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Model Standing Orders for Services Sector

The Ministry of Labour and Employment, with an intent of standardizing the conditions of employment in industrial establishments employing three hundred or more workers to whom the Occupational Safety, Health and Working Conditions Code, 2020 (“Occupational Safety Code”) applies, has issued the draft Model Standing Orders for Services Sector, 2020 (“Model Standing Orders”). The term ‘establishment’ under the Occupational Safety Code inter alia includes a place where any industry, trade, business, manufacturing or occupation is carried on with ten or more workers employed.

Some of the key features/provisions of the Model Standing Orders are:

1.     Classification of Worker. For the purposes of the Model Standing Orders, the workers have been classified into different categories as below:

  1. Permanent Worker, i.e., a worker who has been engaged in an industrial establishment and has completed probation period of six months within the industrial establishment;
  2. Temporary Worker, i.e., a worker who has been engaged for work which is of an essentially temporary nature and likely to be finished within a limited period;
  3. Apprentice, i.e., a person who is undergoing apprenticeship training pursuant to a vcontract of apprenticeship;
  4. Probationer, i.e., a worker who is provisionally employed to fill a permanent vacancy and has not completed six months’ service;
  5. Badli, i.e., a worker who is appointed against the post of a permanent worker or probationer who is temporarily absent; and
  6. Fixed Term Employment, i.e., engagement of a worker on the basis of a written contract of employment for a fixed period, provided that such fixed term worker is entitled to allowances and other benefits similar to that of a permanent employee doing similar work as well as being entitled to gratuity if he renders service under the contract for a period of one year.

2.     Display of Work Hours. The industrial establishments are required to publish notices which shall inter alia display periods of hours of work for all categories of workers, any change in the periods of hours of work, number of shifts, shift timings etc., days being observed as holidays, list of national and festival holidays, pay days, wage bands payable to all categories of workers etc. Such notices are required to be displayed on the electronic notice board or notice board and website or human resource portal/intranet of the industrial establishment.

3.     Concept of Shift Working. The Model Standing Orders allow the industrial establishment to implement shift working, i.e., more than one shift may be worked in a department or departments or any section of a department of the industrial establishment at the discretion of the employer. In case of shift working, the worker shall be liable to be transferred from one shift to another. No shift working shall be discontinued without twenty- one days’ written notice being given to the workers.

4.     Work from Home. The Model Standing Orders also recognize the concept of ‘Work from Home’ and states that the employer may allow a worker to work from home for period as may be determined by the employer and subject to such conditions as may be agreed between the employer and the worker.

5.     Payment of Wages. The Model Standing Orders prescribe that all payments to workers, including payment of wages, will be paid by crediting to the bank account of the worker on electronic mode or digital form and intimation concerning the payment made will be sent to the worker through SMS, e-mail of social media communication such as WhatsApp or by issuing a slip.

6.     Transfer Policy. The employers are permitted to have a transfer policy within the industrial establishment and the said transfer policy will need to be known to all workers for which the details of the policy are to be made available on the human resource portal of the establishment. A worker may be transferred according to the transfer policy and exigencies of work from one shop or department to another or from one station to another or from one industrial establishment to another under the same employer. However, the wages, grade, continuity of service and other conditions of service of the worker shall not be adversely affected by such transfer.

7.     Pre-Medical Examination. The Model Standing Orders also recognize the requirement of conduct of pre-medical examination of the employees, which is a common practice prevailing currently, and in this regard provides that wherever the recruitment rule or any contract of appointment of fixed term employment specify medical examination of a worker, on his first appointment, the employer will at its expense make arrangement for the medical examination.

8.     Protection of Confidential Information. Recognizing the importance of protection of confidential and proprietary information of the employers, the Model Standing Orders restrict a worker from taking any papers, books, drawings, photographs, instruments, apparatus, documents, or any other property either in electronic form or physical form, of an industrial establishment out of the work premises except with prior written permission. Furthermore, the workers are also restricted from passing or causing to be passed or disclosing or causing to be disclosed any information or matter concerning the manufacturing process, trade secrets and confidential documents of the industrial establishment to any unauthorized person, company, or corporation without the written permission of the employer.

