Proper standing? A Review of the new Draft Standing Order for the Service Sector

By January 18, 2021 No Comments

The Ministry of Labour and Employment, Government of India, exercising the powers conferred under section 29(1) read with Schedule I of the Industrial Relations Code, 2020 released the draft of the Model Standing Orders, 2020 for the service sector, mines and all sectors, except service sector and mines, inviting comments and suggestions within 30 (thirty) days of its publication.

The Model Standing Orders for Service Sector, 2020 apply to industrial establishments employing three hundred or more workers who are working in the industrial establishments and which are covered under the Occupational Safety, Health and Working Conditions Code, 2020. Section (2) of the Industrial Relations Code, 2020 defines an “industrial establishment or undertaking” very broadly to mean an establishment or undertaking in which any industry is carried on. An ‘industry’ is defined to mean “any systematic activity carried on by co-operation between an employer and worker (whether such worker is employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature) . . .”.

At the outset, therefore, it is clear that standing orders will be required in any organisation regardless of the activity it is engaged in, as long as the number of workers employed is more than 300. ‘Worker’ is defined similarly to how ‘workman’ is defined in the Industrial Disputes Act, 1947, as “any person (except an apprentice as defined under clause (aa) of section 2 of the Apprentices Act, 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, . . .” and excluding any person (“who is employed mainly in a managerial or administrative capacity; or who is employed in a supervisory capacity drawing wages exceeding eighteen thousand rupees per month or an amount as may be notified by the Central Government from time to time.”

The Industrial Establishment (Standing Orders) Act, 1946 applies only to factories, workshops, motor transport services, etc. and not to offices or to organisations that carry on ‘office work’ such as advisory, consultation, and other services.  With this Act being replaced by the Industrial Relations Code the types of organisations that will need to frame standing orders has increased substantially and will presumably include IT, ITES etc.

The draft Standing Orders for the service sector specifically defines “Fixed Term Employment” to mean the engagement of a worker on the basis of a written contract of employment with the employer for a fixed period. A fixed term employee is required to be treated as the same as a permanent worker doing the same work or work of similar nature, including with respect to gratuity and other statutory benefits, regardless of whether or not the fixed term worker qualifies for such statutory benefits. The draft Standing Orders also provide for working from home.

In addition, the draft Standing Orders specifically provide for issue of appointment letter and confirmation in writing, and for fixation of retirement age transfer policy, and provisions for termination of employment.

Interestingly, the draft Standing Orders specifically provide that no  worker shall take 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 the written permission of his immediate superior, nor shall he in any way pass or cause to be passed or disclose or cause 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.

Provisions as to how to deal with misconduct have now become applicable to all organisations to which the draft Standing Orders apply, and now include sexual harassment, disclosure of confidential information, and unauthorized access of any IT system, computer network of the employer/ customer/client.

In many ways, however, the new draft Standing Orders do not deviate too much from the model standing orders under the Industrial Employment (Standing Orders) Act, 1946.

Many organisations do not have any uniform terms and conditions of employment laid down. As a consequence, the terms and conditions of employment of individual employees can end up being quite ad hoc. This requirement for Standing Orders, even if not applicable to many organisations, will greatly help in bringing about uniformity of terms of employment within an organisation. At the same time, and perhaps more compellingly, this will help manufacturers who have factories and corporate offices where employees have hitherto been subject to two different sets of terms and conditions of employment, depending on whether they were in the factory or in the corporate office. With this change it will be easier for a manufacturer to deal with employees in various offices and factories, and at the same time an employee moving from one place to another is unlikely to face a (possibly negative) change in the terms and conditions of their employment.

The provisions as to theft of the employer’s property and unauthorised access of IT systems are an interesting addition in these draft Standing Orders, presumably placed in order to help stem the growing number of instances of theft of employers’ intellectual property and to facilitate the taking of internal action against an employee who engages in such theft.

It is important to note that an employer who fails to submit draft standing orders shall be punishable with fine which shall not be less than fifty thousand rupees, but which may extend to two lakh rupees and in the case of a continuing offence with an additional fine of two thousand rupees per day till the offence continues.

The extension of the concept of standing orders to other sectors of employment is a welcome move which, hopefully, will bring about clarity to terms of employment and other matters relevant to the relationship between employer and employee. Although the need to have Standing Orders is, as of now, mandated only for organisations having more than 300 workers, it would be other organisations to also consider having them for all the reasons set out foregoing, and also to future proof them as they expand their business. The draft Standing Orders, along with the labour Codes, are likely to come into effect from April this year.

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