INDIA Law and Practice Contributed by: Anshul Prakash, Kruthi N Murthy and Deeksha Malik, Khaitan & Co
(namely the Employees’ Provident Funds and Miscel - laneous Provisions Act 1952), the manner of contribu - tions by employers and employees varies depend - ing on whether an employee is a domestic employee (an employee working in India and holding an Indian passport) or an international worker (an expatriate employee). 1.2 Employment Contracts In India, employment contracts can be definite (fixed- term) or indefinite (permanent), depending on the purpose/duration of the relationship envisaged by the parties. The distinction between the two kinds of employment is explained in 1.1 Employee Status . An employer-employee relationship can either be express or implied, written or verbal. However, to avoid any dispute regarding the terms of employment, it is a common practice to execute an employment contract. Only a few Indian states, such as Karna - taka and Delhi, require a commercial establishment (a non-manufacturing establishment) to issue written appointment letters to employees, which would set out basic particulars such as wages, job designation, the nature of their duties, etc. Certain terms that are generally incorporated in an employment contract include: • nature of work (job description); • place of employment; • date of commencement of employment; • remuneration structure; • assignment of intellectual property by the employ - ee to the employer; • cessation of employment (including notice period); and • restrictive covenants (such as non-solicitation). However, the Indian courts have taken the view that certain terms and conditions of service which are regulated by statute will constitute implied terms of a contract of employment. Therefore, provisions relating to payment of wages, bonuses, gratuity payments and contributions towards employees’ provident funds and employees’ state insurance can be considered to be implied terms of a contract of employment and need not be recorded in writing. Similarly, an employ -
ee’s duty to remain faithful in their duties towards the employer and to maintain the confidentiality of the employer’s proprietary information is considered to be implicit in the employment contract. 1.3 Working Hours The working hours are primarily governed by the Fac - tories Act 1948 (the “Factories Act”) for manufactur - ing establishments, and by state-specific shops and establishments statutes (the “S&E Acts”) for non-man - ufacturing commercial establishments. For some spe - cialised sectors, working hours are governed by spe - cial statutes, such as the Mines Act 1952 for mines, and the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Act 1996 for construction work. The applicable laws provide normal working hours, which range mostly from eight to nine hours a day and are typically set at 48 hours a week. Any addi - tional time spent by the employee towards work is subject to an overtime payment, which is twice the ordinary wages payable to the employee. Some stat - utes also provide weekly/quarterly limits to the num - ber of overtime hours an employee may be required to work. Flexible working arrangements are possible, subject to adherence to the above-discussed statuto - ry limits. It may be noted that several laws dealing with work time regulations exempt managerial employees from their purview; for such employees, the work time requirements are contractually driven. The labour laws in India recognise both full-time and part-time employment. Part-time employees are ordinarily entitled to all benefits given to permanent employees. Having said that, there may be some restrictions on part-time employees, to which employ - ers must be privy. For instance, the S&E Acts applica - ble to Maharashtra and Gujarat provide that part-time workers cannot be allowed to work more than five hours in a day. 1.4 Compensation Minimum Wages The minimum wage requirements are governed according to various periodic central government and state notifications under the Minimum Wages Act
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