Virtual Offices and Labour Law in India

We all have seen it, or might have at least heard of it in case of someone we know. A relative, friend, colleague or neighbor, working from home, attending to official phone calls, typing away at a PC or laptop. Remember the TV ad where an executive was video conferencing with a customer, and he was all dressed up in a nice blazer, a power tie, fancy shirt, and pajamas? While the ad was funny, and might have done well for the product for which it was made, it also showed an aspect of working that is rapidly taking on greater prominence among today’s time and space starved and tech-savvy public.
For many employees, as well as employers, it makes a lot of sense to work from home, or out of some other location which is not the normal place of work for the employer. Some kinds of employees, such as sales employees, have to travel extensively to various locations to visit customers, suppliers, distributors, etc. The internet, advances in telephony and portable computing have made communication and working on the move or at home not only possible but also, in many cases, commercially sensible and effective. More and more employers are giving the option to employees to work from home or someplace other than the employers’ office, and more and more employees are taking up this option. But what is the legal position on this?

Well, first of all, working at home or in a place not within the premises of an employer is nothing new in India. There are many industries wherein traditionally the manufacturing processes take place at the homes of workers. The beedi and papad making industries are just two examples wherein workers produce the products from their own homes and supply them to the employer for packaging and/ or distribution and sale. Various courts have held that Indian employment laws apply to such working-out-of-home workers as well, and so they are entitled to the benefits such as those under Provident Fund Act, compensation in case of accidents in the course of employment, leave, etc.

So what makes a virtual office employee any different. Not too much, really. Except, of course, for the fact that the option of working from home or from other locations, and setting up a virtual office using computer and internet facilities provided by the employer, is typically reserved for employees who don’t fall in the category of ‘workmen’ under labour laws in India. Managerial or administrative employees, or those not performing mainly clerical functions, do not fall in the category of ‘workman’, and in such cases, their employments are governed by their employment contracts/ employment agreements/ policies of the employer. To that end, such employees are not protected by labour laws that are applicable specifically to ‘workmen’. However, certain other labour and employment laws, such as the law related to Shops and Commercial Establishments of a State, continue to apply to such employees. And since the Indian employment laws do not mandate that employees that are not workmen must necessarily work from the premises of the employer, but still extend the benefits of employment to employees working for the employer, it follows that all employment benefits need to be given even to virtual employees, with reasonable modifications to the benefits where necessary.

Thus, the policies and rules of an employer as applicable to employees working in its premises should also generally apply to virtual office employees. This means that the work timings, pay scales, leave rules, etc. should not be different for virtual office employees merely on account of their working from home or elsewhere.

Some Dos and Don’ts:

  • Employers looking to give the above option to their employees should have defined and proper virtual office policies. Eligibility criteria, application methods and formats, terms and conditions, the code of conduct and what constitutes misconduct, etc. should be embodied in such policies.
  • For employees who are hired permanently to be virtual office employees, their Appointment Letters or employment agreements should clearly state the terms and conditions on which the employer’s virtual office policy is to be applied to them. The other employment and service related policies of the employer must also apply to virtual office employees, with suitable modifications where necessary.
  • The employer should not maintain separate records of virtual office employees in terms of such registers and records required to be maintained by law. For example, there should not be separate muster records for standard employees and virtual office employees. However, all documentation as mentioned above (i.e. virtual office policies, Appointment Letters of virtual office employees and other such documents) should be prepared and maintained, so that any government inspector / official can be shown the same if necessary.
  • Insurance policies taken by the employer for his employees should also be applied to virtual office employees, and the insurer should be informed of such employees. The insurer should endorse the insurance policies to include such virtual office employees, so that in the event of any accident claim, the employer and the employee is protected.
  • The employers should remain vigilant and ensure that the virtual office employees are the only ones using the infrastructure provided by the employers, and that they are doing the work themselves. There have been instances where such employees have outsourced their work to third parties at a lower price, and have done work for other concerns. Such malpractices should be avoided.
  • If an employer permits virtual office employees to use company credit cards, such usage should be monitored, preferably through a per-usage approval system. If such a system cannot always be implemented, then the employee should communicate all details of purchases made. In case of employees who wish to avail of the virtual office policy temporarily for health reasons, the employer should have the employees examined by a doctor to ensure that the work to be done by them will not lead to any health complications. It should also be remembered that women who avail of maternity benefit under the Maternity Benefit Act cannot be made to do any work of the employer during the period of maternity benefit. – Bikram Chaudhuri