Global Employment Law Guide |
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India |
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(Asia Pacific)
Firm
Shardul Amarchand Mangaldas & Co
Contributors
Pooja Ramchandani |
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| What are the different categories of employment status (for example, employee, worker, self-employed individuals, etc)? | Employees in India are typically categorized into ‘worker’ and ‘non-worker’ categories under the Industrial Relations Code, 2020 ("IR Code") (in force since November 21, 2025). The ‘worker’ category (replacing the erstwhile ‘workman’ under the repealed Industrial Disputes Act, 1947) includes employees who do manual, unskilled, skilled, technical, operational, clerical or supervisory work earning less than INR 18,000 per month ( ~ USD 191). The ‘non-worker’ category is employees who are engaged in an administrative, managerial or supervisory capacity earning above INR 18,000 per month ( ~ USD 191). However, the determinative test for identifying “worker” is a fact based analysis on the basis of the nature of work of an employee and the nomenclature by which an employee is designated by the employer is not relevant. Apart from employees, companies in India also engage other categories of workforce such as consultants, contract labour, trainees/interns, apprentices, and fixed-term employees. Fixed-term employees have now been formally recognized under the Labour Codes with parity in benefits to permanent employees. Typically, consultants are engaged for specific professional services which regular employees do not carry out. Further, contract labour are personnel engaged through a contractor for non-perennial and non-permanent nature of work at an establishment and are afforded legal protection under the Occupational Safety, Health and Working Conditions Code, 2020 ("OSH Code"). In addition to the said categories of workforce, non-conventional workforce such as ‘gig-workers’ and ‘platform workers’ is gaining traction in India. In the code pertaining to welfare benefits, i.e., Code on Social Security,2020 ("SS Code"), gig and platform workers have for the first time been recognized for the purpose of prescribing social security benefits. Gig workers have been defined to mean “a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship” and the term 'platform work' has been defined to mean as “an employment form in which organizations or individuals use an online platform to access other organizations or individuals to solve specific problems or to provide specific services in exchange for payment". Dedicated gig-worker legislation has been notified/implemented in certain states like Rajasthan (Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023), Karnataka (Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025) and Jharkhand (Jharkhand Platform-Based Gig Workers (Registration and Welfare) Act, 2025). |
| Are there different types of employment contracts (for example, fixed-term, indefinite)? | Yes, there are different types of employment contracts in India depending on the nature of work and job requirements. These include contracts for an indefinite period, fixed-term contracts, and part-time contracts. Fixed-term employment is now formally recognised under the new Labour Codes, which mandate parity in payment of wages and benefits to such employees (including gratuity after one year of continuous service), on a pro-rata basis, with permanent employees performing the same or similar work. |
| What requirements need to be met in order for an employment contract to be valid? | Under the Indian Contract Act, 1872, a contract must have the following ingredients to be valid, i.e., offer, acceptance, consideration, competent parties, legal object, and free consent. Accordingly, an employment contract is an agreement between an employer who avails the services of a person agreeing to be an employee for an agreed duration (for a fixed term or indefinite) for an agreed remuneration. In order to be determined as a valid contract, it is imperative that an employee has entered into such a contract out of his/her own volition, and has acknowledged and understood the terms of employment. The OSH Code (in force since November 21, 2025) requires employers to issue appointment letter to every employee of the establishment with the prescribed information such as Aadhaar number (unique identity number issued to the residents of India), Universal Account Number (relevant for employees’ provident fund account), Insurance Number (relevant for employees’ state insurance fund account), category of skill, wages, avenue for achieving higher wages/higher position, nature of duties, etc. Additionally, certain Local Shops & Establishments Acts in India prescribe the format for appointment letters where details such as the name of employer and employee, period of appointment, wages and nature of appointment (i.e. full-time, part-time etc.) are to be provided. In any event, in practice, employers execute with their employees contracts which contain the terms and conditions of employment including but not limited to appointment, reporting, transfer, remuneration, termination and restrictive covenants. Although the format of an appointment letter is prescribed under the OSH Code and certain State laws, employers have the discretion to decide on the terms and conditions of employment contracts so long as such terms are not contradictory to those prescribed under the applicable law and general principles of contract law. |
| Are part-time employees afforded the same rights as full-time employees? | Part-time workers have been recognised and are afforded legal protection under various Indian employment laws such as the Code on Wages, 2019 ("Wages Code") (which has subsumed the Minimum Wages Act, 1948), the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 and the rules framed thereunder. Courts of India have held that part-time employment is simply engaging employees whose working hours are less than the working hours of full-time or regular employees. Save for the number of working hours, there is no other prominent distinction as regards terms and conditions of employment and statutory benefits provided to part-time employees vis-à-vis full-time employees. Under Indian law, employers are required to provide the same benefits to part-time employees and full-time employees. For instance, a part-time employee is entitled to social security benefits such as provident fund under Chapter III of the SS Code (which has subsumed the Employees' Provident Funds and Miscellaneous Provisions Act, 1952), and the said legislation does not prescribe any criteria in terms of the number of days an employee is required to work in order to be eligible for provident fund. Similarly, part-time employees are entitled to insurance benefits for employment injury or other health-related concerns under Chapter IV of the SS Code (which has subsumed the Employees' State Insurance Act, 1948), maternity benefit under Chapter VI of the SS Code (which has subsumed the Maternity Benefit Act, 1961), bonus under Chapter IV of the Wages Code (which has subsumed the Payment of Bonus Act, 1965), leave encashment under the OSH Code / Local Shops and Establishment Act, and gratuity upon completion of 5 years of continuous service under Chapter V of the SS Code (which has subsumed the Payment of Gratuity Act, 1972). However, to the extent permissible under applicable labour laws, employers may provide pro-rated benefits to part-time employees for the period of actual work done by them, on a case-to-case basis. |
| Can employment contracts be assigned? | Employment contracts in India are contracts of a personal nature and can only be assigned with the consent of the employee. However, one cannot seek specific performance in respect of a contract of personal nature. |
| What rights do employees have (to object, to severance), if any, when the company they work for is transferred as a going concern? | Regulations governing, inter alia, the transfer of services of employees during the sale of a business on a going concern basis are set out under the IR Code. Under the IR Code, employees who fall under the category of 'workers' enjoy certain statutory protections and rights in case of retrenchment and transfer which are otherwise not applicable to other employees. Workers are given statutory protection with regard to severance compensation at the time of transfer of the undertaking as a going concern under the IR Code, in addition to the provisions of their employment contract and policies of the company (if any). Employees who are not categorised as workers under the IR Code are governed by the provisions of their employment contract, policies of the company and the relevant Shops and Establishments Act(s) of the State where the employees are located at the time of transfer. Under Section 73 of the IR Code, where the ownership or management of an establishment is transferred, whether by agreement or by operation of law, from the employer in relation to that establishment to a new employer, every worker who has been in continuous service for not less than 1 (one) year in that establishment immediately before such transfer shall be entitled to retrenchment compensation and notice as provided under Section 70 of the IR Code, unless the following conditions are satisfied: (a) the continuity of services of the employees should not be interrupted by the transfer; (b) the terms and conditions of service applicable to the employees after transfer shall not in any way be altered or modified to be less favourable to the employees than those applicable to them immediately prior to the date of the transfer; and (c) The transferee, in such situation, is liable to pay the employees, in the event of their retrenchment after the date of transfer, compensation on the basis that the services have been continuous and have not been interrupted by the transfer. Transfer of employment can only be by way of an express or implied consent of the employee. Typically, the right to transfer employees is usually incorporated in the employment contracts. However, in the absence of such a right, an employee can only be transferred with their express consent. In case any worker objects to being transferred, then they are entitled to retrenchment compensation along with other dues at the time of retrenchment. |
