The future of workforce structuring in India

Veena Gopalkrishnan
AZB & Partners, Bangalore
veena.gopalakrishnan@azbpartners.com

Nishanth Ravindran
AZB & Partners, Bangalore
nishanth.ravindran@azbpartners.com

Devershi Mishra
AZB & Partners, Bangalore
devershi.mishra@azbpartners.com

The Covid-19 virus has impacted the global community in a manner that has never been seen before. From drastically altering day-to-day social interactions to testing the limits of healthcare infrastructure and corporate business continuity plans, it is safe to say that the impact of the virus has been immense and, in most cases, shocking. Despite the gloom and doom that the virus has caused, it has accelerated the need for employers to adopt new and modern workforce engagement structures.

Employers across the globe have had to ensure that the capital of their organisations are efficiently managed and put to good use during such times, including their most valuable form of capital – their human capital. While many businesses in India seemed to comfortably convert themselves into ‘remote working organisations’ and maintain their workforce, many others we forced to reduce their workforce or adopt alternate and innovative forms of workforce engagement to manage their overheads.

Alternate forms of workforce engagement have allowed businesses to manage bottom lines and to also benefit from the creativity and innovation that has occurred when individuals are no longer constrained by the traditional 9 to 5 working week. This has also given rise to a number of content creators, digital nomads and innovators who no longer feel the need to be tied down to a single city, employer or project. While we are yet to see if these changes will yield sustainable financial returns, it is a step in the right direction for ensuring work-life balance and holistic growth. That said, many organisations still rely heavily on traditional forms of workforce engagement, including:

• Full-time employment: This is the most traditional form of employment, where employees are employed solely by one employer and are employed for the complete workday.
• Part-time employment: Part-time employees are employed for only a part of the workday and are generally allowed to engage in other employment (usually so long as such employer is not a competitor).
• Consultant/independent contractor: Consultants/independent contractors are engaged by an organisation on a contract ‘for service’ where they are required to perform specific tasks for the organisation. Such workers are not considered employees and therefore not entitled to employment benefits.
• Contract workers: Workers engaged through third parties to provide specific services to an organisation, at such organisation’s worksite, are referred to as contract workers. Subject to the number of contract workers that are being engaged/deployed, the organisation and the third-party service provider would be required to adhere to the Contract Labour (Regulation and Abolition) Act 1970.

Traditional employer organisations preferred to engage workers through the workforce structures mentioned above, at best allowing specific categories of employees, ordinarily only young mothers, to work remotely. The pandemic however has forced organisations to are-visit their workforce engagement structures, including the requirement for and the benefits of remote working.

Indian employment law has until very recently been limited to protecting traditional forms of employment such as permanent employees, fixed term employees and contract workers. However, in a radical shift, the Indian government, as part of its overhaul of the Indian employment law landscape, has provided statutory recognition to gig workers and platform workers. Specifically, the Social Security Code defines a ‘gig worker’ to mean a person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship. A ‘platform worker’ has been defined to mean a person engaged in a work arrangement outside of a traditional employer-employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Government of India, in exchange for payment.

With organisations across the world transitioning back to near normalcy, it is a good time to evaluate the meaningful shifts that are being made with a view to enable flexibility, efficiency, diversity and inclusion in the workplace.

Here are several key considerations for organisations that have adopted alternate forms of workforce engagement:

1. Pay parity and social security: Employers in India are statutorily mandated under the Equal Remuneration Act 1976 to ensure that they do not discriminate between men and women during recruitment and in terms of pay. Further, employers are required to ensure that they provide social security benefits to employees under the Employees’ Provident Funds and Miscellaneous Provisions Act 1952 and Employees State Insurance Act 1948. However, these requirements may not apply to workers engaged through alternate forms of workforce engagement. The primary concern when it comes to inclusion of workers engaged through alternate workforce engagement structures is that traditional employment laws may not require the employer to make social security contributions for such workers. The Social Security Code has to an extent solved this issue as it provides for the establishment of social security funds for gig and platform workers. The Social Security Code provides that the Government of India is required to frame and notify suitable social security schemes for gig workers and platform workers relating to life and disability cover; health and maternity benefits; old age protection; education; and any other benefits as may be determined by the Government of India. Therefore, once the Social Security Code is made effective, employers would have to ensure that requisite social security benefits are also provided to such workers.
2.  Discrimination and harassment: Indian law specifically prohibits discrimination in employment in relation to private establishments on the basis of sex, gender (transgender status), disability and HIV status. Further, employers are required to adhere to the Sexual Harassment at Workplace (Prevention, Prohibition and Redressal) Act 2013 (the ‘Prevention of Sexual Harassment Act’) to prevent and redress sexual harassment at the workplace. The Prevention of Sexual Harassment Act defines the ‘workplace’ broadly to cover places outside the office/shop/factory that women employees visit pursuant to their work (including employer provided transport). Further, an employer owes a duty to all women at the workplace and this obligation is not only restricted to the female employees. It is possible that this statute could also extend to alternate forms of workforce engagement, including remote workers. Therefore, it is recommended that the employer extend its redressal mechanisms to even workers who are engaged in alternate workforce structures. Organisations could also consider setting up a framework to investigate and redress allegation of discrimination and bias.
3. Information security: Given that organisations will not exert the same level of supervision and control on alternate workers that they would on traditional employees, issues of information security and confidentiality become even more pertinent. In many cases, alternate workers may rely on unsecure internet connections to perform and send work to organisations, exposing both the intellectual property and IT infrastructure of the organisation to threats from third parties. This could lead to a situation where alternate workers are not provided equal work opportunities that would be given to regular employees. Therefore, it is important that organisations leverage technology to ensure that alternate workers can provide services using secure networks or cloud-based platforms. Further, all information that is sent to such workers would have to be encrypted to ensure security. Organisations could also consider implementing policies that require such workers to provide services only through approved resources and require such worker to maintain complete confidentiality regarding the work that is being done for the organisation.

The past two years have required both employers and workers to re-evaluate their goals and attitudes towards work. While in most cases, laws may be a step behind developments in human resource management and recruitment, organisations can choose to be a step ahead by adopting practices and policies that are inclusive and accommodating and that will increase its diversity profile. Consequently, organisations that engage alternate forms of workforce could ensure that such workers are not disadvantaged vis-à-vis regular employees when it comes to benefits and opportunities, and that their organisations are diverse and inclusive.