INDIA Law and Practice Contributed by: Anshul Prakash, Kruthi N Murthy and Deeksha Malik, Khaitan & Co
Khaitan & Co One World Center 10th & 13th Floors, Tower 1C 841 Senapati Bapat Marg Mumbai 400 013 India
Tel: +91 226 636 5000 Fax: +91 226 636 5050 Email: anshul.prakash@khaitanco.com Web: www.khaitanco.com
1. Employment Terms 1.1 Employee Status
and prior notice in case of any adverse change in the conditions of service. Classification Based on Duration of Work An employee could be either a permanent employee or a fixed-term employee, depending on the dura - tion of work. For fixed-term employees, the duration is predetermined and limited, often tied to specific project requirements. For permanent employees, the employment relationship continues until one of the parties terminates it. The significance of this classification is that there are certain benefits which are linked to the tenure com - pleted by an employee in an organisation (such as gratuity, which is a statutory benefit received by an outgoing employee who has completed five years of continuous service). Accordingly, fixed-term employ - ees may not be entitled to such benefits if the tenure of their employment is shorter (which is commonly the case). However, the stipulations set out by the cen - tral government and certain states under the Industrial Employment (Standing Orders) Act 1946 (the “IESO Act”, which applies to large establishments typically engaged in manufacturing operations) allow pro-rated statutory benefits under applicable laws for fixed-term employees in the workmen category, even if they do not fulfil the minimum service period for qualifying criterion. Other Classifications Other than the above broad classifications, there may be other kinds of classification for very limited pur - poses. For instance, under the social security regime
There are two main kinds of classification of employ - ees: one based on the nature of work, and another based on the duration of employment. Classification Based on Nature of Work Depending on the predominant nature of their respon - sibilities, an employee may be classified as: • a workman, as defined in the Industrial Disputes To determine whether an employee is a “workman”, the actual or primary work performed by the employ - ee is examined. Some cases wherein the courts have considered the functions of an employee as being of a managerial nature are looking at the progress of work vis-à-vis quality and timeliness, ensuring compliance, manpower planning, contract management, monitor - ing costs, mentoring team members, and involvement in policy-making decisions regarding any aspect of the business or service, the conditions of workers/ employees and other such similar powers. The significance of this classification is that persons qualifying as “workmen” are entitled to various statu - tory protections/entitlements, such as severance com - pensation and notice (or the payment of a fixed salary in lieu thereof) in cases of termination of employment for reasons other than the employee’s misconduct, Act 1947 (the “ID Act”); or • a managerial employee.
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