| Do you have statutory rights for employees on change of control of an employer? If so, please give the statute. | Change in control payments are typically contractual. |
| In what circumstances can employers unilaterally change the terms of employment, and what remedies (if any) are afforded to an employee? | Change of terms of employment for ‘worker’ category employees is regulated under Section 40 of the IR Code, which provides that if an employer intends to change the conditions of service applicable to the workers in respect of matters enumerated in the Third Schedule of the IR Code (i.e. wages, provident fund or pension benefits, allowances, leave, shift working, grades, etc.), then the employer has to serve upon the workmen likely to be affected by such change, a notice 21 days prior to the change proposed to be effected. This notice enables employees to raise objections with respect to the changes. However, notice under Section 40 is not required where the change in conditions of service is not detrimental to the employees concerned. Further, where the change does not relate to any of the conditions of service enumerated in the Third Schedule, Courts have held that the notice obligation is not applicable. Usually, the employment contracts and policies prescribe the right of the employer to amend the terms of employment. |
| Is your jurisdiction an employment-at-will jurisdiction? What are the employer’s termination rights? | Employment-at-will is not recognized under Indian law. Employers are required to provide reasons before terminating employment. Further, prior notice is also required to be provided to the employee or a payment in lieu thereof unless the termination is for misconduct on the part of the employee. Common grounds for termination of employment include misconduct, non-performance, loss of confidence, redundancy, etc. Employers have the right to effect summary dismissals where the termination of employment is on account of misconduct, non-performance, etc. In such cases, the employer can terminate the employment of the employee without providing any notice or payment in lieu thereof, after holding an inquiry in the matter and providing an opportunity of hearing to the employee. In terms of rights of the employers at the time of termination, the employers can enforce certain obligations on the employees in order to safeguard their business interests and protect their intellectual property. To this end, various contractual obligations in the form of restraints can be imposed on the outgoing employees, such as non-disclosure of confidential information, assignment of intellectual property, returning company property and assets, non-disparagement, etc. |
| Are there remedies for dismissal without cause or wrongful termination? | Remedies for wrongful termination would typically depend on the facts of the case and the category of employees, whether they are worker-category or non-worker-category employees. These remedies could include reinstatement of the employee with or without back wages for worker-category employees and damages for non-worker employees. Reinstatement with full back wages, however, is not granted automatically, and several factors such as manner and method of selection, nature of appointment (ad hoc, daily wages, temporary, permanent, etc.), period of service, delay in raising industrial dispute, etc. are to be considered. While deciding the issue of back wages, the length of service of the employee, the nature of misconduct, if any, proved against such employee, and the financial condition of the employer are also typically considered. In some cases, compensation may also be awarded where reinstatement is not possible or where the litigation becomes long drawn. Compensation is also awarded in cases where the employer is unable to prove the wrongdoing, or where the worker is nearing the age of superannuation. |
| Are there protections for whistleblowers? | The Companies Act 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 prescribes the requirement of listed companies (and certain other classes of companies) to mandatorily establish a vigil mechanism for their directors and employees to report their concerns or grievances. The vigil mechanism is required to provide for adequate safeguards against victimization. Further, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) require all listed entities to devise an effective whistle blower mechanism enabling stakeholders, including individual employees and their representative bodies, to freely communicate their concerns about illegal or unethical practices. In terms of what such a mechanism should comprise, it is provided that it should have adequate safeguards against victimization of director(s) or employee(s) or any other person who avails the mechanism and also provide for direct access to the chairperson of the audit committee in appropriate or exceptional cases. Apart from the requirement that the mechanism should include safeguards against victimization of the whistleblowers, the companies have been given the discretion to formulate a robust vigil mechanism to address genuine concerns raised by directors and employees to the audit committee. The law provides that there should be adequate safeguards against victimisation of employees and directors who avail of the vigil mechanism, and suitable action should be taken in case of repeated frivolous complaints by a director or an employee. The whistle blower or vigil mechanism prescribed under the LODR Regulations or the Companies Act is in pursuance of good corporate governance and is typically triggered in cases relating to operational inconsistencies or fraudulent practices within the organizations. |
| Do employees have a right to privacy? If so, what are the remedies for a breach? | Under Indian laws, privacy of sensitive personal data or information is governed by the Information Technology Act 2000 (“IT Act”) and the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 (“Data Protection Rules”). Under the Data Protection Rules, sensitive personal data or information has been defined as personal information that consists of information relating to (i) password; (ii) financial information such as bank account or credit card or debit card or other payment instrument details; (iii) physical, physiological and mental health condition; (iv) sexual orientation; (v) medical records and history; (vi) biometric information; (vii) any detail relating to the above clauses as provided to a body corporate for providing service; and (viii) any of the information received under above clauses by a body corporate for processing, storing or processing under lawful contract or otherwise. The Data Protection Rules provide that the company has to obtain the consent of the providers of information only for sensitive personal data. These rules further give the providers of information the right to review the information they had provided as and when requested by them and ensure that if such information is found inaccurate or deficient, the same should be corrected or amended. There are general sanctions and penalties for entities that handle sensitive personal data or information and that: (a) fail to implement and maintain reasonable security practices and procedures; and (b) cause wrongful loss or gain to any person. Organizations that commit violations involving sensitive personal data or information may be liable for damages up to five crore rupees to the affected individual under the IT Act. Organizations that disclose personal information in breach of their contract also may be punished with imprisonment of up to three years, a fine of up to five lakh Rupees, or both. Affected individuals may also bring civil actions for breach of contract. Further, a breach of confidentiality and privacy may be punished with imprisonment of up to 2 years, a fine of up to one lakh Rupees, or both. However, the aforementioned framework is to be replaced by the Digital Personal Data Protection Act, 2023 (“DPDP Act”) and the Digital Personal Data Protection Rules, 2025 (“DPDP Rules”), once they are brought into force. The DPDP Act obtained Presidential assent on 11 August 2023, after being passed by both Houses of Parliament. It was published in the Official Gazette. On November 14, 2025, the Government published the DPDP Rules as well as the timelines within which the provisions of the DPDP Act and DPDP Rules will be brought into force. The Government has provided for staggered implementation of the provisions of the DPDP Act and DPDP Rules, and they will come into force in phases, with incremental provisions coming into force in November 2026 and the remaining by May 2027. The DPDP Act permits the processing of personal data of a Data Principal (i.e. individual to whom the personal data relates) for certain legitimate uses, including for the purposes of employment and those related to safeguarding the employer from loss or liability, such as prevention of corporate espionage, maintenance of confidentiality of trade secrets, intellectual property, classified information or provision of any service or benefit sought by a Data Principal who is an employee. |
