgement of Percept D' Mark (India) (P) Ltd. vs. Zaheer Khan & Anr.

Based on the above rulings, the HC held that a three-year lock-in period would not constitute a restraint on the employment of the employees and did not violate any fundamental rights of the employees.

To answer the second question, the HC had put reliance upon its own 2008 ruling in BLB Institute of Financial Markets Ltd. vs. Ramakar Jha, wherein, there was a lock-in clause of three years in the employment agreement, and the employee left the employment only after just one year of service. The Court has held that negative covenants during employment are valid, and thus, any employment dispute arising out of such negative covenant shall be arbitrable. Based on all referred judgments, the HC finally concluded that negative covenants during the term of employment are valid and enforceable, and any dispute arising out of such covenants shall be arbitrable if the employment agreement provides for arbitration.

3. Right of Surrogate Mother to Maternity Leave:

Title: Supriya Jena vs. State of Orissa and Ors (2024 SCC OnLine Ori 1690)

Issue before the Hon'ble Orissa High Court ("the Orissa HC):

Whether a surrogate mother can claim the benefit of the Act of 1961?

Observations of the Orissa HC:

To answer this issue the Orissa HC referred to the Hon'ble Rajasthan HC judgment titled Smt. Chanda Keswani W/O Shri Bhupesh vs. State of Rajasthan, wherein it was held that a female could become a mother not only by giving birth to a child but also by adopting a child and now, with the development of medical science, through surrogacy as well. The Rajasthan HC further opined that the maternity period includes the period shortly after the child's birth in addition to the pregnancy period. If maternity means motherhood, it would not be proper to distinguish between a natural and biological mother and a mother who had begotten a child through surrogacy.

The Orissa HC also relied on the Hon'ble Bombay High Court's ruling titled Dr. Mrs. Hema Vijay Menon vs. State of Maharashtra, wherein it was held that maternity leave should be granted to employees who become mothers through surrogacy to ensure equal treatment and support for all new mothers, irrespective of how they become parents. Moreover, the Orissa HC observed that the Act of 1961, which aims to protect the employment of women during maternity and ensure their full health, should be interpreted in an inclusive manner that encompasses all forms of motherhood. On this reasoning, the Orissa HC directed the Respondents to sanction 180 days of maternity leave to the Petitioner.

4. OLA Held Liable For Sexual Harassment Committed By Its Drivers

Title: Ms. (X) vs. Internal Complaints Committee, ANI Technologies and Ors (Writ Petition No.8127 OF 2019)

Facts: In 2019, Ms. X experienced sexual harassment by an OLA ANI Technologies ("OLA") driver. She reported the incident to OLA's Internal Complaints Committee ("IC") as constituted under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("PoSH Act"), but her complaint was dismissed. The IC, following advice from its external legal counsel, stated it lacked jurisdiction because OLA drivers are not considered employees, and there is no employer-employee relationship, only a principal-to-principal relationship. Dissatisfied with this decision, Ms. X approached the Hon'ble Karnataka HC for redress.

Observations of the HC:

To clarify the relationship between OLA and its drivers, the Hon'ble HC examined the definitions of "employer" and "employee" under the PoSH Act, as well as the subscription agreement between OLA and the drivers. The Court observed that the PoSH Act's definitions are broad, covering all possible forms of engagement, whether contractual or otherwise, for any duration, with or without remuneration, and including voluntary work.

The HC noted that terms like "driver-partner", "independent contractor", and "principal-to-principal basis" in the subscription agreement were facades which needed to be pierced. Upon closer scrutiny, the Hon'ble HC found that OLA had significant control over the drivers, including the ability to terminate their registration, enforce arbitration for dispute resolution, and impose thirty-two strict guidelines that drivers must follow to avoid deregistration. Based on these observations, the Court concluded that OLA exercises direct supervision over its drivers, making it their employer under the PoSH Act.

Consequently, the HC directed the IC of OLA to conduct an inquiry into the complaint in accordance with the PoSH Act within ninety days and submit a report to the District Officer. Additionally, OLA was ordered to pay Rs 5 lakh in compensation to the complainant, Ms. X.

