We welcome you to the November-December 2024 Edition of IndusLaw's Employment Corner Bulletin, where we discuss the key statutory and judicial updates for the period between November and December of 2024. This year has brought significant changes in the realm of legislative developments and evolving employment practices. In this regard, we also discuss some of the more critical statutory developments and prominent HR practices that employers and HR leaders should take into consideration while strategizing on their organizational practices and compliances for 2025. We have also dedicated a section in the Bulletin to highlight important D&I and HR initiatives being implemented by employers across India.
LEGAL UPDATES
STATUTORY UPDATES
CENTRAL
Employees' Provident Fund Organisation sets January 15, 2025, as Deadline for UAN Activation and Aadhaar-Bank Account Seeding under Employment Linked Incentive Scheme
The Employees Provident Fund Organisation ("EPFO") has issued instructions dated November 22, 2024, regarding the Employment Linked Incentive Scheme ("ELI Scheme") announced in India's Union Budget 2024-25. The ELI Scheme introduces groundbreaking programs to boost formal employment in India. It includes a direct benefit transfer of one-month salary (in 3 equal monthly instalments) by the Government to first-time joiners in all formal sectors, with the maximum benefit amount capped at INR 15,000, subject to further clarifications by the Government.
The EPFO has made it mandatory for every subscriber to have an activated Universal Account Number ("UAN") linked with Aadhaar, and their bank accounts seeded with Aadhaar. Employers are directed to ensure compliance by January 15, 2025, particularly for employees who joined in financial year 2023-24. The UAN activation process can be completed through Aadhaar-based One Time Password verification, enabling employees to access various online services including their Provident Fund ("PF") passbook viewing, claiming submissions, and real-time tracking. The Aadhaar-bank account seeding requirement is essential as the ELI Scheme benefits will be disbursed through direct benefit transfer.
The EPFO has emphasized that these measures are part of its ongoing commitment to improving the delivery of social security benefits and enhancing service accessibility through its online portal to all members.
Employees' Provident Fund Organisation revises Guidelines for Physical Claims Settlement without Aadhaar Seeding – Guidance for International Worker Claims
The EPFO has issued instructions dated November 29, 2024, clarifying the settlement of physical claims for specific categories of members who are unable to seed and authenticate their Aadhaar, a challenging matter for members who are not comfortable with electronic dealings.
The instructions also address concerns raised by EPFO field offices regarding claim settlements for International Workers ("IW"), overseas migrants, and citizens of Nepal and Bhutan. While UAN generation remains mandatory, these specified categories are now exempt from Aadhaar seeding requirements, an important aspect for Indian employers engaging foreign employees. These instructions allow for alternative identification documents such as (i) passports for IWs who have left India without obtaining an Aadhaar and Indian workers who permanently migrated to a foreign country and subsequently obtained their citizenship; and (ii) Citizenship Identification Certificates for Nepalese and Bhutanese workers.
For settlements exceeding INR 5 lakh, additional identity verification by employers is required. The directive emphasizes that claims must undergo proper due diligence, including bank account verification, and requires officer-in-charge approval through e-office documentation. This change aims to facilitate prompt settlement of genuine claims while maintaining proper verification protocols for members who cannot obtain Aadhaar due to their specific circumstances.
Central Government amends Employees' Deposit-Linked Insurance Scheme, 1976 to revise Death Benefit Calculations
The Ministry of Labour and Employment amended the Employees' Deposit-Linked Insurance Scheme, 1976 ("EDLI Scheme") via notification dated November 18, 2024, which is deemed effective from April 28, 2024. The amendment modifies paragraph 22 of the EDLI Scheme, revising the calculation of death benefits for eligible employees. To be eligible, employees must have been in continuous employment for 12 months preceding their death. As per the amendment, eligible beneficiaries will now receive an amount equal to 35 times the deceased employee's average monthly wages (as compared to the previously allowed 30 times) drawn during the 12 months prior to their death (capped at INR 15,000), plus 50% of such deceased employee's average provident fund balance from the same period, subject to a ceiling of INR 1,75,000. The EDLI Scheme ensures a minimum assurance benefit of INR 2.5 lakhs while capping the maximum benefit at INR 7 lakhs. For parttime employees working in multiple establishments, the benefit will be calculated based on their aggregate wages across all qualifying workplaces.