| Are employees afforded any anti-discrimination protection? | The Constitution of India grants several fundamental rights to the citizens of India, such as the right to equality, prohibition of the State from discrimination on the grounds of religion, race, caste, gender or place of birth, and enables the State to formulate anti-discrimination laws. The Wages Code provides that no employer shall discriminate on the ground of sex in matters of recruitment for the same work or work of a similar nature or in any condition of employment, except where the employment of women in such work is prohibited or restricted by or under any applicable law. The Wages Code also provides for non-discrimination on the ground of gender in matters relating to wages. Additionally, the Constitution of India (“Constitution”) provides that the State shall secure equal pay for equal work for both men and women. The Constitution further guarantees that no citizen shall be ineligible or discriminated against in respect of any employment or office under the State, on the grounds only of gender. Apart from the above, the Rights of Persons with Disabilities Act 2016 (“Disabilities Act”) prohibits discrimination on grounds of disabilities in matters of employment in government establishments. An ‘equal opportunity policy’ is required to be formulated by the employers and provide additional facilities or special benefits to disabled employees in order to increase their accessibility in terms of special leave, training programs, workplace infrastructure and communication technologies. Additionally, the Transgender Persons (Protection of Rights) Act, 2019 (“TPPR Act”) prohibits discrimination against a transgender person in matters of employment including, but not limited to, recruitment, promotion and other related issues. The TPPR Act and rules thereunder also require employers to formulate an equal opportunity policy for transgender persons and designate a person to be a complaints officer to deal with the complaints relating to violation of the provisions of the TPPR Act. The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 further prohibits denial of opportunities including access to services or contractual opportunities for service to, refusal to carry out business on ordinary terms with, or to abstain from professional or business relations with individuals belonging to the scheduled castes and scheduled tribes. The Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017 aims to prevent societal stigma and discrimination of people living with HIV-AIDS. The legislation also aims to provide the right to privacy to such persons. Under this Act, it is the duty of every person (including an employer) to ensure that: (a) no HIV test is undertaken or performed upon any person; and (b) no protected person shall be subject to medical treatment, medical interventions or research, except with the informed consent of such person or his representative in the prescribed manner. Additionally, there is a total prohibition against disclosure of HIV status or other private information. |
| Are there statutory rights to vacation, medical leave and parental leave? Have there been any changes to leave benefits in the past 12 months? Is there any proposed legislation that employers should be aware of that will impact leave benefits? | Yes, the OSH Code as well as the State-specific Shops and Establishments legislation provide for a certain number of days as annual leave with wages that the employees are entitled to. The OSH Code provides a worker-category employee with 18 annual/earned leaves, while there is no provision for sick or casual leaves. Further, the State-specific Shops Act also prescribes annual leaves, typically ranging between 12 days and 30 days. For worker-category personnel, the employer is required to comply with the more beneficial provision. Unavailed annual leaves are typically allowed to be carried forward to the next year subject to a prescribed cap. Under the newly implemented OSH Code, ‘worker-category employees’ are entitled to: (a) accumulate up to 30 days of annual leave; (b) automatic encashment of annual leaves accumulated in excess of 30 days; and (c) on-demand encashment of any accumulated leaves at the end of every calendar year. Additionally, the employer is also required to encash accumulated privilege leaves at the end of employment, subject to the accumulation limit of 30 days. Similarly, State-specific Shops Act also provides for accumulation limits in respect of earned leaves and the more beneficial provision is required to be followed. Some Shops and Establishments legislations also provide for sick and casual leaves (typically 7-12 days). Further, in addition to the weekly holidays and compensatory holidays, employees are also entitled to national holidays such as Republic Day (January 26), Independence Day (August 15) and Gandhi Jayanthi (October 2) in most States. Employees are also entitled to 5 to 7 holidays from a list of holidays notified either under the relevant State-level Acts or by the respective State governments for each calendar year under the Negotiable Instruments Act, 1881. Other types of leaves provided by companies in India include paternity leaves (5-7 days), bereavement or compassionate leave (3-5 days), marriage leave (15-20 days), leave without pay, etc. Several companies have also introduced wellness leaves for any employee suffering from medical or mental illness under their liberalized leave policy. These leaves are not mandatorily prescribed under law and can be provided on the basis of the global practice in the company. |
| Are restrictive covenants recognized and, if so, what are reasonable restrictions as to geography, duration and scope of activity? | Restrictive covenants in India typically include the following:
Other restrictive covenants would include non-disparagement and non-interference with the business and contracts of the company. While non-solicitation and non-disclosure obligations are recognized both during the subsistence and after the end of employment in India, non-compete restrictions beyond the term of employment are not enforceable under Indian law. Any non-compete obligations extending beyond the term of employment are considered void. That said, such restrictions are often inserted in contracts to act as a deterrent from unfair competition. While an employer cannot restrain its employee from leaving his/ her employment to join a competitor, the employer can take measures to protect its business, proprietary information and intellectual property in such an eventuality. Contractual obligations in the form of restraints, such as non-disclosure obligations of confidential information, assignment of intellectual property rights of any intellectual property created while in employment, and non-solicitation obligations, etc., can be imposed on the employees to protect the employer on the departure of employees and are recognized under Indian law. Since non-compete restrictions are considered to be in restraint of trade and thus, violative of Section 27 of the Indian Contract Act, the restrictive covenants that are recognized and enforceable under Indian law are non-solicitation of employees, customers and clients of the employer and non-disclosure of confidential information. In terms of reasonability, there are a number of factors that would be taken into consideration while imposing a restrictive covenant on an employee. First among such factors would be the time period for which such restriction would be operational. While the obligations with respect to confidentiality continue in perpetuity, non-solicitation obligations are typically imposed for a period of 12-24 months from the last date of employment. As regards geographical limits, restrictive covenants are typically structured in a manner to be operational without any limitations in terms of geography or territorial limits in India. |
