international employment law firm alliance L&E Global

Looking Ahead 2024: India

Indian employment law and its practices have undergone significant changes in the recent past. There have been several critical judicial pronouncements and legislative changes that have been crucial to employers in India. 2024 is expected to bring significant changes in the realm of legislative developments and evolving employment practices. We have set out below some of the more critical statutory developments, judicial decisions, and prominent HR practices that employers and HR leaders should take into consideration while strategising their organisational practices and compliances.


Enactment of Labour Codes

India enacted four labour codes, namely the Code on Wages, 2019; the Code on Social Security, 2020; the Occupational Safety, Health, and Working Conditions Code, 2020; and the Industrial Relations Code, 2020 (collectively, the “Labour Codes”). The Labour Codes codify and consolidate 29 central labour legislations. While the Labour Codes have been passed by Parliament and received Presidential assent, they are yet to be brought into effect. It is speculated that the Labour Codes will be brought into effect in a phased manner in the second half of the year.

The Central government has also published draft rules under the Labour Codes. Fur­ther, most of the states have also formulated their state-specific rules under the Labour Codes. These state-specific rules will be particularly significant for organisations that have offices across multiple states since the compliance requirements are also likely to vary depending on the relevant state. That said, the central government has requested that all state governments align their rules with those notified by the Central Labour Ministry to ensure uniformity and consistency in terms of statutory compliance for employers.


Implementation of a new data protection regime

After several years of deliberation, the Digital Data Protection Act, 2023 (“DPDP Act”) was passed by the Indian Parliament and received Presidential assent on 11 August 2023. The effective date of the DPDP Act is yet to be notified, and the government is in the process of framing the major rules under the DPDP Act, which are likely to be published in the next few months. Once brought into effect, the DPDP Act will repeal the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 enacted under the Information Technology Act, 2000, which is the prevailing legislation in India governing the processing of personal data and sensitive personal data.


The implementation of the DPDP Act and its rules will usher in a paradigm shift that will likely bring India’s data protection regime on par with other jurisdictions such as Singapore, China, the UK, and 27 of the EU member nations. The DPDP Act requires employers to comply with the obligations of a ‘data fiduciary’ with respect to their employees’ personal data. It is important for employers to begin evaluating and analysing the purposes for which they collect personal data throughout an employee’s lifecycle and identify gaps in their internal practices and policies to ensure compliance with the DPDP Act.


Social Security benefits for gig workers

Discussions around the provision of social security benefits to gig workers have been taking place at various governmental and organisational levels. This is mainly due to the State of Rajasthan’s decision to enact the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, 2023 (“Gig Workers Act”).

While the Gig Workers Act remains to be implemented, it is the first state-level law in India that regulates the engagement of gig workers in establishments. It inter alia requires aggregators to be registered with the state government and provide it with a database of the gig workers registered with them, which will be used for the generation of a unique ID for every gig worker in the state. Additionally, it calls for the creation of a welfare fund and the establishment of a grievance redressal mechanism for platform-based gig workers.

The introduction of the Gig Workers Act has also raised questions regarding the implementation of provisions under the Code on Social Security, 2020 (“SS Code”) pertaining to the provision of social security benefits to gig workers. As the gig economy in India continues to rapidly expand, further delays in the implementation of the SS Code could prompt other states to adopt similar reforms.


Ethical implications of artificial intelligence to the Indian workplace

The use of artificial intelligence (AI) in the workplace is increasingly becoming common amongst employers in India. It is fairly common amongst employers to integrate AI tools with their HR functions for purposes such as screening and evaluating resumes, monitoring employees’ performance, attendance, and health, and conducting workplace-related training sessions. While the use of AI is meant to make business operations and management easier for organisations, there have been ethical concerns due to a lack of algorithmic transparency and a lack of clarity on accountability and liability. Usage of certain algorithms has given rise to a wide range of concerns, such as bias and discrimination at the workplace, incorrect performance evaluation, and violations of employees’ privacy rights.

Currently, in India, there are no standalone employment law legislations that address concerns regarding the use of AI at the workplace. The Factories Act, 1948 only addresses a fraction of such concerns by stipulating certain safety standards on factory premises where robots are installed to carry out hazardous tasks. In the absence of appropriate regulation, employers need to revisit their policies and practices to address concerns related to the usage of AI.


Increased emphasis on compliance with the Apprentices Act, 1961

In the past year, the regional Boards of Apprenticeship Training have been actively requesting employers to comply with the provisions of the Apprentices Act, 1961 (“AA”) and the rules under it. The authorities have also been engaging in one-on-one discussions with employer representatives to guide them in managing their compliance under the AA, in light of their specific business requirements.

On 25 August 2023, the Ministry of Skill Development and Entrepreneurship also issued guidelines for the implementation of the National Apprenticeship Promotion Scheme-2 (“NAPS-2”). Given this background, it is expected that authorities will continue their aggressive approach to mandating compliance with the AA and its corresponding schemes. Employers should analyse their business practices and compliances and ensure that they are compliant with the AA and the rules thereunder.


Legal Recognition of Same-Sex Marriage in India

In October 2023, a Constitution Bench of the Supreme Court of India, in its landmark judgement, refused to grant legal recognition to same-sex marriages in India. Thereafter, the apex court has agreed to consider a number of review petitions seeking the court to reconsider its previous judgement. While there have been no further developments on this matter, the implications of the Supreme Court changing its stance on this contentious issue could be far-ranging from an employment law perspective, especially under social security legislations. For example, under social security legislations, the term “family” is typically defined in heteronormative terms as husband, children, and dependent parents in the case of a female employee, and wife, children, and dependent parents in the case of a male employee.

The development is significant as individuals are ordinarily required to nominate a family member who will receive their benefits in the event of their death or incapacity. Under the current legal regime, an individual can only nominate their same-sex partner if no individuals qualifying as ‘family’ are in existence. If the Supreme Court reconsiders its decisions, Indian employment laws would also need to be appropriately amended to ensure that the entitlement of an employee’s same-sex partner is the same as that of an employee’s partner belonging to the other gender.