Which is the most complicated, love-hate, unavoidable relationship in this world? That one person you wish you could do without but definitely can not? I’m sure no one guessed it right the first time around and I’ve given you food for thought on a very different tangent but for now, I want to draw your attention to that ever oscillating relationship of the professional world – that of an employer with his employees or vice versa.
The independent success of the hirer and the hired are so co-dependent on the effective and time-bound execution of a task as well as proof of talent to climb the corporate ladder, that this association is the most crucial relationship to invest in. The productive functionality and co-existence of both have proved to be the winning formula for long term job satisfaction and success of a company.
The search for educated, competent and driven employees is the goal of all companies which for a country like India with the growing efforts to provide skill and education is an ever-rising number. However, the actual challenge arises in the retention of talent. It is absolutely imperative for an organisation to have an HR team that not just successfully manages a competent person.
But also works in tandem with competent employment advisors or a resourceful labour law firm to keep them consistently updated about the applicable law and review employment contracts and employment manuals on periodic bases. Engaging experienced and proactive labour law advisors has become the key to retention and successful management of a company.
Partner Tania Ahlawat of Ahlawat & Associates discusses the importance of sound employment policies and why companies should invest in engaging a labour law advisor to ensure all obligations are met and rights covered.
Importance of HR and Employment Advisors In India
The compliance of the ever-changing and complex employment or labour laws in India should be the foundation of an organisation. Most companies believe that hiring an HR professional/ advisor ticks that box, however, the qualification of an HR professional in most countries, especially India is that of strategically managing employees within an organization and remaining compliant with the basic employee rights and employer obligations. This may seem like the cost-efficient means to meet an end and companies put off engaging a labour law firm for as long as possible. It is this very thought process that has proven to be extremely counterproductive, leading to tedious correction, government penalties and unfortunate labour disputes.
Employment matters may seem as simple as retention, terms of employment and method of termination. Unfortunately, it is not that simple and it is only when an employee slaps the employer/ company with a legal notice or worse, drags them to the labour court, does a company realise the importance of covering their rights and obligations in a more detailed manner.
Where does the complexity lie?
#1 The Basics:
Indian labour law refers to laws regulating the workforce in India. Labour and employment laws are part of the Concurrent List in the Indian Constitution, which means that the government at the Centre and each State have equal powers to enact laws relating to all labour and employment matters in India. The legislations can be categorized as follows:
- Labour laws enacted by the Central Government, where the Central Government has the sole responsibility for enforcement.
- Labour laws enacted by the Central Government and enforced both by Central and State Governments.
- Labour laws enacted by the Central Government and enforced by the State Governments.
- Labour laws enacted and enforced by the various State Governments which apply to respective States.
Therefore, laws such as sexual harassment, workmen’s compensation and employee provident fund are central acts and applicable to all organisations irrespective of the sector, while there are state acts such as shops and establishment, gratuity, minimum wages, can vary from state to state.
#2 Categories of Employees
Further, Indian labour and employment laws distinguish between the kind of employees as workmen (blue-collar jobs) and non – workmen (white-collar jobs or those in management/supervisory/ administrative roles). Most legislations regulate the service conditions of and protect the rights of only those who qualify as workmen under Indian laws.
The service conditions of non-workmen are more or less governed by the terms of the employment contracts/ agreement and internal policies such as employment manual, sexual harassment policies, etc of a company. Determining whether a particular employee is a workman or not or can fall within the definition of both, has to be undertaken on a case by case basis.
#3 Understanding the Laws Involved
Apart from the hundreds of State labour legislation and approximately 50 Central labour-related laws, it is important to be well versed with the Indian Contract Act, which is the principal legislation governing contracts in India.
Some other points that add to the complexity of HR and Employment:
- India does follow the US model of employment-at-will.
- Agreements which restrict trade, business or profession are void
- Differed impact on employment bonds, non-compete and non-solicit covenants
- Dealing with India’s very well entrenched trade unions and their propensity to raise disputes
Traditionally, the Indian government at both the federal and state level try to ensure a high degree of protection for workers hence draft legislation in favour of the labours/ employees. Therefore, labour law reforms are an ongoing and continuous process and the government has been introducing new laws and amending the existing ones in response to the emerging needs of the workers in a constantly dynamic economic environment.
Labour Law Consultant – The Only Solution
If you will not hire a doctor to do a mechanics job, why would you hire an HR personnel to take care of matters best left to a labour law firm? When dealing with matters of such legal density, engaging a labour law advisor is the smartest move a company can make.
We live in a world of the most enterprising people, especially in India, where every professional think they can do the other’s job, because how hard can it be? However, hiring a labour law consultant without the pre-requisite qualifications and corporate experience will do more harm than good and that is when the penalties start piling up, lawsuits and labour disputes come knocking on the door and your so-called hired labour expert or accountant is clueless about what was missed or how to resolve the issue.
Who is a labour law consultant?
Irrespective of the nomenclature used to describe it, in simple terms – A labour law advisor must be a qualified lawyer or preferably law firm that has experience in labour and corporate matters. When dealing with a company’s employment agreements, contracts, policies, regulations, umpteen corporate filings, employee issues, severance payouts, tweaking corporate contracts for maximum legal benefit and protection, a corporate law firm which also specialises in HR and Employment advisory is essential. It negates all the possible loopholes in contracts, ensures labour law compliance at all times and is responsible for favourably handling of all workmen and non-workmen related arbitrations and disputes.
Who needs a labour advisor?
Whether you are a startup, a partnership, an established company with 5, 50 or 500 employees, or an international company that has set up a company in India or has a branch office or a subsidiary in India, there are immense benefits gained by engaging a labour law firm. Be it organizational structuring, employment compliance laws, acquisitions, outsourcing, data protection, international workforce relations, litigations or risk management, an experienced corporate labour law firm can provide you with the optimal solution and help the company cut costs.
One size fits all
A company may have multiple branches or operations across the country, therefore one might think, considering the applicability of varies labour laws being state-specific, that hiring a labour law consultant in Mumbai for that state and another labour law consultant in Bangalore for that state and yet another labour law consultant in Gurgaon for that state is an expense you will have to incur.
Fortunately, that is not a scenario you will need to deal with. A labour law firm worth their salt, will not only be well versed with the laws in every state but will also be resourceful enough to have their state-specific labour law consultants in place to deal with any employment matters that require attention.
Labour law at any one time is both the product of and a component of, struggles between different interests in society. Experience shows that labour legislation can only fulfil these functions effectively if it is responsive to the conditions and needs of the parties involved. The most efficient way of ensuring that these are taken fully into account is if those concerned are closely involved in formulating a solution.
As the saying goes “you can’t make everyone happy” but if you have resourceful, solution-driven labour law advisors, you can come very close to achieving it.
Tania Ahlawat is Co- Managing Partner, Ahlawat & Associates.Disclaimer: The views or opinions expressed are solely of the author.