Every economic shock leaves a legacy. The deadly coronavirus will be no different. This time it’s a public health emergency that’s shaking up the world economy. In just a few weeks, Coronavirus has changed how we meet and greet each other, how we work and how our children are educated. Offices around the world are empty. This has unwittingly sparked off a giant global experiment in mass remote working. Our work environment is suddenly being reinvented. What demonetisation did to digital payments, corona may end up doing to the future of work. Remote working is an idea whose time has come.
Once this crisis is over, a number of companies will go back to their old habits. However, for many, the new reality of working from home as a viable alternative is here to stay. The world of work is changing like never before and dining room tables have become de facto offices for many. Chief Financial Officers are working round the clock to technologically enable telecommuting at an unprecedented scale. They are scrambling to rent and buy new laptops, secure them with endpoint protection and enable them with secure VPN to provide reliable access to application stack while managing the obligations under the IT Act, General Data Protection Regulation and other applicable data privacy laws.
Chief Human Resource Officers are presented with some unprecedented challenges. Most organisations do not have well documented policies and guidelines to support extended work from home arrangements at scale. Most managers are not equipped to manage remote teams. India’s young workforce often has emigrated from other cities and lives in shared spaces. They typically do not have a quiet workplace at home supported by adequate power back up and reliable high-speed internet. Most of them confuse work from home with a facility to lounge around and Netflix all day. There are not enough tools available to measure their availability, productivity and engagement from the remote work location.
As the new reality dawns and evolves into more mature telecommuting models, India’s legacy labour laws and proposed Labour Codes stay silent on the subject. They do not recognise work from home as a viable work arrangement. Here is an outline of the key issues:
There are 416 Labour Laws and Rules between Centre, States and Union Territories leading to 278 different filings and approximately 1,000 different formats of Registers. An organisation is required to maintain statutory records under various acts such as Shops and Establishment Act, Minimum Wages Act, Payment of Wages Act, Equal Remuneration Act, Payment of Bonus Act, Factories Act, and Contract Labour Regulation and Abolition Act. These laws regulate hours of work, payment of wages, leaves, holidays, terms of service and other conditions of work of persons employed. All of these leads to applicability of statutory records such as Muster Rolls, Wage Registers, Leave and Attendance Registers, and Overtime Registers, either physically or electronically.
However, they assume that an employee has a fixed geography of work and does not account for an employee working from a remote location. Our Labour Codes should make provisions for new ways of recording leave and attendance, hours of work among others. They should rationalise and simplify the need for maintaining records in multiple formats.
An employer has to compute the wage of an employee based on the days and hours of work and maintain statutory registers as evidence. Overtime work hours have different slabs and statutory payment requirements. In a remote work arrangement, organisations will need to manage these records such that they are admissible by the Labour Department.
In case an employee works remotely and is based in a different state, the applicable labour laws will change leading to different compliance obligations. States have implemented labour laws with different applicability criteria, registration and documentation requirements. These shows themselves in frequency of filings, formats of statutory records and penalty structures. Let us take a few examples.
Different states have different minimum wages based on schedule, skill level and zone. As an example, just the state of Karnataka has over 800 different minimum wages. In the event of employees working remotely from different states, the complexity of wage computation will increase sharply. Minimum wage requirements for different states will have to be satisfied to stay compliant.
Professional Tax implementation varies between states in applicability, computation and filing requirements. However, it leads to a Monthly Compliance in Challan MTR-6. In case an employee telecommutes from a different state, there are implications leading to additional registrations and filings. In several states, professional tax filings are at a local municipal level and not fully digitised. As a result, the cost of monthly compliance can rise sharply.
Labour Welfare Fund is a state law and has state specific requirements in applicability, computation, frequency and filing. In case an employee telecommutes from a different state, there are implications leading to additional registration and filings leading to higher complexity and cost of managing compliance.
India’s regulatory ecosystem is fluid. In 2019, there were 3,029 regulatory updates of which 694 were around labour across the Centre and States. As work from home becomes real and more widespread, organisations will have greater geographical spread. This will lead to their being under the purview of increased number of applicable acts, compliances, filings and relevant regulatory updates.
Globalisation has been a powerful force shaping the modern times. The world economies have become increasingly connected and interdependent. Greater flexibility, adaptability and resilience will be key to the next-generation workforce. Technology advancements in office productivity tools, collaboration tools, digital documents, flexible workflows, cheaper broadband connectivity will continue to make work from home easier.
India’s labour laws continue to address the needs of the 19th century while the rest of world is already in the 21st century. Modernisation is long overdue. While the proposed labour codes acknowledge gig, informal and unorganised labour, they largely stay silent on the addition of work from home as a legal option. While the government should actively start thinking about a regulatory framework to enable teleworking, organisations should understand the implications of work from home during the ongoing crisis and ensure that they inadvertently do not miss critical compliances.
The author is co-founder and CEO of Avantis RegTech
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Rishi Agrawal is co-founder and CEO at Avantis RegTech.Read More +