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Erika C Collins
The Employment Law Review
Reproduced with permission from Law Business Research Ltd.
Tis article was frst published in Te Employment Law Review 4th edition
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The
Employment
Law
Review
Fourth Edition
Editor
Erika C Collins
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Acknowledgements
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ESTUDIO GRAU ABOGADOS
GEORGE Z GEORGIOU & ASSOCIATES LLC
GIANNI, ORIGONI, GRIPPO, CAPPELLI & PARTNERS
GIESE & PARTNER
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KGDI LAW FIRM
KOCHHAR & CO
LAW FIRM AFAR & PARTNERS, LTD
MATHESON
MATTOS FILHO, VEIGA FILHO, MARREY JR E QUIROGA ADVOGADOS
NESTOR NESTOR DICULESCU KINGSTON PETERSEN
PAUL HASTINGS (EUROPE) LLP
PAUL HASTINGS LLP
PAUL HASTINGS LLP SHANGHAI REPRESENTATIVE OFFICE
Acknowledgements
iii
SAGARDOY ABOGADOS
SAYENKO KHARENKO
SRVULO & ASSOCIADOS SOCIEDADE DE ADVOGADOS, RL
SKRINE
SNR DENTON
SOTYSISKI, KAWECKI & SZLZAK
TILLEKE & GIBBINS
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URENDA, RENCORET, ORREGO Y DRR
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iv
CONTENTS
Editors Preface ...................................................................................................xi
Erika C Collins
Chapter 1 GLOBAL DIVERSITY AND
INTERNATIONAL EMPLOYMENT ..................................... 1
Erika C Collins
Chapter 2 EMPLOYMENT ISSUES IN CROSS-BORDER
M&A TRANSACTIONS .......................................................... 7
Erika C Collins and Michelle A Gyves
Chapter 3 SOCIAL MEDIA AND INTERNATIONAL
EMPLOYMENT ..................................................................... 14
Suzanne Horne and Eleni Konstantinou
Chapter 4 AUSTRALIA ............................................................................ 31
Miles Bastick, Shivchand Jhinku and Zo Adams-Lau
Chapter 5 AUSTRIA ................................................................................ 46
Jakob Widner
Chapter 6 BELGIUM ............................................................................... 65
Chris Van Olmen
Chapter 7 BRAZIL ................................................................................... 81
Vilma Toshie Kutomi
Chapter 8 CANADA ................................................................................ 99
Jefrey E Goodman and Christopher D Pigott
Chapter 9 CHILE ................................................................................... 112
Francisco della Maggiora M
Chapter 10 CHINA .................................................................................. 125
Gordon Feng and Erika C Collins
Contents
v
Chapter 11 COSTA RICA ........................................................................ 143
Carolina Soto Monge
Chapter 12 CYPRUS ................................................................................ 155
George Z Georgiou, Anna Praxitelous and Natasa Aplikiotou
Chapter 13 CZECH REPUBLIC ............................................................. 170
Lenka Velvarsk
Chapter 14 EL SALVADOR ..................................................................... 186
Diego Martn-Menjvar and Carlos Roberto Rodrguez Salazar
Chapter 15 ESTONIA .............................................................................. 201
Heli Raidve
Chapter 16 FINLAND ............................................................................. 218
Petteri Uoti and Loviisa Hr
Chapter 17 FRANCE ............................................................................... 229
Deborah Sankowicz and Jrmie Gicquel
Chapter 18 GERMANY ........................................................................... 246
Tomas Griebe and Jan-Ove Becker
Chapter 19 GREECE ............................................................................... 266
Efe G Mitsopoulou and Ioanna C Kyriazi
Chapter 20 GUATEMALA ....................................................................... 284
Lionel Francisco Aguilar Salguero
Chapter 21 HONG KONG ..................................................................... 291
Michael J Downey
Chapter 22 INDIA ................................................................................... 309
Manishi Pathak
Chapter 23 INDONESIA ......................................................................... 327
Nafs Adwani
Chapter 24 IRELAND.............................................................................. 342
John Dunne and Georgina Kabemba
Contents
Chapter 25 ITALY .................................................................................... 361
Rafaella Betti Berutto
Chapter 26 JAPAN ................................................................................... 374
Setsuko Ueno
