LegaLogic-Employment Law Newsletter: Hybrid Working Model – November 2021

Across sectors, employees have enjoyed the work-from-home environment. With its pros and cons it has given them an opportunity to work at their own pace and convenience. As offices are soon to re-open, employees are looking for options where they can reap the benefits of flexibility that remote working environment offers.

Based on the research and surveys conducted recently, it has been observed that employees who have been provided the flexibility to work from a remote location or from office as per their convenience have greater on-the-job satisfaction as well as efficiency and on the other hand the employers can deal with the re-opening offices with 100% capacity and at the same time prevent spread of any virus. Further, the employers are also gaining benefits of the increased efficiency of the employees due to such flexibility. The demand of flexible work time has gained popularity in the recent times among the employees and employers. The Hybrid Working Model enables the employers to provide flexibility to their employees to either work from office or work from a remote location (“Hybrid Working Model”).

While, the Hybrid Working Model provides flexible working conditions for the employees, there are certain compliances which an employee has to adhere to. The Hybrid Working Model is not yet an identified concept in Indian labour law and thus, it is important to review existing policies to accommodate the hybrid working arrangements. Such policies will include, without any limitation policies about:

a. Working schedules

b. Approval Process

c. Joining and exit formalities

d. IT Support

e. Travel/relocation expenses

f. Travel for training/meetings

g. Importance to secure company confidentiality while working remotely

Employers should consider implementing an exhaustive policy of the Hybrid Working Model which will include the current market trends as well as the appropriate statutory prescriptions and customise the same in accordance with the organisational needs.

Arbitrability of Employment Disputes in India

Arbitration is the most common form of alternate dispute resolution mechanism in India. However, when the employment disputes are in question then arbitration is the least preferred mechanism for resolution. This Newsletter is to make the reader aware of the nuances of referring an employment/labour dispute for arbitration. The Industrial Disputes Act, 1947 (“ID Act”), provides for different ways of resolution of labour disputes such as reference of a dispute to the Works Committee (Section 3); Conciliation Officers (Section 4 and 5); Courts of Inquiry (Section 6); Labour Courts (Section 7); State Industrial Tribunals (Section 7A); National Industrial Tribunals (Section 7B); and Arbitration (Section 10A).

Understanding Section 10A of the ID Act

Section 10A of the ID Act was inserted vide an amendment in 1956, for enabling the employers and the employees to refer the dispute for arbitration by entering into a written agreement. As per the language that has been given under the aforementioned provision:

a. Reference When Made: The parties have the right to refer a particular dispute for arbitration under Section 10A of the ID Act before such dispute is referred to either to the Labour Courts or National/State Industrial Tribunals, as the case may be, under Section 10 of the ID Act.

b. Arbitration, the First Resort: It is a settled position of law that if the parties have agreed for arbitration by a written agreement, then they will have to compulsorily refer the dispute for arbitration first i.e., such matter cannot be referred for adjudication in any other Labour Courts or National/State Tribunal for adjudication.

c. Agreement between the Parties: A dispute cannot be referred to arbitration unless both the parties to the dispute agree to resolve dispute via arbitration. It is also required that both parties sign the agreement, attesting to the terms and conditions stated therein.

d. Written Agreement: An arbitration contract has to be made in writing by both the parties.

e. Appointment of Arbitrator: The parties may appoint a sole arbitrator to preside over the arbitration proceedings. In case the parties want to appoint more than one arbitrator, then parties should appoint one arbitrator each and the two appointed arbitrators will have to appoint a neutral third arbitrator to preside over the arbitration proceedings. Hence, it is required that the arbitration panel should consist of odd number of arbitrators so that the case of an equally divided opinion the neutral arbitrator has the power to decide.

Arbitrability of Employment Disputes

It is pertinent to note that the arbitration proceedings for all the industrial disputes which have been referred for arbitration under Section 10A of the ID Act, have to be conducted in the manner as provided under the ID Act in contrast to other arbitration proceedings to which the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), applies.

In Kingfisher Airlines Limited vs Captain Prithvi Malhotra and Othersi , (“Kingfisher Airlines Case”) the Bombay High Court had discussed the issue whether an industrial dispute or a dispute relating to enforcement of a right or an obligation created under the ID Act, is arbitrable, i.e., capable of being adjudicated by a private forum of an arbitrator. In the aforementioned case, the Hon’ble High Court of Bombay had laid down that adjudication of industrial disputes is reserved by the legislature exclusively for the authorities established under the ID Act, as a matter of public policy. Therefore, such disputes stand excluded from the purview of the private fora of the arbitrator. Consequently, the industrial dispute is rendered inarbitrable outside the ID Act i.e., it is not arbitrable under the Arbitration Act. In Rajesh Korat vs. Management of Innovitiii, Karnataka High Court had upheld the order of the Bombay High Court in the Kingfisher Airlines Case.

As a matter of practice, where an arbitral award has been passed, then the power of judicial review the arbitral award is very skewed with other courtsiii and hence, arbitration in employment matters is the least preferred form of dispute resolution.

Thus, arbitration which is otherwise a preferred way of resolving a dispute, as observed over the years through various judicial precedents, arbitration of labour disputes has not been that successful as compared to the resolution of labour disputes by reference to the designated industrial tribunals. In our opinion, while executing employment agreements, employer must take this into consideration and accordingly choose that dispute resolution mechanism which suits their interests best.