Employees' State Insurance Corporation issues Strict Directive on Online Submission of Cash Benefit Claims
The Employee State Insurance Corporation ("ESIC") has issued a significant directive dated November 5, 2024, regarding the submission of cash benefit claims by covered employees, following a review of claim submissions from April to August 2024. Despite previous instructions to facilitate online claims through the Insured Person Portal ("IP Portal"), many branch offices continue to process claims physically rather than encouraging insured persons to use the online platform. The directive specifically addresses 2 key issues: the continued creation of claims by branch offices instead of insured persons using the portal, and branch managers' practice of requesting physical copies of documentation even when claims are submitted online. The ESIC has mandated immediate action to eliminate offline claim submissions and has instructed branch managers to stop requesting physical copies of documents already submitted through the IP Portal. The directive emphasizes that while verification can be done directly with dispensaries or hospitals when needed, benefit payments should not be delayed by requiring hard copies of certificates, an initiative that will assist claimants.
STATE
Gurugram District issues Comprehensive Compliance Directives and Reporting Requirements under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 – Changes from Requirements under the POSH Act
The Haryana government has issued significant directives regarding compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act") for Gurugram (Gurgaon). Through a notification dated November 4, 2024, the District Officer of Gurugram revised the deadline for filing annual reports on workplace sexual harassment cases to February 28th of each year, changed from the previously notified date of April 30th of each year. Both government and non-government organizations must comply with this new timeline, with a penalty of INR 50,000 for employers who fail to submit their reports by the deadline. Organizations are required to use the compliance checklist available on www. gurugram.gov.in.
Subsequently, on December 12, 2024, the Additional Deputy Commissioner of Gurugram issued a comprehensive compliance directive under the POSH Act, applicable to all organizations, companies, schools, and hospitals in Gurugram. The directive mandates that organizations submit their POSH Act annual reports covering the period from January 1 to December 31, 2024. The compliance framework encompasses 7 key areas: organizational policies, workplace notices, employee awareness programs, Internal Committee ("IC") formation, complaint handling procedures, reporting mechanisms, and annual report submissions. Organizations must demonstrate their compliance by publishing internal POSH policies, forming ICs with properly qualified members, conducting regular awareness workshops, and displaying notices in multiple languages. They must also maintain detailed records of complaints received, resolved, and pending, along with documentation of awareness programs conducted throughout the year. This is a supplement to the POSH Act provisions in relation to the annual report, which should contain the details relating to (i) number of complaints of sexual harassment received in the year; (ii) number of complaints disposed off during the year; (iii) number of complaints pending for more than ninety days (along with reasons for delay); (iv) number of workshop or awareness programmes against sexual harassment carried out; and (v) nature of action taken by employer or District Officer. The directive also emphasizes that non-compliance with any of these provisions will result in penalties.
Karnataka Government announces Deadline for Contributions under the Karnataka Labour Welfare Fund Act, 1965
The Karnataka Government has announced an important update to the Karnataka Labour Welfare Fund's contributions for calendar year 2024 vide a press note dated December 24, 2024. Under the Karnataka Labour Welfare Fund Act, 1965 ("KLWF Act"), employers are required to remit a total contribution of INR 60 per employee (INR 40 from the employer, INR 20 from the employee) by January 15, 2025. This mandate applies to various establishments including factories, IT/BT companies with over 50 workers, plantations, motor services, and organizations registered under the Karnataka Shops and Commercial Establishment Act, 1961. All payments must be made exclusively through the official online portal at www.klwb.karnataka.gov.in. Employers should note that delayed payments will incur penalties, with interest rates of 12% per annum for the first 3 months, escalating to 18% thereafter. Additionally, non-compliant establishments may face inspections from the Welfare Commissioner and Labour Department officers, potentially leading to legal proceedings.
The Government of Karnataka Seeks to Amend the Karnataka Labour Welfare Fund Act, 1965
The Karnataka Government on December 12, 2024, has tabled a bill seeking to amend the KLWF Act. Under the KLWF Act, for every employee in an establishment, contributions must be paid to the Karnataka Labour Welfare Board, which includes contributions from the employer, employee and the State Government which forms part of the fund. The proposed changes to the contribution rates are as follows: the employer's contribution will increase from INR 40 to INR 100, the employee's contribution will increase from INR 20 to INR 50, and the state government's contribution will also increase from INR 20 to INR 50.
