As PM Modi encourages WFH ecosystem, here’s what law has to say

Prime Minister Narendra Modi recently said flexible workplaces, a work-from-home ecosystem and flexible work hours are the need of the future. The government has already taken steps to ease this transformation, replacing almost 30 labour laws with four codes: the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health & Working Conditions Code, 2020. The government promulgated and notified the four new labour codes on September 29, 2020.

The moment new labour codes were announced, there was much speculation on whether there would be a reduction in take-home pay, the possibility of a four-day work week, and so on. So what does the law say about a permanent work-from-home scenario, something that new entrants to the workforce are increasingly demanding?

Moneycontrol breaks down the details of laws governing permanent work from home (WFH), work from anywhere (WFA) and mandatory work from an office (WFO).

Does the law allow WFH?

The solitary mention of ‘work from home’ in the codes is in the Draft Model Standing Orders issued under the Industrial Relations Code which deals with laws relating to trade unions, conditions of employment in industrial establishment, etc, said Suvigya Awasthy, associate partner at PSL Advocates & Solicitors.

The Union government has pre-published the draft rules for all four codes, but since labour is on the concurrent list of the Constitution, states have to frame regulations on their part.

While these codes do not specifically deal with WFH, a beginning has been made with the Draft Model Standing Orders. These orders will guide employers at industrial establishments having over 300 workers on formulating rules of conduct for workers, Awasthy said. Accordingly, an employer may allow employees to work from home for a fixed period, subject to conditions of appointment or agreement between the two parties.

Moreover, Awasthy explained that the Social Security Code contains the phrase ‘home-based worker’ which may pertain to a person engaged in the production of goods or services for an employer in his own home or other premises.

“The definition has been peculiarly worded that allows the worker to execute the work from a place of his choice or from anywhere apart from the workplace of the employer,” he said.

The governance and implementation of the labour laws will happen in a staggered manner—though they were to kick in from July 1, it had to be deferred as several states could not come to an agreement on the terms. While the codes have been notified, they have not been notified for enforcement apart from certain provisions.

Notably, Awasthy pointed out that respective state governments play a pivotal role in enforcement of labour laws and in case of any overlap between the rules made by the Union government and a state, in accordance with the settled principles of law and doctrine of repugnancy, the law and rules made by the central government will hold precedence over the law enacted by a state government.

Do employees have a choice?

The Ministry of Commerce and Industry issued a notification under which work from home or any place outside SEZs (Special Economic Zones) unit may be permitted for employees working in the IT/ITeS sector, including specified contractual employees, subject to approval by the authority concerned, explained Suyash Srivastava, partner, DSK Legal.

However, there’s a catch. Since there is no central legislation specifically granting a blanket guarantee in terms of rights of a full-time employee or part-time employee to work from home or work from anywhere, the matter of choice hardly exists, said Mukul Chopra, senior partner at Victoriam Legalis, a Mumbai-based law firm.

“Nevertheless, the employer may give such an option to the employees as a part of its policies or contractual terms agreed upon between the employer and the employee,” he said.

For instance, an employee managing the technical affairs of an organisation may choose the WFH model; however, an accountant in the same organisation may not be able to afford the WFH model given the nature of the person’s work, said Awasthy.

Some legacy organisations such as Microsoft, Accenture and Deloitte, and startups including Swiggy, have allowed some of their employees to choose their work mode.

These changes came to light when a sizeable chunk of youngsters— 47 percent—told job portal Indeed that they’re very likely to change jobs within the next 12 months. Of them, 61 percent said this was because of return to office plans by their employers, which would spell the end of working from home.

Currently, the attrition rate is the highest in the history of the IT-BPM industry in India. Full-time employee attrition was around 24 percent in FY22. Among the top 300 companies, the Q3 and Q4 FY22 attrition was 26 percent.