Part C: Recent Developments In Labour & Employment Law In India

1. Central Government notifies Centralized Pension Payments System ("CPPS") for pensions under EPS 1995

Effective Date: January 1, 2025

On September 4, 2024, the Ministry of Labour and Employment announced the introduction of a CPPS for the Employees' Pension Scheme (EPS) of 1995. This new system represents a significant change by creating a national-level centralized platform, allowing pension payments to be made through any bank branch across India. Scheduled to launch on January 1, 2025, as part of the EPFO's Centralized IT Enabled System (CITES 2.01) modernization project, the CPPS will eventually transition to an Aadhaar-based payment system (ABPS). The CPPS is designed to streamline pension disbursements nationwide, eliminating the need to transfer Pension Payment Orders (PPOs) between offices, even if pensioners move or change their bank or branch. This initiative is expected to greatly benefit pensioners who return to their hometowns after retirement.

2. Launch of a new She-Box Portal

On August 29, 2024, the Ministry of Women and Child Development introduced the updated SHE-Box portal. This centralized platform aims to compile information on Internal Committees (IC) and Local Committees (LC) nationwide, facilitating the registration and monitoring of workplace sexual harassment complaints. According to the press release, the enhanced SHE-Box allows complainants to submit their complaints directly to the relevant IC or LC. The portal will become fully operational once all Central Government Ministries/Departments, States/UTs, and the private sector update their respective IC/LC information. The goal is to onboard the details of nodal officers and ICs from all Central Ministries/Departments by October 2024.

3. Registration of gig and platform workers on e-Shram portal of the Ministry of Labour & Employment

The Ministry of Labour & Employment is launching the eShram portal to register and support unorganized/migrant workers in India, providing them with a Universal Account Number (UAN) for Skill, finding jobs, and checking eligibility for social sector schemes. The portal is a One-Stop-Solution for workers, allowing them to access various social security schemes. As millions of workers join the Platform economy, the Central Government is onboarding Platform Aggregators on eShram to facilitate registration. Testing with aggregators has been completed to ensure API integration with the portal. Aggregators are encouraged to complete API testing and onboard themselves and platform workers on the portal. A Standard Operating Procedure (SOP) and information pertaining to platform and platform workers can be shared during on-boarding. The Ministry wishes to continue advancing collaboratively and requests support in registering platform workers on the eShram portal to achieve a just and equitable gig and platform economy.

4. Extension of Timeline for Obtaining Insurance Policy under Karnataka Compulsory Gratuity Insurance Rules, 2024

Effective date: July 4, 2024

On July 4, 2024, the Government of Karnataka issued a notification that extended the deadline for employers to obtain a valid insurance policy for gratuity payments under the Karnataka Compulsory Gratuity Insurance Rules, 2024 ("Rules"). This amendment significantly increases the timeline from 60 days (originally until March 10, 2024) to 6 months (now until July 10, 2024). Consequently, employers of establishments that were in existence at the time of commencement of the Rules are required to secure a valid insurance policy within 6 months of the Rules' implementation, providing essential relief to employers in fulfilling this obligation.

5. Amendment to the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Rules, 2018

Effective Date: July 22, 2024

The Government of Maharashtra has notified an amendment in the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Rules, 2018. These changes outlined the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) (Amendment) Rules, 2024, focusing on enhancing documentation requirements for establishments. An amendment under the notification includes the introduction of forms A, D and F regarding the "Insurance certificate of establishment". This means that establishments will now need to provide an insurance certificate in these forms, reinforcing the need for insurance documentation. Form R is also introduced which pertains to "Insurance policy number and date of validity of insurance policy of establishment" has been introduced. In the Schedule appended to Part A, Part B and Part C a new entry regarding "Copy of insurance certificate of insurance of establishment" has been added.

