Cabinet considers Model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill, 2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has considered the Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill, 2016. The Bill will now be sent to States/UTs to enable them to modify their respective Shops and Establishments Acts, if they so desire either by adopting the said Bill as it is or after modifying its provisions as per their requirements. This Bill was finalised after detailed deliberations and discussions with public through internet and with employees/labour representatives, employers’ associations/federations and State Governments through tripartite consultative process. The Model Bill would bring about uniformity in the legislative provisions, making it easier for all the States to adopt it and thereby ensuring uniform working conditions across the country and facilitate the ease of doing business and generate employment opportunities.
The main features of the draft model Bill are as follows:

1. It will cover only establishments employing ten or more workers except manufacturing units.
2. The Bill provides freedom to operate 365 days with flexibility on timing to open and close. Sec 10(ii) provides that an establishment may work on all days of the week.
3. Women to be permitted during night shift, if the provision of shelter, rest room ladies toilet, adequate protection of their dignity and transportation etc. exists.
4. Online one common registration through a simplified procedure.
5. The Act, once legislated will cover only establishments employing ten or more workers except manufacturing units.
6. Godowns, warehouses, or workplace related to packaging activities are proposed to be covered under the law, as per the draft model Act. Not applicable on government offices and the Reserve Bank of India
7. Working Hours: The employees will work for 9 hours a day and any time spent above these limits will be treated as over time. A maximum of 125 hours per quarter is allowed as over time. A mandatory 30 minutes break is to be provided. No employee is to work for 5 hours at a stretch without such break.
8. Women: The Model Act provides that women can work only from 6 am to 9 pm. Women can be employed on night shifts subject to the conditions that the establishment has the provisions of shelter, rest room ladies toilet, adequate protection of their dignity and transportation etc. available. Facilities such as cab services, night crèches and ladies toilet should be compulsorily provided by employers in case women are working during the night shift.
9. Holidays: Every employee is entitled to 8 days of casual leave in a calendar year. A worker will get 12 days mandatory causal cum sick leaves throughout the year. Apart from this, every worker who has put in 240 days in a year is entitled to one day of leave for every 20 days of work the subsequent year.
10. Penalty for non-compliance: Most of the offences other than safety hazards are compoundable and a fair opportunity will be provided to employers for compliance of irregularities.

The proposal has been cleared by the Cabinet and noted by the Labour Ministry. The Centre has been receiving suggestions from time to time to enact the model law, which the States and UTs could consider for enforcement either by adopting the central law or necessary modification by the state law. Government has the power to make rules regarding adequate measures to be taken by the employer for the safety and health of workers. Even though this piece of legislation may be welcome by the IT industry, we will have to wait and watch how the states decide to implement the same.

Sexual Harassment Policy and its Applicability to companies in India

As per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (the “Sexual Harassment Act”) companies hiring women employees must have a comprehensive sexual harassment policy in place. The legislation applies to all establishments where woman are engaged either as employees or otherwise (say one who comes to the work place as a customer or intern or doing some project or survey can also raise a complaint if she is subjected to sexual harassment)


Sexual harassment as defined in the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 includes any one or more of the following unwelcome acts or behavior (whether directly or by implication):
i. physical contact and advances;
ii. a demand or request for sexual favors;
iii. making sexually colored remarks;
iv. showing pornography; and / or
v. any other unwelcome physical, verbal or non-verbal conduct of sexual nature. The above definition also includes any form of offensive behavior including gender-based harassment of a person of the same sex as the harasser. The following is a partial list of sexual harassment examples:
a. unwanted sexual advances;
b. offering employment benefits in exchange for sexual favors;
c. making or threatening reprisals after a negative response to sexual advances.
d. visual conduct that includes leering, making sexual gestures, or displaying of sexually suggestive objects or pictures, cartoons or posters;
e. verbal conduct that includes making or using derogatory comments, epithets, slurs, or jokes;
f. verbal sexual advances or propositions;
g. verbal abuse of a sexual nature, graphic verbal commentaries about an individual’s body, sexually degrading words, or suggestive or obscene letters or invitations; and / or
h. physical conduct that includes touching, assaulting, or impeding or blocking movements.
If a woman employee experiences sexual harassment at the workplace, she may report it immediately in writing to the presiding officer of the company’s internal complaints committee (constituted under the Act) within 3 (three) months from the date of last incident of harassment. The committee shall carry out the proceedings of conciliation and hold an inquiry in a manner prescribed herewith in this section.

