LEGAL CHALLENGES TO FLEXIBLE WORK ARRANGEMENTS IN INDIA

1. Flexible Working Arrangements

In recent years, the workspace has undergone a seismic shift due to the COVID-19 pandemic. This shift has brought Flexible Working Arrangements (FWAs) to the forefront, presenting both opportunities and challenges for employers and employees. As per a recent study, nearly 44% of Indian employees work in a flexible work model, which is significantly higher than any country in the Asia-Pacific Region, (Singapore 24%, Australia 20%, and China only 16%). [1]

FWAs is an overarching term that encompasses a range of options available to employees, including but not limited to flexible work hours, remote work opportunities, adjusting workload to be less or more while maintaining a proportionate salary, and other similar arrangements. These agreements allow employees to tailor their work schedules and conditions to better suit their personal needs and preferences, promoting a healthier work-life balance and increasing overall job satisfaction.

Despite the prevalence and future prospects of FWAs, there is a dearth of proper policy, guidelines, and regulatory frameworks at both the central and state levels. This article tries to delve into the intricacies of FWAs within the existing Indian legal framework, aiming to offer insightful analyses and viable solutions for employers and employees.

2. Classification of FWAs

Globally FWAs have been majorly categorized as:

1. 1. 1. Flex-Time: The employees get an option to adjust their working hours from typical nine to five within a certain time bracket. This allows an employee to prioritise personal schedule, and maintain work-life balance suiting their choices.
      2. Flex-Place: The employee has the flexibility to choose the place of work beyond the traditional brick-and-mortar premises of the employer. This may include remote working/work from home, co-working spaces, or satellite offices
      3. Flex-Load: This option empowers employees to adjust their work hours to align with their needs. This flexibility allows individuals to work fewer hours when personal commitments require more time or, conversely, to earn additional income when necessary. Examples of such arrangements include job sharing among multiple employees, phased retirement options, and part-time schedules.

3.Legal Challenges Associated with FWAs

1. 1. 1. Jurisdictional Challenges: FWAs transcend state boundaries, presenting challenges in effectively implementing labour and employment laws, particularly those specific to individual states. A prime illustration of this complexity lies in state-specific leave and benefit regulations. Traditionally, a business adheres to the Shops and Establishment Acts of the state where the employer maintains a physical establishment. However, in an FWA scenario, the employer may have to provide benefits to employees based on the location of their work rather than the physical establishment of the employer.
      2. Health and Safety of the Employee: Typically, determining an employer’s liability for workplace accidents hinges on whether the accident occurred “out of and in the course of employment.” If the answer is affirmative, the employer is responsible for compensating the injured employee; conversely, if not, the employer is not liable.Now could the employer be held accountable for injuries sustained by a remote worker, like an electric shock from a faulty switch at the employee’s home during work hours, even if they had no control over the situation? To mitigate such risks and legal complexities in a flexible working model, the employer should establish proper Standard Operating Procedures (SOPs) for employees to follow.Additionally, Flexible Work Arrangements (FWAs) present novel health challenges, including isolation, burnout, and other mental health issues. It is imperative for employers to maintain constant communication with their remote employees to ensure they are not experiencing any such health concerns. Furthermore, employers may offer the services of mental health experts to all employees to mitigate such detrimental effects on the employees’ mental health.
      3. Data Privacy and Cybersecurity Concerns: Flexible working involves handling sensitive data outside the traditional office premises of the employer, posing a significant threat to the trade secrets, intellectual property, and other personal data of the employer. The employer needs to enter into a comprehensive non-solicitation agreement, non-disclosure agreement, non-compete agreement, etc., with its employees to safeguard its business interests.
      4. Independent Contractor: Employers sometimes try to bypass legal compliances by labelling all flexible employees as independent contractors. However, if such employees do not meet the criteria for being labelled as independent contractors, the employer might end up exacerbating its problems rather than resolving them. The employer shall understand that merely working offsite does not automatically qualify someone as a legitimate independent contractor.
      5. Revision Required in Equal Remuneration Act, 1976: The Act only provides for equal remuneration for men and women for work of a similar nature. However, this Act is archaic and needs to be amended for the 21^st Updated provisions are necessary to ensure equal remuneration for both traditional and remote employees while also discouraging discrimination in pay, and other benefits based on the location of work, whether physical or remote.
      6. Added Burden of Drafting Agreements: FWAs are governed by the agreement between the employer and the employee. The Employer has to make separate agreements for each of its employees opting for FWA. In drafting such additional agreements, it becomes crucial even more than before to pay extra details to provisions related to work hours, place of employment, performance expectations, and data security, amongst others.