6. Amendment to the Tamil Nadu Shops and Establishments Rules, 1948

Effective date: July 2, 2024

The amendment introduces certain rules regarding the registration process and First-aid facilities to be provided by the employer. These amendments are in line with the amendment to the Tamil Nadu Shops and Establishments Act, 1947, which was also published on July 2, 2024. The newly implemented rules introduce the following requirements:

• Application for Registration (Rule 2A): Establishments must apply for registration to the area Inspector in Form-Y, applications are to be submitted online with a fee of Rs. 100.
• Issuance of Registration Certificate (Rule 2B): The Inspector will issue the registration certificate online within 24 hours of application, and the register of establishments will be maintained.
• Intimation for Existing Establishments (Rule 2C): The employer of an existing establishment must provide details of the establishment in Form ZB, online through the designated web portal of the Labour Department to the area Inspector.
• Amendment of Registration Certificate (Rule 2D): Applications for amendment of registration certificates must be submitted online, and the Inspector will provide a fresh certificate within 24 hours of receiving the application.
• First-aid Facilities (Rule 6A): Establishments must provide a first-aid box for every 150 employees, the box must be marked with a red cross and contain basic first-aid materials.
• Penalty Increase (Rule 18): The maximum penalty for violation of the rules is increased from Rs. 50 to Rs. 2,000.

7. Tamil Nadu Shops and Establishment (Amendment) Act, 2023 Comes into Force

Effective date: July 2, 2024

On July 2, 2024, the Government of Tamil Nadu issued a notification to implement the Tamil Nadu Shops and Establishments (Amendment) Act, 2023 (2023 Amendment I), which aims to enforce the Tamil Nadu Shops and Establishments (Amendment) Act, 2018 (2018 Amendment). In conjunction, the notification also introduced the Tamil Nadu Shops and Establishments (Amendment) Act, 2023 (2023 Amendment II), which establishes additional welfare provisions for employers. Both amendments are effective from July 2, 2024, and are deemed to have amended the Tamil Nadu Shops and Establishments Act, 1947 (Principal Act).

Key changes introduced by these amendments.

• Registration of Establishments: The Amendment, mandates that all employers with 10 or more workers must apply for registration of their establishment using the prescribed form. For existing establishments with 10 or more workers, employers are required to submit the necessary details within one year from the commencement date of the 2018 Amendment (i.e., by July 2, 2025). Following this submission, the Inspector will issue a registration certificate. The amendment stipulates that the Inspector must complete the registration within 24 hours; if this timeline is not adhered to, the establishment will be deemed registered. The registration process is outlined in the notification dated July 2, 2024, which amends the Tamil Nadu Shops and Establishments Rules, 1948 (Amended Rules). Employers are required to submit their applications through a designated web portal of the Labour Department, though specific portal details have not been provided. This portal will also facilitate the submission of details by existing establishments. The application format (for new establishments) and the intimation format (for existing establishments) will require employers to disclose details such as the entity's constitution (e.g., society, company, partnership), the name of the employer, and the total number of employees, including contract workers provided by manpower services.
• Welfare provisions for persons employed in the establishment: The amendment mandates that employers ensure adequate facilities for drinking water, washrooms, restrooms, lunchrooms, and first-aid provisions. Specifically, the Amended Rules require at least one first-aid box to be available for every 150 employees.

8. Himachal Pradesh Factories (Amendment) Rules, 2024 published.

Effective date: August 30, 2024.

• The Government of Himachal Pradesh has published the amendment to the Himachal Pradesh Factories Rules, 1950 ("Rules"). The key highlights of the amendment are as follows:
• The licensing fee structure for factory licenses has been updated to better reflect current economic conditions and administrative practices.
• The fees for the application for the license, transfer of license and in case of loss of license have been increased from INR 100 to INR 500.
• A new rule has been inserted which establishes a framework for recognizing "competent persons" for safety and inspection roles within factories. The rules stipulates that the Chief Inspector can designate individuals as competent for specific areas, enabling them to conduct tests and inspections related to buildings, machinery, lifting equipment, pressure plants, and more. Further, a schedule has been added which mentions the specified qualifications and experience required to be recognized qualified personnel handle critical safety functions.