The internal complaints committee of the company shall consist of the following members: presiding officer, who shall be a woman, employed at a senior level in the company, two or more than two members may be nominated from amongst employees who have a history of commitment towards social causes of women or have adequate legal knowledge, one member to be nominated from amongst a non-governmental organization or association committed to the cause of women or a person familiar with the issues relating to sexual harassment. As per the Sexual Harassment Act, a company must nominate at least ½ (one-half) of the above mentioned members as women. The presiding officer and every member of the committee shall not hold office for more than 3 (three) years from the date of their nomination and a minimum of 3 (three) members, including the presiding officer, shall be present while the inquiry is being conducted by the committee.

If the committee finds that the allegations leveled by the complainant are malicious in nature or it is proved that the complainant has produced false, forged, or misleading documents during the inquiry it may recommend the management to take strict action against the complainant including but not limited to termination of employment and filing a civil suit thereof in an appropriate court of law. The Committee may recommend to the head of department, human resource, action which may include transfer or any of the other appropriate disciplinary action.

The essence of the said legislation is to provide a work environment that is free from all forms of discrimination and conduct that can be considered harassing, coercive or disruptive including sexual harassment. Actions, words, jokes or comments based on an individual’s sex, race, color, national origin, age, religion, disability or any other legally protected characteristic will not be tolerated. This policy defines sexual harassment at the company and creates a mechanism for redressal of complaints. This policy also provides safeguards against false or malicious charges.

Get legally correct sexually harassment policy for yourself at HR Drop is a pro-bono initiative to help the HR industry with their documentation needs.

Components of Salary – Understanding How Gross Salary is Broken into Components in India.

HR managers must understand some basic facts about employment laws in order to design a comprehensive salary structure. Following is usually how break up of gross salary works:

Basic Salary -This is the base income. The basic salary is used to calculate several other constituents of the salary. Basic salary is always taxable and hence ideally should not be kept more than 40% (percentage forty) percent of the cost to company (“CTC”), but then keeping it to low may also cause the reduction in other constituents of the salary. Hence a balanced basic income should be calculated.

Medical Reimbursement – This is the part of salary where the employee gets paid for the medical expenditure that they incur. It is tax free only up to INR 15,000 (Indian Rupees Fifteen Thousand Only) a year. If the employee does not produce medical bills for the amount, then the sum will be added to the income of the employee for that year.
House Rent Allowance (“HRA”) – House rent allowance is a very crucial part of the salary structure. It is usually 40% (percentage forty) to 50% (percentage fifty) of the basic salary. It’s important to note that HRA becomes taxable if you do not pay any rent. Additionally, if the HRA is lower than 40% (percentage forty) of the basic, the company may lose out on the chance to reduce tax.

Leave Travel Allowance – This amount is usually paid to the employee and his / her family for leave travel to any place in India. This amount is exempt from tax. The journey can be by rail or air, depending on what the employer offers.

Special allowance (Other allowance etc) – This is the part which makes up for the remainder part of the salary. It is usually not bigger than the basic salary. This is the part which actually cannot be treated as any other constituent of the salary. This part of the salary is usually completely taxable.

Employee Stock Options Plans (“ESOP”) – ESOP is designed in order to retain employees in the company. These are incentive programs that gives the qualifying employees the right to buy the firm’s common stock (ordinary shares) at a discount. The company gives an employee either free shares or gives an option to buy shares at a discounted price if the employee decides to stay with the company for a fixed period. If the holder of shares holds the shares for more than a year, capital gains tax will not be applicable.

Provident Fund Contribution – Provident fund contribution is governed by the Employees Provident Funds and Miscellaneous Provisions Act, 1952. It’s a form of social security that employees get in the form of monthly contribution (both employees share and employers share) for their old age, retirement or in case of some emergency. According to this legislation there is statutory rate of contribution, which is 12 %(percentage twelve) of emoluments (basic salary, dearness allowance, cash value of food concession and retaining allowances if any). This contribution is deducted from the employee’s salary and deposited in a fund called the employee provident fund account. The employer also makes a matching contribution. Here too a balance needs to be maintained, with the basic salary higher the PF contribution also increases which in turn can cause a reduction in take home salary and a subsequent increase in employer’s payout. Please note, out of 12% (percentage twelve) of the employer’s share of contribution, 8.33 %( percentage eight decimal three three) is to be remitted towards pension fund.