9.     Conditions on Dual Employment. The Model Standing Orders also restrict dual employment and accordingly provide that a worker shall not at any time work against the interest of the industrial establishment in which he is employed and shall not take any employment in addition to his job in the industrial establishment, which may adversely affect the interest of his employer. However, the employer may permit a worker to take up additional job, assignment with conditions or without conditions and the worker shall obtain prior permission of the employer.

10.  Stoppage of Work The employer may, at any time, in the event of fire, catastrophe, break-down of machinery or stoppage of power supply, disaster, pandemic, epidemics, civil commotion or other cause beyond his control, stop any section or sections of the industrial establishment, wholly or partially for any period or periods without notice. In cases where the workmen are laid off for short periods on account of failure of plant or a temporary curtailment of production, the period of unemployment will be treated as compulsory leave either with or without pay, but where workers need to be laid off for an indefinitely long period, their services may be terminated after giving them due notice or pay in lieu thereof.

11.  Notice for Termination of Employment. The Model Standing Orders prescribe terminating of employment of a permanent worker with one month prior written notice or wages in lieu thereof subject to the provisions of the Industrial Relations Code, 2020.

12.  Misconduct, Suspension and Inquiry. In case of a worker being engaged in an act amounting to ‘misconduct’, the worker may be suspended by the employer pending investigation or enquiry into complaints or charges of misconduct against such worker. Such investigation or enquiry shall be ordinarily completed within ninety days from the date of suspension and the worker shall be paid subsistence allowance, at the prescribed rates, during the period of suspension which shall be subject to the worker not taking any employment elsewhere during such period of suspension. The term ‘misconduct’ has been defined to inter alia include:

  1. theft, fraud or dishonesty in connection with the employer’s business or property;
  2. taking or giving of bribes or an illegal gratification whatsoever in connection with the employer’s business or his own interests;
  3. habitual late attendance and habitual absence without leave or without sufficient cause;
  4. drunkenness, fighting or riotous, disorderly or indecent behavious while on duty at the place of work;
  5. habitual neglect of work;
  6. acceptance of gifts from subordinate employees;
  7. conviction in any court of law for any criminal offence involving moral turpitude;
  8. threatening, abusing or assaulting any superior or co-worker; and
  9. involvement in unauthorized access of any IT system, computer network of the employer/customer/client.

Comments and Observations:

The Model Standing Orders are presently in a draft format and suggestions and objections have been invited from interested stakeholders. The current format of the Model Standing Orders has tried to balance the reasonable expectations of employees versus the business interests of employers.

Introduction of provisions such as undertaking of pre-employment medical examination, protection of confidential and proprietary information of the employers, restriction on dual employment are steps in the right direction in updating the laws and regulations with the current trends. The Model Standing Orders encourage the employers to make online payments to employees, has introduced the concept of ‘work for home’ for the services sector for the first time, promote the use of information technology in dissemination of information to employees, allow flexibility in fixing working hours and they therefore appear to be harmonious with the current context of employment. According to the Labour Minister Mr. Santosh Kumar Gangwar, “the orders will pave the way for the industry harmony as they aim at formalizing the service-related matters in an amicable manner.”

While this is the first initiative to bring in a separate model standing orders for the services sector, some concerns have already been raised by trade unions with regard to raising of the limit for applicability of the standing orders from the 100 workers limit to establishments with over 300 workers as they fear this may lead to a ‘hire and fire’ situation. Revamping of the labour code has been long overdue and one of the impediments in ease of doing business in India. It is expected that the new labour codes [refer Firm’s articles at Part I – Labour Code 2020 – Employment and HR – India (mondaq.com) and Part II – Labour Laws: The Code Of Social Security, 2020 – Employment and HR – India (mondaq.com)] together with the separate Model Standing Orders for services sector, manufacturing sector and mining sector will bring uniformity while maintaining flexibility for the sector-specific requirements.