Update on Indian labour law

Maternity Rights bill

A bill introducing new maternity rights has passed the Indian Upper House. It now needs to pass the Lower House and get Presidential consent.

The bill, when passed, will:

• increase the right to maternity leave from 12 to 26 weeks;
• provide 12 weeks leave for adopting or surrogate mothers;
• make the provision of crèches obligatory for businesses employing more than 50 people;
• make provision for home working.

However, the changes will only apply to workers in the regulated or organised sectors.

If the mother already has 2 or more children, the leave will be only 12 weeks.

No paternity rights are as yet provided for.

Non-compete agreements in India

A recent appeal case in India has confirmed the effectiveness of employee non-compete agreements, subjective to some restraints.

The case involved former employees of ABB who had set up a rival Indian company using trade secrets and confidential information acquired while at ABB. The High Court of Karnataka found in favour of ABB on a range of issues including the right of ABB to protect its confidential information from misuse by a former employee.

The Court up held the basic principle in equity that if you receive information in confidence you should not be able to take unfair advantage of it or use it to the detriment of the person who owned the confidential information.

Nevertheless, to be enforceable in India non-compete restrictions must be reasonable. A restriction that prevents a former employee from earning a living is unlikely to be enforced. However, non-compete restrictions necessary to protect an employer’s proprietary interests, limited in time and geography, should normally be enforceable.

Employers can restrain former employees from disclosing confidential information but this does not however, mean that they could prevent such an employee from earning his/her living working for a competitor or similar business.

The terms of the non-compete agreement therefore remain central to an employer’s ability to protect itself from competitive former employees.

Equal pay for equal work

The Supreme Court of India recently confirmed the principle that if you are a temporary employee carrying out the same work as a permanent employee in an organisation you are entitled to be paid the same as the permanent employee. The court said that mere differences in the titles given to the employees were irrelevant. What mattered was the actual work carried out and the duties and responsibilities that went with the role.

The court said that paying temporary workers less than permanent staff for similar work amounted to “exploitative enslavement”. Temporary staff status must not be used for the purpose of wage arbitrage.