Chapter 27 LATVIA ................................................................................. 389
Sigita Kravale
Chapter 28 LUXEMBOURG ................................................................... 405
Guy Castegnaro, Ariane Claverie, Cline Defay, Christophe
Domingos, Laurence Chatenier, Lorraine Chery and Evelyne Schoeser
Chapter 29 MALAYSIA ............................................................................ 425
Siva Kumar Kanagasabai, Selvamalar Alagaratnam and Foo Siew Li
Chapter 30 MALTA .................................................................................. 444
Ron Galea Cavallazzi
Chapter 31 MEXICO ............................................................................... 454
Miguel Valle, Jorge Mondragn and Rafael Vallejo
Chapter 32 NETHERLANDS ................................................................. 473
Eugenie Nunes
Chapter 33 NICARAGUA ....................................................................... 496
Bertha Xiomara Ortega Castillo
Chapter 34 NORWAY .............................................................................. 506
Gro Forsdal Helvik
Chapter 35 PERU ..................................................................................... 519
Jos Burgos C
Chapter 36 POLAND .............................................................................. 535
Roch Paubicki and Karolina Nowotna
Chapter 37 PORTUGAL .......................................................................... 549
Pedro Furtado Martins, Dora Joana and Nuno Pais Gomes
Contents
viii
Chapter 38 ROMANIA ............................................................................ 564
Delia Paceagiu Ratoi, Iurie Cojocaru, Alexandru Lupu and
Patricia-Sabina Macelaru
Chapter 39 RUSSIA .................................................................................. 577
Irina Anyukhina
Chapter 40 SAUDI ARABIA .................................................................... 596
Amgad T Husein, John Balouziyeh and Fadil M Bayyari
Chapter 41 SINGAPORE ........................................................................ 608
Ian Lim, Nicole Wee and Gordon Lim
Chapter 42 SLOVAKIA ............................................................................ 622
Katarna Matulnkov
Chapter 43 SLOVENIA............................................................................ 634
Vesna afar and Martin afar
Chapter 44 SOUTH AFRICA .................................................................. 652
Susan Stelzner, Stuart Harrison, Brian Patterson and Zahida
Ebrahim
Chapter 45 SPAIN .................................................................................... 673
Iigo Sagardoy de Simn
Chapter 46 SWEDEN .............................................................................. 693
Erik Danhard and Jennie Lw
Chapter 47 SWITZERLAND .................................................................. 705
Ueli Sommer
Chapter 48 TAIWAN ............................................................................... 718
Seraphim Mar
Chapter 49 TURKEY ............................................................................... 731
Serbulent Baykan and Handan Bektas
Chapter 50 UKRAINE ............................................................................. 744
Svitlana Kheda
Contents
ix
Chapter 51 UNITED ARAB EMIRATES ................................................ 758
Ibrahim Elsadig
Chapter 52 UNITED KINGDOM .......................................................... 768
Suzanne Horne
Chapter 53 UNITED STATES ................................................................ 780
Patrick Shea and Erin LaRufa
Chapter 54 URUGUAY ............................................................................ 795
Gabriel Ejgenberg
Chapter 55 VIETNAM ............................................................................ 806
Michael K Lee, Huong Ti Tanh Nguyen and Doan Ngoc Tran
Appendix 1 ABOUT THE AUTHORS .................................................... 819
Appendix 2 CONTRIBUTING LAW FIRMS CONTACT DETAILS .. 853
xi
EDITORS PREFACE
It has once again been my great pleasure to edit this most recent edition of Te Employment
Law Review. In reviewing chapters for inclusion in this edition, I was struck repeatedly
by both the breadth and variety of laws and approaches to employment regulation across
jurisdictions as well as the similarities, especially with regard to certain trends, some of
which are discussed below. As with the earlier editions, this book is not meant to provide
a comprehensive treatise on the law of any particular country but instead is intended to
assist practitioners and human resources professionals in identifying key issues so that
they may, in turn, help their clients avoid potentially troublesome (and often costly)
missteps.