| Can employees be terminated for refusing to sign a restrictive covenant? What serves as consideration for a restrictive covenant? | Restrictive covenants as specified above are typically included in the employment contract. In case any of the employees refuses to comply with or breaches the above-mentioned restrictive covenants, the employer can terminate their employment. In addition to the above, employment contracts in India also include non-competition provisions extending beyond the term of employment. Non-competition provisions extending beyond the term of the employment contract have been held to be void and not enforceable as per Section 27 of the Indian Contract Act, 1872 (“Contract Act”). While such clauses may not be enforceable, an employer may include such a clause since it may act as a deterrent for an employee to join the business of a competitor. Considerations such as joining bonus, training, continued vesting and exercise of stock options, etc. generally serve as a consideration for restrictive covenants (except non-compete restrictions) extending beyond the term of employment. Payment of such consideration for non-compete does not make the restrictions enforceable but gives the employer a right to claim damages by a proportionate clawback of the consideration. |
| Does your jurisdiction require contributions to a pension or retirement scheme? | The social security legislation, such as the SS Code in India, requires certain contributions to be made by the employer and eligible employees on a monthly basis towards provident fund, pension, employees’ deposit-linked insurance and certain benefits in case of sickness, maternity and employment injuries. Under Chapter III of the SS Code, both the employees and the employer are required to contribute to provident fund at the rate of 12% of the wages of the employee every month. Out of the 12% stated aforesaid, 8.33 % is remitted to the pension fund. Employers can choose to limit the contributions to 12% of the wage ceiling prescribed, which currently stands at INR 15,000 (USD 158.86). Foreign nationals working in notified establishments are also covered as international workers by the provisions of the Employees’ Provident Scheme. Under Chapter IV of the SS Code, in case of employees earning upto INR 21,000 (~USD 222), both the employer and the employee are required to make a contribution to the fund established by the Employees' State Insurance Corporation. The employer is required to contribute at the rate of 3.25% of the wages of the employee and the employee is required to contribute at the rate of 0.75% of their wages towards the fund. In addition to the above, Chapter V of the SS Code provides for the scheme of payment of gratuity to an employee after he/she has rendered continuous service for not less than 4 years and 8 months on superannuation, retirement or resignation, termination or on death or disablement due to accident or disease. Gratuity is payable for every completed year of service or part thereof in excess of 6 months at the rate of 15 days’ wages, based on the rate of wages last drawn by the employee, subject to a maximum of INR 2,000,000 (unless a higher amount is agreed contractually). Unlike the provisions governing Employees' Provident Fund and the Employees' State Insurance, there is no contribution required from the employees in case of gratuity. In addition, the State-specific Labour Welfare Fund Acts (“LWF Acts”) governing matters relating to the welfare of labour working in a particular State, provide for the constitution of a fund (maintained by the State Government) for the purposes of promoting and financing activities connected with the welfare of the labour in such States. The applicability of the relevant State-specific LWF Acts depends on the number and salary threshold of the employees engaged in an establishment. The LWF Acts require an employer to make contributions to the labour welfare fund on behalf of itself and the employee. These benefits (especially provident fund, pension and gratuity) can also be provided by way of private trust funds subject to obtaining exemption under the relevant legislation and conditions prescribed thereunder. |
| Are certain benefits mandated by your jurisdiction? | The benefits available to the employees under Indian law include the following: employees’ provident fund, employees’ state insurance, maternity benefit, gratuity, statutory bonus, earned leave encashment, retrenchment compensation, overtime payment, and disability benefits. However, the eligibility of employees to these benefits depends upon a number of factors such as the applicability of the particular legislation to the employer and employee, wages earned by the employee, number of years of service and nature of roles and responsibilities of the employee. |
| Is it permitted to have a mandatory retirement age in your jurisdiction? | The Courts in India held that the concept of retirement exists essentially for the purpose of providing benefits to employees. It is founded on the consideration that individuals who have rendered service to an organization for the useful span of life must not be left to penury in their old age. The SS Code defines ‘superannuation’ to mean “the attainment by the employee of such age as is fixed in the contract or conditions of service, as the age on the attainment of which the employee shall vacate the employment". For the purposes of the chapter governing Employees' Provident Fund under the SS Code, the age of superannuation has been provided to be fifty-eight years. Further, the model standing orders framed under the IR Code provide that the age of retirement or superannuation of a worker shall be as agreed upon between the employer and the worker under an agreement or as given in a settlement/award which is binding upon both the worker and the employer, and where there is no such agreed age, retirement to be on completion of 58 years of age by the worker. Therefore, in case of employees in the private sector, the law does not prescribe any particular age as the age of retirement, and the same can be fixed by way of an agreement between the parties. Entities in the private sector, including non-government entities, typically frame their own rules and regulations with respect to the age of retirement. The market practice is to keep the age of retirement within the range of 58 to 60 years to link it with the pensionable age under the SS Code. Having said that, there are some instances where the age of retirement is extended up to 70 years of age as well. |
| Is it possible to cease pension or insured benefits (income continuance/disability insurance, healthcare, life assurance, etc.) when work continues beyond retirement age? | In India, the schemes under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which are still in force, provide that employees are entitled to receive pension once they attain the retirement age of 58 years. Similarly, gratuity is paid to the employees upon superannuation, subject to them completing 4 years and 8 months of continuous service. With respect to insurance benefits, since these are contractual in nature, it is up to the employer’s discretion to continue or cease these benefits when work continues beyond retirement age. |
| Can an employer require that employees return to work in the office (absent government order to shut down)? If an employee refuses to return to the office, can the employer terminate the employee’s employment? | We understand that this query was specifically asked in the context of COVID-19. However, in the present-day scenario, the employer is well within its right to prescribe mandatory work from the office. The Courts in India have held that the employer is justified in terminating the services of the workmen if they deliberately refuse to attend to work. Therefore, where the job role requires work from the office and the employee refuses to come to the office, subject to applicable Government directives in this regard, termination of the employee’s employment could be considered. However, one would need to bear in mind that the Courts in India are usually pro-employees and often rule in favour of the employees by requiring employers to offer more flexibility than legally required to the employees on humanitarian grounds. Additionally, the model standing orders for the service sector under the IR Code provide that an employer may allow a worker to work from home / remote location / virtual workplace for a specified period, subject to the conditions of appointment. |
Global Employment Law Guide
India
(Asia Pacific) Firm Shardul Amarchand Mangaldas & CoContributors Pooja Ramchandani Kriti Kaushik
Updated 09 May 2026Employees in India are typically categorized into ‘worker’ and ‘non-worker’ categories under the Industrial Relations Code, 2020 ("IR Code") (in force since November 21, 2025). The ‘worker’ category (replacing the erstwhile ‘workman’ under the repealed Industrial Disputes Act, 1947) includes employees who do manual, unskilled, skilled, technical, operational, clerical or supervisory work earning less than INR 18,000 per month ( ~ USD 191). The ‘non-worker’ category is employees who are engaged in an administrative, managerial or supervisory capacity earning above INR 18,000 per month ( ~ USD 191). However, the determinative test for identifying “worker” is a fact based analysis on the basis of the nature of work of an employee and the nomenclature by which an employee is designated by the employer is not relevant.