9. Goa Rights of Persons with Disabilities (Second Amendment) Rules, 2024 published.

Effective date: September 19, 2024

The Department of Empowerment of Persons with Disabilities, Goa on September 19th 2024 notified the Goa Rights of Persons with Disabilities (Second Amendment) Rules 2024 to further amend the Goa Rights of Persons with Disabilities Rules 2018 ("Rules"). The amendment streamlined and clarified the responsibilities of various departments and officials who are involved in the empowerment of persons with disabilities. The Department of Social Welfare will now be recognised as the Department for Empowerment of Persons with Disabilities throughout the Rules.

10. Notification for IT employees and the work timing modifications in West Bengal

Effective date: July 1, 2024

In accordance with the exemption granted to IT sector establishments from the working hours provisions of the West Bengal Shops and Establishments Act, 1963, the requirement for an 8.5-hour workday does not apply to these establishments. This notification serves to confirm the exemption, stipulating conditions that IT establishments shall not exceed a maximum of 9 hours of work per day and 48 hours per week.

11. West Bengal - Special Employment Exchange for Physically Handicapped

Effective Date: August 30, 2024

On August 30th, 2024, the Government of West Bengal issued a notification concerning the Special Employment Exchange for Persons with Disabilities. It is mandated that employers in every establishment shall provide information or returns in the prescribed forms regarding vacancies designated for individuals with benchmark disabilities that have arisen or are anticipated to arise within the establishment. This information must be submitted to the Special Employment Exchange for Physically Handicapped at the Directorate of Employment under Department of Labour, in strict accordance with Rule 13 of the Rights of Persons with Disabilities Rules, 2017.

12. The Department of Labour, Punjab, Has Issued Notification to Permit Establishments to Operate 365 Days in a Year

Punjab Labour Department has issued a notification on July 15, 2024, allowing establishments registered under the Punjab Shops and Commercial Establishments Act, 1958 (PSA) to remain open every day until May 31, 2025. This permission comes with several conditions:

• Establishments must hire additional staff to cover the extended hours, ensuring compliance with PSA regulations.
• Female employees cannot work past 8:00 P.M. without their written consent. Employers must provide adequate safety and security measures during working hours and ensure safe transportation home for female employees after work.
• All employees must receive the facilities and benefits outlined in relevant labour laws.
• If any terms of the notification or PSA provisions are violated, the exemption will be revoked by the competent authority after a hearing.

Part D: Foreign Developments

1. Indonesia:

Enhanced Maternity and Paternity Rights:

The Indonesian government on July 2, 2024 enacted a new law (Law No. 4 of 2024 on Mother and Child Healthcare in the First One Thousand Days of Life), focusing on enhancing the welfare of mothers and children by introducing new rights for working parents. The key highlights of the law are:

• Maternity leave period: Can be extended up to three months if medically necessary. Working mothers are entitled to full wages for the first four months and 75% of their wage for the fifth and sixth month;
• Paternity leave: Working fathers are entitled to up to two days of paternity leave, with the possibility of extending this by an additional three days or as agreed with their employer;
• Workplace facilities: Employers must support working mothers who breastfeed by providing healthcare facilities, lactation rooms and daycare services; and
• Adjustment of workload and working hours: Companies should adjust the workload and working hours of working mothers while also considering company productivity targets.

2. Australia:

Right to disconnect:

Starting from August 26, 2025, the employees of small businesses will have the right to ignore work-related communications outside of their regular working hours, unless it is unreasonable to do so. This means that while employers can still attempt to contact employees, the employees are protected if they choose not to respond, provided their refusal is reasonable. Factors determining the reasonableness of a refusal include the purpose of the contact, whether the employee is compensated for being available outside of normal hours, their level of responsibility, and their personal circumstances.

3. Türkiye:

Short-time working:

Starting March 1, 2024, new regulations on short-time working will replace the old rules with several key changes:

• Employers can also apply for short-term work during general epidemics.
• The minimum short-time working period is four weeks, except for employees whose employment is terminated, transferred, or suspended.
• The short-time working period must be at least one-third of the normal weekly working hours for the workplace, though for individual employees, it can be less than one-third but not zero.
• Applications for short-time working due to compelling reasons like natural disasters or epidemics no longer require approval from the Turkish Employment Agency's board of directors.

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