SUPREME COURT | ||
Sl. No. | Ratio | Brief details |
1. |
The continuous service and essential roles of the appellants justified regularization of employment. Jaggo v. Union of India1 |
In this case, the appellants, who had been working for an extended period, sought regularization of employment. The Delhi High Court relied on the principle laid down in Secretary, State of Karnataka v. Uma Devi [(2006) 4 SCC 1] ("Uma Devi") and concluded that the petitioners were part-time workers who were neither appointed against sanctioned posts, nor had they performed a sufficient duration of full-time service to satisfy the criteria for regularization. Aggrieved by the decision of the High Court, the appellants filed an appeal before the Supreme Court of India. While discussing Uma Devi's judgement, the Supreme Court distinguished between "illegal" and "irregular" appointment. The Court set aside the order of the High Court and made a significant ruling regarding the employment status of longterm temporary workers in government institutions and emphasized that when workers perform essential and ongoing functions within an organization, they cannot be denied claims to regularization merely because they are classified as "temporary" or "part-time" employees. The Court held that the actual nature of work must take precedence while considering workers' rights to regularization. |
2. |
Affirmation that the aggrieved woman was a "concerned party" and has an unquestionable right to access the enquiry report under Section 13(1) of the POSH Act. Ms. X v. Union of India2 |
A female constable at Border Security Force ("BSF") filed a workplace sexual harassment complaint against a senior officer at BSF under the POSH Act. Pursuant to the preliminary investigation, no evidence was found, and the respondent was discharged of all charges. However, a follow-up detailed investigation was conducted under the Border Security Force Act, 1968 ("BSF Act"), which resulted in the accused officer receiving 3 penalties: (i) 89 days of rigorous imprisonment, (ii) a 5-year promotion freeze, and (iii) forfeiture of 5 years of pension service. Although these punishments were carried out, the aggrieved woman argued that the punishment was too lenient, and the punishment should have been imposed under the POSH Act. The aggrieved woman also raised concerns about not receiving the enquiry report. In view of this, the aggrieved woman sought court intervention. In relation to non-furnishing of the enquiry report, the BSF contended that the report was not furnished to the aggrieved woman as she was not the accused, and the report did not have any material against the respondent. The Court dismissed this justification, affirming that as a victim, the aggrieved woman had an unquestionable right to access the enquiry report under Section 13(1) of the POSH Act. The Court penalised the BSF with a fine of INR 25,000 for failing to provide the enquiry report to the victim constable. |
3. |
Guidelines and directives for the proper and effective implementation of the POSH Act by the Supreme Court of India. Aureliano Fernandes v. the State of Goa & Ors.3 |
In this case, the Supreme Court addressed significant concerns about the implementation of the POSH Act. The Court issued comprehensive directions for the effective implementation of the POSH Act on May 12, 2023. Noting the non-implementation of the previous directions issued on May 12, 2023, the Court on December 03, 2024, issued further directions for the effective implementation of the POSH Act, establishing a clear timeline for both public and private sectors. For the facilitation of complaints, the bench suggested that every state should institute a SHe-Box portal. It also directed that both the public and private sector must establish ICs and the survey report made by the District Officer should be submitted to the Court by March 31, 2025. The Court further outlined a structure for handling the complaints related to sexual harassment and directed the States/Union Territories ("UTs") to appoint District Officers by December 31, 2024, who will then constitute Local Complaints Committee ("LCC") by January 31, 2025. It further directed the District Officers to appoint Nodal Officers at taluk level to facilitate the processing of such complaints. The Court mandated all the nodal officers of each State/UTs to provide their name and designation to be accessible on the SHe-Box portal. |
4. |
The employer has the right to take an action against the employee where the employee abandons his job without informing the employer about his whereabouts, after the employer has made attempts to reach out to the employee. Life Insurance Corporation of India v. Om Prakash4 |
The respondent employee was an Assistant Administrative Officer at Life Insurance Corporation ("LIC"), who remained absent from duty since September 25, 1995, without notice, which amounted to abandonment of service as per the LIC Staff Regulations. Despite multiple notices and show cause notice, the employee neither responded to the notices nor did he provide information about his whereabouts for over 90 days. The disciplinary authority considered it as a case of abandonment of services and ordered termination of the employee. The respondent employee filed a writ before the Himachal Pradesh High Court which held that the termination of the employee was invalid as due opportunity to be heard was not provided to him. The Supreme Court, however, held that treating the respondent to have abandoned his service and taking appropriate action against him, in terms of the LIC Staff Regulation, cannot be faulted and accordingly, set aside the order of the High Court. |