Apart from employees, companies in India also engage other categories of workforce such as consultants, contract labour, trainees/interns, apprentices, and fixed-term employees. Fixed-term employees have now been formally recognized under the Labour Codes with parity in benefits to permanent employees. Typically, consultants are engaged for specific professional services which regular employees do not carry out. Further, contract labour are personnel engaged through a contractor for non-perennial and non-permanent nature of work at an establishment and are afforded legal protection under the Occupational Safety, Health and Working Conditions Code, 2020 ("OSH Code").
In addition to the said categories of workforce, non-conventional workforce such as ‘gig-workers’ and ‘platform workers’ is gaining traction in India. In the code pertaining to welfare benefits, i.e., Code on Social Security,2020 ("SS Code"), gig and platform workers have for the first time been recognized for the purpose of prescribing social security benefits.
Gig workers have been defined to mean “a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship” and the term 'platform work' has been defined to mean as “an employment form in which organizations or individuals use an online platform to access other organizations or individuals to solve specific problems or to provide specific services in exchange for payment".
Dedicated gig-worker legislation has been notified/implemented in certain states like Rajasthan (Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023), Karnataka (Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025) and Jharkhand (Jharkhand Platform-Based Gig Workers (Registration and Welfare) Act, 2025).
Yes, there are different types of employment contracts in India depending on the nature of work and job requirements. These include contracts for an indefinite period, fixed-term contracts, and part-time contracts. Fixed-term employment is now formally recognised under the new Labour Codes, which mandate parity in payment of wages and benefits to such employees (including gratuity after one year of continuous service), on a pro-rata basis, with permanent employees performing the same or similar work.
Under the Indian Contract Act, 1872, a contract must have the following ingredients to be valid, i.e., offer, acceptance, consideration, competent parties, legal object, and free consent. Accordingly, an employment contract is an agreement between an employer who avails the services of a person agreeing to be an employee for an agreed duration (for a fixed term or indefinite) for an agreed remuneration. In order to be determined as a valid contract, it is imperative that an employee has entered into such a contract out of his/her own volition, and has acknowledged and understood the terms of employment. The OSH Code (in force since November 21, 2025) requires employers to issue appointment letter to every employee of the establishment with the prescribed information such as Aadhaar number (unique identity number issued to the residents of India), Universal Account Number (relevant for employees’ provident fund account), Insurance Number (relevant for employees’ state insurance fund account), category of skill, wages, avenue for achieving higher wages/higher position, nature of duties, etc. Additionally, certain Local Shops & Establishments Acts in India prescribe the format for appointment letters where details such as the name of employer and employee, period of appointment, wages and nature of appointment (i.e. full-time, part-time etc.) are to be provided. In any event, in practice, employers execute with their employees contracts which contain the terms and conditions of employment including but not limited to appointment, reporting, transfer, remuneration, termination and restrictive covenants. Although the format of an appointment letter is prescribed under the OSH Code and certain State laws, employers have the discretion to decide on the terms and conditions of employment contracts so long as such terms are not contradictory to those prescribed under the applicable law and general principles of contract law.
Part-time workers have been recognised and are afforded legal protection under various Indian employment laws such as the Code on Wages, 2019 ("Wages Code") (which has subsumed the Minimum Wages Act, 1948), the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 and the rules framed thereunder. Courts of India have held that part-time employment is simply engaging employees whose working hours are less than the working hours of full-time or regular employees. Save for the number of working hours, there is no other prominent distinction as regards terms and conditions of employment and statutory benefits provided to part-time employees vis-à-vis full-time employees. Under Indian law, employers are required to provide the same benefits to part-time employees and full-time employees. For instance, a part-time employee is entitled to social security benefits such as provident fund under Chapter III of the SS Code (which has subsumed the Employees' Provident Funds and Miscellaneous Provisions Act, 1952), and the said legislation does not prescribe any criteria in terms of the number of days an employee is required to work in order to be eligible for provident fund.
Similarly, part-time employees are entitled to insurance benefits for employment injury or other health-related concerns under Chapter IV of the SS Code (which has subsumed the Employees' State Insurance Act, 1948), maternity benefit under Chapter VI of the SS Code (which has subsumed the Maternity Benefit Act, 1961), bonus under Chapter IV of the Wages Code (which has subsumed the Payment of Bonus Act, 1965), leave encashment under the OSH Code / Local Shops and Establishment Act, and gratuity upon completion of 5 years of continuous service under Chapter V of the SS Code (which has subsumed the Payment of Gratuity Act, 1972). However, to the extent permissible under applicable labour laws, employers may provide pro-rated benefits to part-time employees for the period of actual work done by them, on a case-to-case basis.
Employment contracts in India are contracts of a personal nature and can only be assigned with the consent of the employee. However, one cannot seek specific performance in respect of a contract of personal nature.