One of the common themes during 2012 was an increase in the promulgation
of laws and regulations designed to increase fexibility and lower the costs of labour for
employers while maintaining sufcient protections for employees. A prime example of this
trend is the passage throughout 2012 of legislation in EU Member States implementing
the EU Directive on Temporary Agency Work, which came into efect in December
2011. Te Directive and related implementing legislation ensure certain minimum
compensation and benefts for temporary agency workers while also increasing fexibility
for employers. Both Vietnam and Mexico also adopted legislation in 2012 that sanctions,
but also places limitations on, labour outsourcing arrangements. In Brazil, President
Dilma Roussefs Greater Brazil Plan also has been aimed at increasing employment and
avoiding the slowdown and economic crisis faced by other jurisdictions. Among the
employment-related measures implemented pursuant to the Greater Brazil Plan are relief
from payroll contributions for the information technology sector and other incentives
to foster employment. Finally, in the UK, a novel idea is under consideration that would
allow an employer to issue an ownership interest in the company to the employee in
exchange for the employees agreement not to be protected by the unfair dismissal laws.
While these eforts are, of course, aimed at benefting workers by addressing
unemployment, a number of them also are by-products of another trend: the
implementation of austerity measures in response to debt crises in Europe and elsewhere.
Fewer unemployed citizens means lower entitlement spending for governments. Other
xii
Editors Preface
employment-related austerity measures also have been implemented or proposed that are
less benefcial to employees and jobseekers. In the Netherlands, for example, the period
of time during which an individual can collect unemployment benefts was reduced
from three years to two. Portugal continues to consider a reduction of remuneration and
benefts for civil servants and employees public enterprises.
Tis fourth edition once again includes several general-interest chapters one
addressing employment issues in cross-border mergers and acquisitions, one addressing
social media in the workplace, and another addressing global diversity initiatives. Tis
edition also boasts the addition of fve new countries, bringing the number of covered
jurisdictions to 52.
I wish once again to thank our publisher, particularly Lydia Gerges, Adam Myers
and Gideon Roberton; all of our contributors; and my associate, Michelle Gyves, for
their tireless eforts to bring this edition to fruition.
Erika C Collins
Paul Hastings LLP
New York
February 2013
309
Chapter 22
INDIA
Manishi Pathak
1
I INTRODUCTION
Employment relations in India are governed by the Constitution of India, treaties,
statutes, collective and individual contracts and judicial precedents. Tere are around
165 pieces of labour legislation, including 55 central (federal) and 110 state pieces of
legislation. Employment legislation lies in the concurrent list of the Seventh Schedule
of Article 246 under the Constitution of India, which gives both the central and state
governments (up to a certain extent) the power to legislate matters that are on the list.
In India most of the labour and employment laws primarily apply only to a
workman as defned in the Industrial Disputes Act, 1947 (the ID Act). Te information
provided in this chapter applies primarily to the workman category of employees as
defned under the Industrial Disputes Act, 1947 (discussed below). A workman is
defned as a person who is employed to do any manual, unskilled, skilled, technical,
operational, clerical or supervisory work for hire or reward, excluding a person:
a who is employed mainly in a managerial or administrative capacity; or
b who is employed in a supervisory capacity and draws a salary exceeding 10,000
rupees per month or exercises functions mainly of a managerial nature.
An employee is classifed as a workman based on the nature of the duties performed and
not the designation of the employee.
i Dispute resolution mechanisms
Te Industrial Disputes Act, which is the primary statute dealing with labour dispute
resolution, provides for the establishment of the following authorities for the resolution
of labour disputes.