5. |
The Supreme Court applied the fourfold test established in Vidya Drolia v. Durga Trading Corporation as the framework for assessing whether a dispute could be resolved through arbitration. Applying this test, it observed: "the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s) such as the PW Act and ID Act which designate exclusive forums for adjudication." Dushyant Janbandhu v/s M/s Hyundai Autoever India Pvt. Ltd.5 |
In this case, the employee, an assistant manager at Hyundai Autoever India ("Company") claimed unpaid wages after his termination. He sought payment of unpaid wages under the Payment of Wages Act, 1936 ("PW Act") and challenged the termination order under the Industrial Disputes Act, 1947 ("ID Act"). The Company, however, invoked an arbitration clause from the employment agreement and filed an application before the authority under the PW Act seeking reference of dispute to arbitration. The authority rejected the application. Aggrieved by the same, the respondent approached the High Court of Madras seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 ("Arbitration Act"). The High Court appointed an arbitrator despite the employee's objection that employment disputes with statutory remedies cannot be arbitrated. This led to an appeal before the Supreme Court, challenging whether employment matters protected by statutory provisions can be subject to arbitration even with a contractual arbitration clause. The Supreme Court held that employment disputes involving wage recovery cannot be arbitrated as the PW Act expressly prohibits Civil Courts and Arbitral Tribunals from hearing wage-related disputes. While acknowledging minimal judicial interference under Section 11(6) of the Arbitration Act, the Court emphasized that arbitrability must be evaluated at the initial stage, by applying the four-fold test established in Vidya Drolia v. Durga Trading Corporation [(2021) 2 SCC 1]. Further, costs of INR 5 lakhs were imposed on the Company for pursuing arbitration in bad faith despite clear statutory restrictions. |
6. |
On December 6, 2024, the Supreme Court issued a notice to the Ministry of Women and Child Development, Ministry of Corporate Affairs and Women and National Commission for Women seeking their reply on a plea to declare private sector IC members under the POSH Act as public servants. The next hearing is scheduled on January 24, 2025. Janaki Chaudhry & Anr. v. Ministry of Women and Child Development & Ors6 |
Former IC member and retired journalist Olga Tellis filed a Public Interest Litigation ("PIL") before the Supreme Court seeking protection of IC members in private workplaces. The petition highlights that IC members in private companies are vulnerable to arbitrary termination and retaliation in case they make decisions unfavourable to senior management. Unlike public sector IC members, private sector members lack security of tenure and grievance redressal mechanisms. The petitioners argue that this disparity creates an environment where independent decision-making is compromised, effectively undermining the purpose of IC. It is contended in the petition that this disparity violates the constitutional rights enshrined under Article 21 (right to life and personal liberty) and Article 19(1)(g) (right to practice any profession). The PIL seeks to address this by designating private sector IC members as "public servants" to ensure parity in service conditions and protections with public sector IC members. |
7. |
Mere allegations of harassment, without proof of direct or proximate incitement, does not amount to abetment to suicide. Courts should ascertain on the basis of the materials on record whether there is anything to indicate even prima facie that the accused intended the consequences of the erstwhile Indian Penal Code, 1860, i.e., suicide. We have analysed this case in detail and have outlined the approach to mitigate the liability of employers in such cases here. Nipun Aneja and Ors v State of Uttar Pradeshd7 |
In this case, a First Information Report ("FIR") was filed against the executives of the employer for abetment of suicide of an employee under Section 306 of the Indian Penal Code, 1860 ("IPC"). The executives filed an application before the Allahabad High Court to quash the criminal proceedings which was dismissed. Following this rejection, the executives filed an appeal before the Supreme Court, challenging the High Court's decision. The Supreme Court outlined the key legal elements needed to establish abetment to suicide within the context of employment and held that (i) there should be direct instigation or provocation; (ii) there should be sufficient evidence to showcase such provocation; and (iii) the provocation should be proximate to the time of occurrence of suicide, leaving the employee with no option but to commit suicide. |
Footnotes
1. SLP (C) No.5580/2024
2. Writ Petition (Criminal) No. 284/2020
3. 2023] 7 S.C.R. 772
4. Civil Appeal No. 4393/2010
5. Civil Appeal No. 14299/2024
6. W.P.(C) 796/2024; On December 6, 2024, the Supreme Court issued a notice to the Ministry of Women and Child Development, Ministry of Corporate Affairs and Women and National Commission for Women seeking their reply on a plea to declare private sector IC members under the POSH Act as public servants. The next hearing is scheduled for January 24, 2025.
7. Criminal Appeal No. 654 of 2017
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