Regulations governing, inter alia, the transfer of services of employees during the sale of a business on a going concern basis are set out under the IR Code. Under the IR Code, employees who fall under the category of 'workers' enjoy certain statutory protections and rights in case of retrenchment and transfer which are otherwise not applicable to other employees. Workers are given statutory protection with regard to severance compensation at the time of transfer of the undertaking as a going concern under the IR Code, in addition to the provisions of their employment contract and policies of the company (if any). Employees who are not categorised as workers under the IR Code are governed by the provisions of their employment contract, policies of the company and the relevant Shops and Establishments Act(s) of the State where the employees are located at the time of transfer.
Under Section 73 of the IR Code, where the ownership or management of an establishment is transferred, whether by agreement or by operation of law, from the employer in relation to that establishment to a new employer, every worker who has been in continuous service for not less than 1 (one) year in that establishment immediately before such transfer shall be entitled to retrenchment compensation and notice as provided under Section 70 of the IR Code, unless the following conditions are satisfied: (a) the continuity of services of the employees should not be interrupted by the transfer; (b) the terms and conditions of service applicable to the employees after transfer shall not in any way be altered or modified to be less favourable to the employees than those applicable to them immediately prior to the date of the transfer; and (c) The transferee, in such situation, is liable to pay the employees, in the event of their retrenchment after the date of transfer, compensation on the basis that the services have been continuous and have not been interrupted by the transfer. Transfer of employment can only be by way of an express or implied consent of the employee. Typically, the right to transfer employees is usually incorporated in the employment contracts. However, in the absence of such a right, an employee can only be transferred with their express consent. In case any worker objects to being transferred, then they are entitled to retrenchment compensation along with other dues at the time of retrenchment.
Change in control payments are typically contractual.
Change of terms of employment for ‘worker’ category employees is regulated under Section 40 of the IR Code, which provides that if an employer intends to change the conditions of service applicable to the workers in respect of matters enumerated in the Third Schedule of the IR Code (i.e. wages, provident fund or pension benefits, allowances, leave, shift working, grades, etc.), then the employer has to serve upon the workmen likely to be affected by such change, a notice 21 days prior to the change proposed to be effected. This notice enables employees to raise objections with respect to the changes. However, notice under Section 40 is not required where the change in conditions of service is not detrimental to the employees concerned. Further, where the change does not relate to any of the conditions of service enumerated in the Third Schedule, Courts have held that the notice obligation is not applicable. Usually, the employment contracts and policies prescribe the right of the employer to amend the terms of employment.
Employment-at-will is not recognized under Indian law. Employers are required to provide reasons before terminating employment. Further, prior notice is also required to be provided to the employee or a payment in lieu thereof unless the termination is for misconduct on the part of the employee. Common grounds for termination of employment include misconduct, non-performance, loss of confidence, redundancy, etc. Employers have the right to effect summary dismissals where the termination of employment is on account of misconduct, non-performance, etc. In such cases, the employer can terminate the employment of the employee without providing any notice or payment in lieu thereof, after holding an inquiry in the matter and providing an opportunity of hearing to the employee. In terms of rights of the employers at the time of termination, the employers can enforce certain obligations on the employees in order to safeguard their business interests and protect their intellectual property. To this end, various contractual obligations in the form of restraints can be imposed on the outgoing employees, such as non-disclosure of confidential information, assignment of intellectual property, returning company property and assets, non-disparagement, etc.
Remedies for wrongful termination would typically depend on the facts of the case and the category of employees, whether they are worker-category or non-worker-category employees. These remedies could include reinstatement of the employee with or without back wages for worker-category employees and damages for non-worker employees. Reinstatement with full back wages, however, is not granted automatically, and several factors such as manner and method of selection, nature of appointment (ad hoc, daily wages, temporary, permanent, etc.), period of service, delay in raising industrial dispute, etc. are to be considered. While deciding the issue of back wages, the length of service of the employee, the nature of misconduct, if any, proved against such employee, and the financial condition of the employer are also typically considered. In some cases, compensation may also be awarded where reinstatement is not possible or where the litigation becomes long drawn. Compensation is also awarded in cases where the employer is unable to prove the wrongdoing, or where the worker is nearing the age of superannuation.
The Companies Act 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 prescribes the requirement of listed companies (and certain other classes of companies) to mandatorily establish a vigil mechanism for their directors and employees to report their concerns or grievances. The vigil mechanism is required to provide for adequate safeguards against victimization. Further, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) require all listed entities to devise an effective whistle blower mechanism enabling stakeholders, including individual employees and their representative bodies, to freely communicate their concerns about illegal or unethical practices. In terms of what such a mechanism should comprise, it is provided that it should have adequate safeguards against victimization of director(s) or employee(s) or any other person who avails the mechanism and also provide for direct access to the chairperson of the audit committee in appropriate or exceptional cases. Apart from the requirement that the mechanism should include safeguards against victimization of the whistleblowers, the companies have been given the discretion to formulate a robust vigil mechanism to address genuine concerns raised by directors and employees to the audit committee. The law provides that there should be adequate safeguards against victimisation of employees and directors who avail of the vigil mechanism, and suitable action should be taken in case of repeated frivolous complaints by a director or an employee. The whistle blower or vigil mechanism prescribed under the LODR Regulations or the Companies Act is in pursuance of good corporate governance and is typically triggered in cases relating to operational inconsistencies or fraudulent practices within the organizations.
Under Indian laws, privacy of sensitive personal data or information is governed by the Information Technology Act 2000 (“IT Act”) and the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 (“Data Protection Rules”). Under the Data Protection Rules, sensitive personal data or information has been defined as personal information that consists of information relating to (i) password; (ii) financial information such as bank account or credit card or debit card or other payment instrument details; (iii) physical, physiological and mental health condition; (iv) sexual orientation; (v) medical records and history; (vi) biometric information; (vii) any detail relating to the above clauses as provided to a body corporate for providing service; and (viii) any of the information received under above clauses by a body corporate for processing, storing or processing under lawful contract or otherwise.
The Data Protection Rules provide that the company has to obtain the consent of the providers of information only for sensitive personal data. These rules further give the providers of information the right to review the information they had provided as and when requested by them and ensure that if such information is found inaccurate or deficient, the same should be corrected or amended. There are general sanctions and penalties for entities that handle sensitive personal data or information and that: (a) fail to implement and maintain reasonable security practices and procedures; and (b) cause wrongful loss or gain to any person. Organizations that commit violations involving sensitive personal data or information may be liable for damages up to five crore rupees to the affected individual under the IT Act. Organizations that disclose personal information in breach of their contract also may be punished with imprisonment of up to three years, a fine of up to five lakh Rupees, or both. Affected individuals may also bring civil actions for breach of contract. Further, a breach of confidentiality and privacy may be punished with imprisonment of up to 2 years, a fine of up to one lakh Rupees, or both.
