Every workforce question
is a business question.

India has consolidated a long list of central labour statutes into four codes: the Code on Wages, 2019, the Code on Social Security, 2020, the Industrial Relations Code, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020. Central rules under the codes have been notified. Commencement and applicability turn on notification of the relevant provisions, which can be staged, so the position for a given establishment has to be confirmed rather than read off a single date. Labour is a concurrent subject, so state rules count for as much as central ones, and applicability has to be worked out sector by sector and state by state rather than assumed.

The consequences of the change run further than a payroll adjustment, because the codes rewrite the definition of wages itself. That definition feeds gratuity, provident fund contributions and other statutory entitlements, so what a pay structure built around allowances costs under the codes depends on how the structure is put together and has to be modelled rather than assumed. The effect is not evenly distributed across a workforce. It gathers in particular grades and particular locations, and it shows up in accrued provisions on the balance sheet before it shows up in the monthly outflow. Readiness reviews model that impact across the employee population, revisit standing orders and service rules, look again at contractor and multi-state licensing, and identify the employment documents that no longer match the statutory position. Most of that is arithmetic and paperwork. The harder part is explaining a change in salary architecture to the people it affects.

We develop and manage employment agreements and policies, structure compensation and benefits, and handle severance and termination. Our guidance extends to confidentiality and non-compete arrangements, and to the employment aspects of mergers, acquisitions and business transfers. We draft service regulations and handbooks, conduct disciplinary proceedings and related documentation, and run employment law audits.

On restrictive covenants the Indian position differs from many jurisdictions, and drafting imported from elsewhere does not translate directly. Section 27 of the Indian Contract Act, 1872 renders an agreement in restraint of trade void to that extent, subject to the statutory exception for a restraint attached to the sale of goodwill, and post-termination non-compete clauses are generally not enforced. Restrictions that operate during employment, genuine confidentiality obligations and non-solicitation of clients and staff sit on different footing. An employer whose drafting rests on an unenforceable non-compete, rather than on confidential information properly protected, has less protection than it believes it has.

We advise on whistleblower, harassment and internal misconduct investigations. On workplace harassment, the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 requires an employer at or above the headcount the Act prescribes to constitute an Internal Committee, and sets out an enquiry process and annual reporting. Procedural defects are a common ground of challenge, separately from the underlying facts. A committee constituted wrongly, natural justice not observed, findings recorded without reasons: each of those has been treated as a serious procedural defect. We also advise on reduction-in-force exercises, where sequencing and the statutory requirements on notice, compensation and, in defined cases, government permission bear on whether the exercise is lawful.

Beyond that we advise on individual and industrial disputes, and appear in conciliation and before labour authorities and tribunals. We train legal and HR teams too, though most of that training is really aimed at line managers.

A consolidation of this size settles slowly. Commencement and applicability turn on notification, provisions can be brought into force in stages, and states are at different points in framing and notifying rules of their own. Sector-specific exemptions and transitional arrangements sit on top of that. Because commencement is staged and applicability is location-specific, the position has to be confirmed for each establishment rather than inferred from a date. A date committed to in an internal announcement is the step that is hardest to walk back.

Employment law in India is several regimes at once, and the first question in almost any matter is which of them governs. The Industrial Relations Code, 2020 uses the term worker, and classification turns principally on the duties a person actually performs rather than on designation, subject to the statutory exclusions, which include a wage ceiling for employees engaged in a supervisory capacity. Someone carrying a managerial title who does not in substance manage anything may still sit inside the protective machinery. Factories and commercial establishments are regulated separately. And shops and establishments legislation is state law, so a policy written for one location rarely transfers untouched to another. Nor is the workforce usually a single category. Contract labour engaged through a contractor carries its own registration and licensing obligations, along with the principal employer’s residual liability where a contractor defaults on wages or welfare, and the standing risk that an arrangement papered as a contract for services is treated as employment because of the way control, supervision and integration work day to day.