1 Manishi Pathak is a senior partner at Kochhar & Co.
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310
Conciliation ocers
Conciliation ofcers are government ofcials appointed by the Labour Department to
mediate and promote the settlement of industrial disputes between workmen and their
employers. Teir powers are neither judicial nor quasi-judicial but are administrative in
nature.
Boards of conciliation
Te appropriate government (central or state government) has the power to constitute
a board of conciliation for the settlement of an industrial dispute referred to it. Te
board of conciliation can have either two or four members (appointed in equal numbers
from the parties to a dispute, to be nominated by the parties), and a chairman, who is
independent. Te board of conciliation functions like an arbitral tribunal.
Labour courts
Labour courts have been set up by the government in all states for the purpose of
adjudicating industrial disputes relating to matters specifed in the Second Schedule of
the ID Act, such as discharge or dismissal, application and interpretation of standing
orders, and the legality of a strike or lockout.
Industrial tribunals
Industrial tribunals adjudicate industrial disputes relating to the matters specifed in
the second or third schedule of the ID Act and for performing such matters as may be
assigned to them under the ID Act. Te functions and duties of the industrial tribunals
are quasi-judicial in nature.
National tribunals
National tribunals adjudicate disputes that in the opinion of the government involve
questions of national importance or are of such a nature that industrial establishments
situated in more than one state are likely to be afected.
Courts of inquiry
In special cases, the appropriate government (central or state government), may establish
a court of inquiry to look into any matter relevant to an industrial dispute.
Apart from the authorities set up under the ID Act, state high courts and the
Supreme Court of India also have jurisdiction to hear certain labour disputes under the
provisions of the Constitution of India.
Every state has a high court, which has superintendence over all courts and
tribunals throughout the state. Te high court exercises jurisdiction with regard to
employment laws, which is an original jurisdiction Article 226 of the Constitution
of India empowers the high court to issue appropriate orders and writs for enforcement
of the fundamental rights guaranteed under the Constitution, where a party has been
denied such a right or in the matters originating from labour court decisions.
Te Supreme Court of India is a court of record and, hence, the judgments
pronounced by it form judicial precedents that are to be followed by all subordinate
courts in India. Te Supreme Court also exercises appellate and original jurisdiction with
regard to employment laws.
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311
Employers and employees may also agree to refer the dispute to arbitration under
the ID Act.
Civil court
Te civil court also has jurisdiction to decide employment-related matters for employees
in the category of non-workmen. Every award passed or order issued by the industrial
court or settlement arrived before the industrial court is executed by a civil court.
ii Major employment law statutes
Certain statutes described below are only applicable to specifc categories of employees
or establishments.
Te Industrial Disputes Act, 1947
Te ID Act provides for the investigation and settlement of industrial disputes through
dispute resolution authorities. It also provides the conditions regulating strikes, lockouts,
lay-ofs and retrenchment, changes in conditions of services and prohibits unfair labour
practices by the employer or employees.
Te Trade Unions Act, 1926
Te Trade Unions Act provides for the recognition and registration of trade unions,
providing legality to labour organisations and enabling collective bargaining.
Te Industrial Employment (Standing Orders) Act, 1946 (the IESO Act)
Te IESO Act regulates the conditions of employment of workmen by providing for
certifcation of standing orders. Standing orders are written documents dealing with
terms and conditions of employment. Since standing orders are drafted by employers,
the afected trade unions or workers are given an opportunity to object. Te IESO Act
prescribes model standing orders as a minimum standard that the employers are required
to follow while preparing their own standing orders. It is primarily applicable to industrial
establishments employing 100 or more workmen; however, the state government may, by
notifcation, extend the applicability to establishments with fewer than 100 employees.
For instance, the state of Maharashtra and Gujarat has extended the applicability of the
IESO Act to establishments with 50 or more employees.