4. International Insight

Singapore’s Tripartite Guidelines on Flexible Work Arrangement Requests (introduced on 16^th April 2024) provide a structured framework for employees to formally request flexible work arrangements (FWAs) and for employers to handle such requests effectively. Here are the key aspects:

1. 1. 1. Formal FWA Request: The employee seeking such flexibility has to submit a formal request for the same to their employer. The request shall include details such as the model of FWS sought, expected frequency, duration, reasons, etc.
      2. Open Discussion on the Request: The employer and employees shall mutually discuss the request; any disagreement should be addressed through an internal grievance redressal procedure. While accepting or rejecting the request, the employer should give due consideration to reasons like cost increase, detriment to productivity, and practicality, while ignoring reasons like personal bias, preference for direct supervision of the employee, etc.
      3. Communication of the Decision: The employer shall communicate his decision on the formal request made by the employee within two months of making such a request. Further, in case of rejection of request, the same shall be recorded in writing in the communication by the employer.

5. Implications for the Indian Legislature and Employers

Singapore’s FWA guidelines offer valuable insights for Indian lawmakers in drafting its own flexible work agreement guidelines. Drafting such guidelines will streamline FWAs and would ensure transparency and consistency. Further, such guidelines will not just empower an employee but would also protect the business interests of the employer. Furthermore, such a guideline would prioritise work-life balance in the Indian job sector and would enhance productivity, talent retention, and good employee relations.

Adopting such guidelines would enhance business resilience and promote jobs in tier-three cities. Additionally, Indian companies can attract and retain talent by offering flexibility to foreign employee according to their time zones.

In the absence of regulation on FWAs, the flexible working model will currently be governed solely by the employment contract. Therefore, to safeguard business interests, employers must establish a clear, comprehensive, and flexible FWA policy. Additionally, to prevent disputes, employers should communicate expectations, performance metrics, and reporting mechanisms clearly to employees.

Furthermore, to protect sensitive data from cyber fraud and breaches, employers must establish secure channels for communication and data sharing between themselves and employees. Finally, to effectively monitor the performance of remote employees, employers should shift assessment metrics from time spent to outcomes generated by employees.

6. Conclusion:

While looking at the evolving workspace, it is evident that the global shift is towards flexible working, accelerated by recent crises and technological advancements. With nearly half of Indian employees embracing FWAs, it is crucial to address the associated challenges within the existing legal framework, as discussed above in this article.

Drawing insights from international models like Singapore’s Tripartite Guidelines, India can develop its own legal framework to facilitate FWAs, ensuring fairness and productivity. Such guidelines would not only benefit employees by fostering work-life balance but also safeguard the interests of employers. Additionally, it will hold the potential to boost talent retention, promote job creation in smaller cities, and enhance business resilience.

However, in the absence of formal regulations, employers must proactively establish clear policies, communication channels, and performance evaluation methods tailored to remote work dynamics. Prioritising data security, mental health support, and outcome-based assessments can help navigate the unique challenges of FWAs effectively. As we embrace the future of work, collaboration between policymakers, employers, and employees will be key to optimising the full potential of flexible working arrangements in India’s dynamic employment landscape.

Author:  Gyanendra Mishra, Partner, Dentons Link Legal

Disclaimer

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Footnotes

[1] https://timesofindia.indiatimes.com/city/bengaluru/44-of-indian-employees-have-embraced-flexible-work/articleshow/106196296.cms