However, the aforementioned framework is to be replaced by the Digital Personal Data Protection Act, 2023 (“DPDP Act”) and the Digital Personal Data Protection Rules, 2025 (“DPDP Rules”), once they are brought into force. The DPDP Act obtained Presidential assent on 11 August 2023, after being passed by both Houses of Parliament. It was published in the Official Gazette. On November 14, 2025, the Government published the DPDP Rules as well as the timelines within which the provisions of the DPDP Act and DPDP Rules will be brought into force. The Government has provided for staggered implementation of the provisions of the DPDP Act and DPDP Rules, and they will come into force in phases, with incremental provisions coming into force in November 2026 and the remaining by May 2027. The DPDP Act permits the processing of personal data of a Data Principal (i.e. individual to whom the personal data relates) for certain legitimate uses, including for the purposes of employment and those related to safeguarding the employer from loss or liability, such as prevention of corporate espionage, maintenance of confidentiality of trade secrets, intellectual property, classified information or provision of any service or benefit sought by a Data Principal who is an employee.
The Constitution of India grants several fundamental rights to the citizens of India, such as the right to equality, prohibition of the State from discrimination on the grounds of religion, race, caste, gender or place of birth, and enables the State to formulate anti-discrimination laws. The Wages Code provides that no employer shall discriminate on the ground of sex in matters of recruitment for the same work or work of a similar nature or in any condition of employment, except where the employment of women in such work is prohibited or restricted by or under any applicable law.
The Wages Code also provides for non-discrimination on the ground of gender in matters relating to wages. Additionally, the Constitution of India (“Constitution”) provides that the State shall secure equal pay for equal work for both men and women. The Constitution further guarantees that no citizen shall be ineligible or discriminated against in respect of any employment or office under the State, on the grounds only of gender.
Apart from the above, the Rights of Persons with Disabilities Act 2016 (“Disabilities Act”) prohibits discrimination on grounds of disabilities in matters of employment in government establishments. An ‘equal opportunity policy’ is required to be formulated by the employers and provide additional facilities or special benefits to disabled employees in order to increase their accessibility in terms of special leave, training programs, workplace infrastructure and communication technologies.
Additionally, the Transgender Persons (Protection of Rights) Act, 2019 (“TPPR Act”) prohibits discrimination against a transgender person in matters of employment including, but not limited to, recruitment, promotion and other related issues. The TPPR Act and rules thereunder also require employers to formulate an equal opportunity policy for transgender persons and designate a person to be a complaints officer to deal with the complaints relating to violation of the provisions of the TPPR Act.
The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 further prohibits denial of opportunities including access to services or contractual opportunities for service to, refusal to carry out business on ordinary terms with, or to abstain from professional or business relations with individuals belonging to the scheduled castes and scheduled tribes.
The Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017 aims to prevent societal stigma and discrimination of people living with HIV-AIDS. The legislation also aims to provide the right to privacy to such persons. Under this Act, it is the duty of every person (including an employer) to ensure that: (a) no HIV test is undertaken or performed upon any person; and (b) no protected person shall be subject to medical treatment, medical interventions or research, except with the informed consent of such person or his representative in the prescribed manner. Additionally, there is a total prohibition against disclosure of HIV status or other private information.
Yes, the OSH Code as well as the State-specific Shops and Establishments legislation provide for a certain number of days as annual leave with wages that the employees are entitled to.
The OSH Code provides a worker-category employee with 18 annual/earned leaves, while there is no provision for sick or casual leaves. Further, the State-specific Shops Act also prescribes annual leaves, typically ranging between 12 days and 30 days. For worker-category personnel, the employer is required to comply with the more beneficial provision.
Unavailed annual leaves are typically allowed to be carried forward to the next year subject to a prescribed cap. Under the newly implemented OSH Code, ‘worker-category employees’ are entitled to: (a) accumulate up to 30 days of annual leave; (b) automatic encashment of annual leaves accumulated in excess of 30 days; and (c) on-demand encashment of any accumulated leaves at the end of every calendar year. Additionally, the employer is also required to encash accumulated privilege leaves at the end of employment, subject to the accumulation limit of 30 days. Similarly, State-specific Shops Act also provides for accumulation limits in respect of earned leaves and the more beneficial provision is required to be followed.
Some Shops and Establishments legislations also provide for sick and casual leaves (typically 7-12 days). Further, in addition to the weekly holidays and compensatory holidays, employees are also entitled to national holidays such as Republic Day (January 26), Independence Day (August 15) and Gandhi Jayanthi (October 2) in most States. Employees are also entitled to 5 to 7 holidays from a list of holidays notified either under the relevant State-level Acts or by the respective State governments for each calendar year under the Negotiable Instruments Act, 1881.
Other types of leaves provided by companies in India include paternity leaves (5-7 days), bereavement or compassionate leave (3-5 days), marriage leave (15-20 days), leave without pay, etc. Several companies have also introduced wellness leaves for any employee suffering from medical or mental illness under their liberalized leave policy. These leaves are not mandatorily prescribed under law and can be provided on the basis of the global practice in the company.
Restrictive covenants in India typically include the following:
- Non-Disclosure: employees are restrained from using or disclosing confidential information, directly or indirectly obtained from the employer, without the employer's consent, express or implied;
- Non-Competition (limited to during the course of employment): employees undertake that during the course of employment, they will not be a competitor of the employer in the form and nature of the employment of the employer; and
- Non-Solicitation: employees are restrained from soliciting, inducing or encouraging any employees of the employer to terminate his employment with or to accept employment with any competitor, supplier or customer of the employer. Under this restriction, apart from solicitation of employees, former employees are also restrained from soliciting, contacting, or inducing customers/clients/vendors, etc.
Other restrictive covenants would include non-disparagement and non-interference with the business and contracts of the company.