Te Payment of Wages Act, 1936 (the PW Act)
Te Payment of Wages Act regulates the payment of wages to workers employed in
certain specifed industries and provides a remedy against illegal deductions and
unjustifed delays in the payment of wages. It is applicable to workers employed in a
factory, industrial or other establishment, whether directly or indirectly (i.e., through a
contractor). Te PW Act is applicable to an employed person drawing a wage of 18,000
rupees per month (earlier the wage ceiling was 10,000 rupees per month).
India
312
Te Minimum Wages Act, 1948 (the MW Act)
Te MW Act safeguards the interests of workers by providing a minimum wage for
certain jobs. It requires employers to pay their workers the minimum wages as fxed
under the MW Act from time to time by the government.
Te Payment of Bonus Act, 1965
Te Payment of Bonus Act provides for the payment of statutory bonuses to the
employees, employed in certain establishments on the basis of profts or the productivity
of the establishment.
Te Factories Act, 1948 (the Factories Act)
Te main objective of the Factories Act is to regulate working conditions in factories
including working hours, leave, holidays, overtime and the employment of children,
women and young persons, and ensure basic minimum requirements for the safety,
health and welfare of the factory workers.
Te Maternity Benet Act, 1961
Te Maternity Beneft Act provides for maternity leave and other benefts before and
after childbirth, medical termination of pregnancy or miscarriage. Te employer is
required to pay maternity benefts at the rate of the average daily wage for the period of
her actual absence up to a maximum of 12 weeks.
Te Employees Compensation Act, 1923
Te Employees Compensation Act applies to persons employed in factories, mines,
plantations, construction works and certain other hazardous occupations. It provides for
payment of compensation to workmen and their dependants in the event of an injury
caused due to an accident arising out of and in the course of employment, and resulting
in disability or death. Te amount of compensation to be paid depends on the nature of
the injury, the average monthly wage and the age of the workmen.
Te salary limit for the purposes of compensation is 8,000 rupees.
Te Employees State Insurance Act, 1948 (the ESI Act)
Te ESI Act, wherever applicable, provides for health care and cash beneft payments in
the case of sickness, maternity and employment injury. It provides for need-based social
insurance schemes that protect the interest of workers in contingencies such as sickness,
maternity, temporary or permanent physical disablement, or death due to employment
injury.
Te salary limit for eligible employees is 15,000 rupees.
Te Employees Provident Fund & Miscellaneous Provisions Act, 1952 (the EPF Act)
Te EPF Act provides for the institution of provident funds, family pension funds and
deposit-linked insurance funds for the employees, which taken together provide old-age
and survivorship benefts, long-term protection and security to the employee (and after
his or her death to his family members), and advances in times of need. Te salary limit
for employees covered by the EFP Act is 6,500 rupees.
India
313
Te Payment of Gratuity Act, 1972
Te Payment of Gratuity Act provides for the payment of a gratuity to employees on
termination of employment after completion of a minimum of fve years of continuous
service with the employer and upon his or her death. Te gratuity is payable at the
rate of 15 days average wages for every completed year of service up to a maximum of
1 million rupees. It is the duty of the relevant state labour department to ensure efective
implementation of such payments. Te maximum gratuity that can be paid is up to
1 million rupees (or more, if the employer wishes).
II YEAR IN REVIEW
i Privacy law
Te Information and Technology (Reasonable Security Practices and Procedures and
Sensitive Personal Data or Information) Rules, 2011 (the Rules), has introduced privacy
law regarding personal information and sensitive personal data and information.
Personal information is defned as any information that relates to a natural person
which is capable of identifying such person.
Sensitive personal data or information means such personal information which
consists of:
a passwords;
b fnancial information such as bank account or credit card or debit card or other
payment instrument details;
c physical, physiological and mental health conditions;
d sexual orientation;
e medical records and history;
f biometric information; and
g any details relating to the above clause as provided to a body corporate for
processing or storage, under lawful contract or otherwise.