Fixed-term employment is recognised, with benefits no less favourable than those of a permanent worker doing similar work and gratuity available on a pro-rata basis after the qualifying period. The Code on Social Security, 2020 also brings gig workers and platform workers within a defined framework, which matters to any business whose delivery model runs on them.

Underneath the headline questions sits a steady operational load. Provident fund and employees’ state insurance registration and monthly contributions. Gratuity provisioning. Maternity benefit, including the creche obligation that applies above the prescribed headcount and the discretionary work-from-home provision. Professional tax and labour welfare fund contributions where the state levies them. Each of them carries its own registers, returns and inspections.

Employers with international workers have a further set of provident fund obligations, softened where a social security agreement between India and the home country allows a certificate of coverage. All of this is administrative housekeeping right up to the point where a past period surfaces as a recovery claim with interest and damages attached. Payroll structure is where the codes and the social security regime meet. A cost-to-company built on a small basic component and a wide spread of allowances was, for many employers, a deliberate way of holding statutory cost down. The revised definition of wages limits how far that approach works, and the effect on statutory cost depends on how a particular structure is built. We model the effect on gratuity, provident fund, bonus, leave encashment and notice pay before any restructuring is announced. Payroll vendors matter here as well, since a system configured against the old registers will keep producing them long after the rules have moved on.

What a deal does to employees depends entirely on how it is structured. In a share sale the employer does not change, so contracts, service continuity and accrued entitlements are generally unaffected, subject to change-of-control and incentive plan terms, and the work is diligence and integration. In a business transfer or slump sale the employer does change, and employees do not move across automatically. Transfer needs consent. Statutory provisions on transfer of an undertaking may also give a worker with the qualifying period of continuous service an entitlement to notice and compensation as though retrenched, unless the conditions on continuity of service, terms and the transferee’s liability are satisfied. For those who do transfer, continuity of service, terms no less favourable and the treatment of accrued leave and gratuity are what decide whether the transfer is clean. Employment diligence findings can affect price and risk allocation: unremitted contributions, contractors who cannot produce licences or challans, employees classified as consultants who plainly are not, an Internal Committee that exists on paper, establishments operating without registration, standing orders never certified.

Most of those defects are more easily addressed before a process begins. Where a defect cannot be cured before signing, remedies may include a specific indemnity, an escrow or a price adjustment, depending on the matter.

Several things change once the employer or the counterparty sits outside India. A secondment put together casually can create permanent establishment exposure for the foreign entity, so the contractual analysis and the tax analysis have to be done together and not one after the other. Employer-of-record and staffing arrangements face the same control and integration questions that apply to domestic contracting. Share awards granted by a foreign parent to employees here carry exchange control and withholding consequences, and those are far easier to build in at grant than to unwind afterwards. Employee data moving offshore engages obligations under the Digital Personal Data Protection Act, 2023, which is being brought into force in stages and under which restrictions on transfer operate through government notification. Timing is the practical difficulty in most of this. A secondment usually starts before anyone asks the questions, and unwinding a long-running arrangement is harder than structuring it at the outset.

Where a dispute goes depends on who is bringing it. Matters involving workers usually run through conciliation before the labour authorities and then to adjudication before the tribunals constituted under the Industrial Relations Code, 2020, with transitional arrangements continuing existing forums in places, and the parties have limited room to contract out of that route. Employees outside the category are generally left with a civil suit for damages, or with writ proceedings against a public employer. Harassment matters have their own route, including a statutory appeal from the Internal Committee’s recommendations, which is subject to a short limitation period. Some non-compliance also carries penal exposure for the employer and for named officers, which changes the complexion of a matter considerably. Most of these cases turn on the contemporaneous record, and consistency of treatment across comparable conduct is relevant as well as documentation.

Contemporaneous performance records carry more weight than concerns first recorded at termination. The same concerns sitting in appraisals, improvement plans and dated correspondence form part of a process.