While non-solicitation and non-disclosure obligations are recognized both during the subsistence and after the end of employment in India, non-compete restrictions beyond the term of employment are not enforceable under Indian law. Any non-compete obligations extending beyond the term of employment are considered void. That said, such restrictions are often inserted in contracts to act as a deterrent from unfair competition. While an employer cannot restrain its employee from leaving his/ her employment to join a competitor, the employer can take measures to protect its business, proprietary information and intellectual property in such an eventuality. Contractual obligations in the form of restraints, such as non-disclosure obligations of confidential information, assignment of intellectual property rights of any intellectual property created while in employment, and non-solicitation obligations, etc., can be imposed on the employees to protect the employer on the departure of employees and are recognized under Indian law. Since non-compete restrictions are considered to be in restraint of trade and thus, violative of Section 27 of the Indian Contract Act, the restrictive covenants that are recognized and enforceable under Indian law are non-solicitation of employees, customers and clients of the employer and non-disclosure of confidential information. In terms of reasonability, there are a number of factors that would be taken into consideration while imposing a restrictive covenant on an employee. First among such factors would be the time period for which such restriction would be operational. While the obligations with respect to confidentiality continue in perpetuity, non-solicitation obligations are typically imposed for a period of 12-24 months from the last date of employment. As regards geographical limits, restrictive covenants are typically structured in a manner to be operational without any limitations in terms of geography or territorial limits in India.
Restrictive covenants as specified above are typically included in the employment contract. In case any of the employees refuses to comply with or breaches the above-mentioned restrictive covenants, the employer can terminate their employment. In addition to the above, employment contracts in India also include non-competition provisions extending beyond the term of employment. Non-competition provisions extending beyond the term of the employment contract have been held to be void and not enforceable as per Section 27 of the Indian Contract Act, 1872 (“Contract Act”). While such clauses may not be enforceable, an employer may include such a clause since it may act as a deterrent for an employee to join the business of a competitor.
Considerations such as joining bonus, training, continued vesting and exercise of stock options, etc. generally serve as a consideration for restrictive covenants (except non-compete restrictions) extending beyond the term of employment. Payment of such consideration for non-compete does not make the restrictions enforceable but gives the employer a right to claim damages by a proportionate clawback of the consideration.
The social security legislation, such as the SS Code in India, requires certain contributions to be made by the employer and eligible employees on a monthly basis towards provident fund, pension, employees’ deposit-linked insurance and certain benefits in case of sickness, maternity and employment injuries.
Under Chapter III of the SS Code, both the employees and the employer are required to contribute to provident fund at the rate of 12% of the wages of the employee every month. Out of the 12% stated aforesaid, 8.33 % is remitted to the pension fund. Employers can choose to limit the contributions to 12% of the wage ceiling prescribed, which currently stands at INR 15,000 (USD 158.86). Foreign nationals working in notified establishments are also covered as international workers by the provisions of the Employees’ Provident Scheme.
Under Chapter IV of the SS Code, in case of employees earning upto INR 21,000 (~USD 222), both the employer and the employee are required to make a contribution to the fund established by the Employees' State Insurance Corporation. The employer is required to contribute at the rate of 3.25% of the wages of the employee and the employee is required to contribute at the rate of 0.75% of their wages towards the fund.
In addition to the above, Chapter V of the SS Code provides for the scheme of payment of gratuity to an employee after he/she has rendered continuous service for not less than 4 years and 8 months on superannuation, retirement or resignation, termination or on death or disablement due to accident or disease. Gratuity is payable for every completed year of service or part thereof in excess of 6 months at the rate of 15 days’ wages, based on the rate of wages last drawn by the employee, subject to a maximum of INR 2,000,000 (unless a higher amount is agreed contractually). Unlike the provisions governing Employees' Provident Fund and the Employees' State Insurance, there is no contribution required from the employees in case of gratuity.
In addition, the State-specific Labour Welfare Fund Acts (“LWF Acts”) governing matters relating to the welfare of labour working in a particular State, provide for the constitution of a fund (maintained by the State Government) for the purposes of promoting and financing activities connected with the welfare of the labour in such States. The applicability of the relevant State-specific LWF Acts depends on the number and salary threshold of the employees engaged in an establishment. The LWF Acts require an employer to make contributions to the labour welfare fund on behalf of itself and the employee.
These benefits (especially provident fund, pension and gratuity) can also be provided by way of private trust funds subject to obtaining exemption under the relevant legislation and conditions prescribed thereunder.
The benefits available to the employees under Indian law include the following: employees’ provident fund, employees’ state insurance, maternity benefit, gratuity, statutory bonus, earned leave encashment, retrenchment compensation, overtime payment, and disability benefits. However, the eligibility of employees to these benefits depends upon a number of factors such as the applicability of the particular legislation to the employer and employee, wages earned by the employee, number of years of service and nature of roles and responsibilities of the employee.
The Courts in India held that the concept of retirement exists essentially for the purpose of providing benefits to employees. It is founded on the consideration that individuals who have rendered service to an organization for the useful span of life must not be left to penury in their old age. The SS Code defines ‘superannuation’ to mean “the attainment by the employee of such age as is fixed in the contract or conditions of service, as the age on the attainment of which the employee shall vacate the employment". For the purposes of the chapter governing Employees' Provident Fund under the SS Code, the age of superannuation has been provided to be fifty-eight years.
Further, the model standing orders framed under the IR Code provide that the age of retirement or superannuation of a worker shall be as agreed upon between the employer and the worker under an agreement or as given in a settlement/award which is binding upon both the worker and the employer, and where there is no such agreed age, retirement to be on completion of 58 years of age by the worker.
Therefore, in case of employees in the private sector, the law does not prescribe any particular age as the age of retirement, and the same can be fixed by way of an agreement between the parties. Entities in the private sector, including non-government entities, typically frame their own rules and regulations with respect to the age of retirement. The market practice is to keep the age of retirement within the range of 58 to 60 years to link it with the pensionable age under the SS Code. Having said that, there are some instances where the age of retirement is extended up to 70 years of age as well.
In India, the schemes under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which are still in force, provide that employees are entitled to receive pension once they attain the retirement age of 58 years. Similarly, gratuity is paid to the employees upon superannuation, subject to them completing 4 years and 8 months of continuous service. With respect to insurance benefits, since these are contractual in nature, it is up to the employer’s discretion to continue or cease these benefits when work continues beyond retirement age.
We understand that this query was specifically asked in the context of COVID-19. However, in the present-day scenario, the employer is well within its right to prescribe mandatory work from the office.
The Courts in India have held that the employer is justified in terminating the services of the workmen if they deliberately refuse to attend to work.
Therefore, where the job role requires work from the office and the employee refuses to come to the office, subject to applicable Government directives in this regard, termination of the employee’s employment could be considered. However, one would need to bear in mind that the Courts in India are usually pro-employees and often rule in favour of the employees by requiring employers to offer more flexibility than legally required to the employees on humanitarian grounds.
Additionally, the model standing orders for the service sector under the IR Code provide that an employer may allow a worker to work from home / remote location / virtual workplace for a specified period, subject to the conditions of appointment.