Te above information would not be regarded as sensitive personal data or information
for the purposes of these Rules if such data or information is freely available or accessible
in the public domain, or furnished under the right to information or any other law
presently in force.
Te Rules provide certain obligations on bodies corporate (including employers)
that collect, receive, possess, store, deal or handle the information of the information
provider. Tese obligations include framing a policy for handling and dealing with
personal information, including sensitive personal data and information, the mode of
collection of information, the disclosure of information, transfer of information and
security measures that are required to be undertaken by the body corporate.
ii Social security/employees provident fund
A foreign national, employed in India in an establishment to which the EPF Act applies,
is required to become a member of the EPF Fund, unless India has entered into a social
security agreement on a reciprocity basis with his or her home country and the employee
India
314
is contributing to a social security programme in his or her home country and has
obtained a detachment certifcate from their respective social security authorities.
Social security agreements with Belgium, Germany, Switzerland, Denmark,
Luxembourg, France, the Republic of Korea and the Netherlands have been made
efective from 1 September 2009, 1 October 2009, 29 January 2011, 1 May 2011,
1 June 2011, 1 July 2011, 1 November 2011 and 1 December 2011 respectively.
III SIGNIFICANT CASES
i American Express Bank Ltd v. Ms Priya Puri
Te Delhi High Court held that the right of an employee to search for better employment
cannot be curbed by a court injunction on the ground that the employee is privy to the
employers confdential data. Te Court held that the employer cannot be allowed to
perpetuate forced employment in the guise of confdentiality.
ii DLL (International Taxation), Mumbai v. Morgan Stanley & Co Inc
In this case Morgan Stanley & Co (MSCO) outsourced some of its activities to one of
its group companies in India, Morgan Stanley Advantages Services Pvt Ltd (MSAS), by
entering into a service agreement. Te basic questions that arose before the Bombay High
Court were whether MSCO had a permanent establishment (PE) in India under the
double taxation avoidance agreement (DTAA) between India and the US, on account
of the services rendered by MSAS. It was held that to decide whether a PE had been
established the Court must conduct a functional and factual analysis of each activity
of the establishment. Furthermore, where MSCO seconded an employee to MSAS in
India, such employee did not become an employee of MSAS and he or she retained
employment with MSCO. In this sense a service PE is established in India (under the
DTAA, a service PE exists or is established where an enterprise furnishes services within
a contracting state, through its employees or personnel).
iii Bhilwara Dugdh Utpadak Sahakari S Ltd v. Vinod Kumar Sharma and Others
In this case the Supreme Court has held that the employees of the contractor would be
deemed the employees of the principal employer if they were doing the work of regular
employees and working under the direct orders of the principal employer.
iv New Delhi Municipal Corporation v. NDMC General Majdoor Union and
Another
In this case the Delhi High Court held that when the nature of work to be performed by
the permanent employees and that of the muster roll employees (daily-rated labourers) is
diferent both in respect of skill and responsibilities, the demand of equal pay by muster
roll employees to that of permanent employees, applying the principle of equal pay for
equal work, is not sustainable. It is settled law that equal pay for equal work is not a
principle to be applied in abstract.
India
315
v Bharat Fritz Werner Karmika Sangha v. Management of Bharat Fritz Werner
Ltd
In this case the Karnataka High Court held that extending beneft of ex gratia towards
payment of bonuses to certain workmen and denying others who engaged in strike action
is illegal, and an act of victimisation and discrimination, because the ex gratia payment
was being paid for a long time and had become a condition of service. It was further held
that condition of service cannot be changed without following the procedure as specifed
in the Industrial Disputes Act, 1947.