Bonus – Payment of bonus is governed by the Payment of Bonus Act, 1965. Bonus is a part of CTC, which is usually given once a year in lump sum based on employee’s and the company’s overall performance. It is taxable as a part of the salary. In some companies this amount is also variable depending on the employee’s performance and him/her meeting their key performance indicators. However, it is important to note that according to the Payment of Bonus Act, 1965 every employee who is drawing a salary of up to INR 10,000 (Indian Rupees Ten Thousand Only) per month and who has worked for minimum period of 30 (Thirty) days in a year is entitled to be paid bonus. The amount usually is 8.33% (percentage eight decimal three three) of the salary earned by the employee.

Gratuity – Payment of Gratuity, governed by the Payment of Gratuity Act, 1972 is a lump sum amount paid by the company, when the employee either retires or resigns from the company. However, for it to be paid the employee needs to have worked in the company for at least 5 (five) years. Gratuity can be calculated by the following formula:

Gratuity = Last drawn salary x 15/26 x No. of years of service

The above is broadly how gross salary is broken into components in order to save tax and other statutory contributions like provident fund, employee state insurance etc.

Digitization of the Human Resource Industry

Digitising and democratising is together disrupting the HR sector like never before. Not only do these HR have new tools and platform to choose employees from, the interviews itself are not limited to a one on one interview anymore. Here are top 5 trends being adopted by HRs which will make you believe how they are disrupting their ways to get ahead:

Digitization of HR documents:
According to a research result, it is proven that digitisation of HR documents can result in a 15% increase in productivity. With this in mind HR Drop has pioneered the manner and mode in which HR managers prepare human resource documents. Companies use our platform to view and download HR documents in a manner that makes life simple and productive.

Interview on Skype:
Employers to be more visible online as an essential is a passé. HRs today understand that they could easily lose a candidate if they get in to the process of telephonic and face to face meetings. What they are indulging in is very interesting; as interesting as getting on a Skype call to judge the candidate. Established big data brands have modernized their way of approaching and leaving an imprint on the prospective candidates by organising Skype call interviews to gauge whether to take the process ahead or not. It sure saves a lot of time and efforts.
Faster application process:
Having said that, organisations today are becoming employee-focused and no one wants to lose good talent due to endless and complicated application processes. It is the age of quicker processes and not spending weeks and weeks before you find out that you were not selected. Companies like understand the value of good candidates and have processes closed at a much faster pace with employee friendly processes.

Mobile and Millennials:
Job listing is not the right way of attracting millennials as they would simply not visit them and HR managers of today have understood that. It is best to have mobile-friendly career section to woo the millennial generation. Organisations today also ensure that loading times are fast and that the navigation is user friendly. Brands like Oxigen have listings on all the mobile friendly social platforms and have been successful to attract millennial talent.

Organisations with wider visibility
Potential applicants would easily use all the sources, such as different webpages and social media sites, for their job searches. Organisations today cover all potential websites and put job ads in as many places as possible online.

Experience efficiency/ inefficiency of your hiring process
Majority of HR departments never experience how efficient or inefficient the current hiring process actually is. By physically going through the job application, HR Managers are today spotting weaknesses and making improvements as required. Brands like Helpchat is a good example of utilising this effectively.

Share what innovative ways you’ve used for your startup to hire and manage employees on our official Facebook page HR Drop.


Unlike maternity leave which is governed by the Maternity Benefit Act, 1961, India is yet to finalize a policy with respect to paid leave for fathers-to-be. Paternity leave as the name suggests allows fathers-to-be paid leave, immediately after child birth. With the number of nuclear families growing in India, many companies in the private sector have begun providing 5 to 10 days off for fathers-to-be. Add to this a weekend and the employee gets almost two weeks off. This benefit is now also prevalent in government and public sector companies, which offer up to a maximum of 15 days of leave. In the west, organizations offer long paternity leave which help a father take on additional responsibilities of the family. For instance, in Italy, an employee receives 13 weeks leave with 80 per cent pay, eight weeks in Sweden and 45 weeks in Norway, both offering 80 per cent pay to employees on paternity leave. Canada gives its employees 35 weeks of leave with 55 per cent pay. Globally, it was Sweden that introduced the concept of paternity leaves. In 1974, they pioneered the concept of parental leave where both parents were encouraged to take time off when a child was born.

Companies in India have begun believing that paternity leave gives men an opportunity to develop a stronger bond with the child from birth. Policies like these are adopted to stay in touch with the present generation’s reality and their challenges. Such policies also help better employee-employer relations, enhance employee satisfaction and hence better engagement at work. It supports employees and encourages them to give their best when at the workplace. The important point is whether this is sufficient as most private companies are averaging around five days of paternity leave. There are organizations which have started extending the duration of this leave for up to 15 days as they believe it is an extension of addressing their gender issues and helps make men sensitive to a family’s needs.

Sample paternity leave looks like this:

Eligibility: Forming part of the overall leave policy of the company, a male employee who has been employed by the company on a full-time basis for at least 80 working days prior to the date on which a leave period is to begin, is eligible to avail paid paternity leave. For calculating the above 80 days Saturdays, Sundays and gazette holidays will be excluded while probation period will be included. Paternity leave does not apply to part time employees, interns and consultants. The male employee can avail 5 days of paid paternity leave 15 days before or within 6 months from the delivery date. The leave application shall be accompanied by proof such as birth certificate or doctor’s note in regards to the delivery date.
Paternity leave cannot at any time be clubbed with casual leave or sick leave. If such leave is not availed within the period, it shall be treated as lapsed. Encashment of paternity leave is not permissible.

Return To Work Requirement after leave: An employee who has taken paid parental leave is expected to return to work on a full-time basis after completion of leave period. If the employee does not return to work after completion of leave, the employee must repay a pro-rata share of the salary received during the period of paid leave.

Gender roles have evolved rapidly in recent decades, especially in terms of the place and status of women. But the evolution of our mental models of masculinity, and especially fatherhood, has been slower. Helping fathers to take time to care for their children will help children, families, and women. Fathers to be deserve their share of paternity leave. Happy father’s day!


What’s the one assurance investors want before setting up manufacturing base in India? The ease of making workforce adjustments in line with changing market conditions. In this area, Indian labour laws are among the most restrictive. The Industrial Disputes Act of 1947 has two provisions in the way of workforce adjustments. Chapter VB of the Act requires prior approval of the appropriate government before resorting to any layoff, retrenchment or closure in establishments employing 100 or more workmen. The draft Labour Code on Industrial Relations currently in circulation seeks to raise the threshold to establishments employing 300 or more workers, but it is still work in progress.
Contract labour is yet another major area of concern. Investors would surely want to know if engaging workers on temporary contracts would run afoul of the law. The Contract Labour (Regulation and Abolition) Act, 1970, as the name suggests, is enforced to regulate the practice and abolish it in certain cases. In other words, the practice is not prohibited. Engaging contract workers for temporary, intermittent or seasonal work is allowed but using them for work of perennial nature violates the letter and spirit of the law. Why would investors want to engage workers on temporary contracts in the first place? To meet surges in demand for goods and services requiring urgent workforce adjustments. Immediate deployment of regular workers is not always feasible and pruning them alongside falling demand often meets legal obstacles. Moreover, regular workers are increasingly becoming less productive and more expensive.

The Government of India is making a concerted effort to create 10 million jobs every year to fulfil the aspirations of the new age employee who is joining the workforce. But this goal can be achieved only with overhauling of the employment laws. The new set of employment laws must give an entrepreneur the flexibility of hiring an employee while giving employment security to the worker. One of the key areas of concern on employment in recent years is flexibility wished for by the employers and security as well as similar benefits/protection of the workers wished for by workers and / or employees. While it is recognized that contractualization of labour is emerging as an integral component of contemporary employment relations, there is a need for policy to situate contractualization of labour from perspective of business requirement and needs as well as security, protection and dignity of, decent work for workers. India is trying to get manufacturers to ‘Make in India’, an ambitious programme which endeavours to place India to become the world’s manufacturing capital through business friendly government policies and labour reforms. There is a need for change in the mindset of the government. Labour laws should be simple and flexible to promote compliance and create jobs in a fast manner. As the reforms package unfolds, pragmatic solutions will have to be discovered to assure investors that their business interests would not suffer by mindless application of the law, while taking care to ensure that workers’ interests are not compromised. Labour reforms are critical to the “Make in India” campaign. Investors have been waiting with anticipation. Brand India cannot afford to disappoint.


Maternity leave in India is governed by a legislation called the Maternity Benefit Act, 1961 which provides for mandatory leave for women employees at the time of child birth. Some key features are:

i. Maternity leave can be availed by female employees who have worked for a period of at least 80 (eighty) days at the company.
ii. For the purpose of calculating 80 (eighty) days on which a woman has actually worked, the days for which she was on holidays declared under any law for the time being in force to be holidays with wages shall be taken into account.
iii. The maximum period for which any woman shall be entitled to maternity leave is 12 (twelve) weeks, of which not more than 6 (six) weeks shall precede the date of her expected delivery, and 6 (six) weeks post delivery.
iv. For availing this leave, the women employee shall have to submit her leave application, stating the date from which she will be absent from work, not being a date earlier than 6 (six) weeks from the date of her expected delivery. The application shall be accompanied by such proof as may be prescribed that the woman is pregnant.
v. In case of miscarriage or medical termination of pregnancy, a woman shall, on production of such proof as may be prescribed, be entitled to leave with salary for a period of 6 (six) weeks immediately following the day of her miscarriage or, as the case may be, her medical termination of pregnancy.

With increase in women workforce many companies in India opt for higher than stipulated maternity leave. Urban Ladder is one case in point. The company has increased the maternity leave to twenty-six weeks (six months), for its full-time women employees. Additionally, employees have the option to avail additional three months of part-time work at an equivalent pay basis or additional three months of unpaid leave. “We have a healthy female to male diversity ratio of 38:62 and we believe this is a key catalyst to our business performance. We’ve noticed that career progression of many female employees coincides at the time when they decide to start families. Some of them decide to stop working leading to a leaky pipeline of high potential women at the middle of the pyramid. Revising the maternity leave policy is the first step towards ensuring we give them the required support they need to pursue their career goals while raising a family.” Said Geetika Metha, Vice-president – HR, Urban Ladder.

Recognizing the high-performing talent pool of the female workforce, companies are creating opportunities for women in leadership, bringing equality and varied skill sets to the table. Roles of women in organizations range from design, technology, marketing, sourcing, customer service among many others. Committed towards building an organisation with a diverse workforce, new-age companies ensure all employees, develop, adapt, innovate and progress supporting them through their careers.


The executive search industry is beginning to look at non-profit organisations for profit. With the development sector scaling up, the need for professionals to head these organisations has come to the fore.
With high profile NPOs like the Bill Gates Foundation, Ford Foundation and Gere Foundation making their presence felt in India and running their ships like a well-oiled efficient engines, executive search firms are increasingly being mandated to find someone to run their organisation like a corporate.

An executive search firm Third Sector Partners was set up a year ago to address this gap and has done 15 placements during the year. This is huge for a sector which is traditionally not known for paying decent salaries, let alone paying headhunters’ fee. Even Stanton Chase and Heidrick & Struggles are also doing select assignments in this field.
Search firms have facilitated appointments of Shibani Sachdeva (ex-marketing head, SAS Institute) for United Way, Mahesh Naik (ex-accounts head, Cipla) for Magic Bus, Kumud Sampath (ex-president and ED, Astra Zeneca) for US Pharmacopeia, among others.
In CSR, P K Madhav has been appointed for the Biraju Foundation, Ruby Thapar for the Vedanta Group, Veronica George for Sesame India. Others like the Murugappa group and Tata’s have also taken the same route. Whether it is Turner Broadcasting, Jasubhai foundation, Monitor Group, Operation Smile, Akesi, or UN Millennium Development Goals, they are all looking at HR firms to find them leaders. “Foundations have their own targets and measurement systems.
They look for professionals who can play multiple roles,” says Pari Jhaveri, head of Third Sector Partners. There is hardly any company that does not do charity. “Today donor companies want to know that funds are being deployed in an efficient manner, instead of the haze that existed earlier,” says Mohit Mohan, VP Gilbert Tweed.
But what is the kind of talent that these organisations look at? Ex-bureaucrats, UN network veterans and corporate talent. These organisations are willing to pay Rs 20 lakh per annum for mid-level managers. Not bad when you consider that the money is tax-free if its a UN associated body.
This year, even students at Tata Institute of Social Sciences are expecting close to Rs 5 lakh per annum when recruiters from NPOs go knocking at their doors.