vi Goa Bottling Co Pvt Ltd v. deputy Regional Director, ESI Corporation, Goa
and Others
In this case the High Court of Bombay held that, in view of Circular dated 26 June
1982 issued by the ESI Corporation, the repair and maintenance of factories, including
furniture and packing charges, etc., would be within the ambit of expenditure to attract
ESI contribution. It was further held that in the absence of bifurcation of payment made
for loading and unloading to the contractor, the whole amount will be taken as wages
for the purpose of ESI contribution.
vii Superintending Engineer, Mettur Termal Power Station, Mettur v. Appellate
Authority, Joint Commissioner of Labour, Coimbatore and Another
It has been held by the Madras High Court that when the contractor, who engages the
workmen, does not pay the amount of gratuity to them, the principal employer is liable
to pay gratuity to such workers as per the provisions of the Section 21(4) of the Contract
Labour (Regulation and Abolition) Act, 1970. Te principal employer will have a right
to recover the amount from the contractor.
viii Te Assistant Director Employees State Insurance Corporation Marol v. M/s.
Western Outdoor Interactive Private Limited and M/s. Reliable Software
Systems Private Limited v. Employees State Insurance Corporation Regional
Oce, Marol
Te Mumbai High Court in this case declared software development activity as a
manufacturing process and therefore considered a software development establishment
as a factory, covered under the ESI Act.
IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP
i Employment relationship
Except for a few state-specifc laws that require documents to establish an employer
employee relationship, Indian employment laws generally do not specify for an
employment contract to be in writing. It is recommended, however, that employers
enter into detailed employment contracts or communicate the terms and conditions of
employment to the employees through a written letter at the beginning of employment.
Employment contracts in India would generally include the following terms:
a name and address of the employer and employee;
India
316
b title of job or nature of work (or job description);
c place of work;
d probation period, if any, and its terms;
e date of commencement of employment;
f salary details;
g any benefts that an employee is entitled to;
h type of contract: permanent or fxed-term;
i period of notice required for termination of employment;
j leave entitlement;
k conditions under which the employer can terminate the contract; and
l restrictive covenants non-compete, confdentiality, non-solicitation provisions,
etc.
Apart from certain state-specifc statutes, the employment laws in India do not provide
any provisions relating to when and how an employment contract should be executed.
Such contract may be executed in writing before or after the employee has started
working for the employer. It is best practice, however, to execute such contract before the
commencement of employment.
In practice, the terms of employment may be amended when both the parties
agree to such amendment in writing. In the case of a workman, however, the ID Act
provides that an employer can change the terms of employment with respect to certain
specifed issues that are adverse to the employees by giving 21 days advance written
notice. If any employee challenges the change with the labour authorities, the employer
would not be able to make such change until the fnal resolution of the dispute.
ii Probationary periods
Under the employment laws in India, probationary periods are permissible. Pursuant to
the IESO Act (in establishments to which it is applicable) a workman can be employed
on a probationary basis to provisionally fll a permanent vacancy for a maximum of
three months. For establishments to which the IESO Act is applicable, a probationer
is not entitled to any dismissal notice or payment in lieu of notice during the period of
probation.
In establishments to which the IESO Act is not applicable, employers are free
to decide on the reasonable duration of probation. Te notice periods would, however,
depend on the applicable state-specifc Shops and Establishments Act.
iii Establishing a presence
Strictly speaking, a foreign company has to have an Indian presence (i.e., branch ofce,
liaison ofce, project ofce, joint venture, subsidiary) to carry on business in India and
to hire employees. A foreign company, however, can engage a service provider in India to
provide services through its manpower.
Subject to certain factors, a foreign company that is not registered in India can
engage an independent contractor. An independent contractor could be deemed to
have established a PE of the foreign company in accordance with the applicable DTAA
between India and the relevant foreign country. Where a PE is deemed to have been
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created in India, the profts of the foreign company attributable to the PE would be liable
to taxation in India.
Depending on the applicable statutes based on the nature of industry and category
of the employee, the employees would be entitled to benefts under the following statutes:
a the ESI Act;
b the EPF Act, which provides for the setting up of the following social schemes: