What can HR professionals in the UK learn from legal reforms in India?

Robert Shore: Hello, and welcome to the Brightmine podcast, formerly known as the XpertHR podcast. Brightmine is a leading provider of people data, analytics and insight, offering employment law expertise, comprehensive HR resources and reward data to meet every HR and organisational challenge and opportunity. You can find us any time of the day or night at www.brightmine.com.

Hello everyone. My name is Robert Shore, and today we’re going to be talking about workplace culture and legislation changes in the UK but also, and most particularly, in India.

To do this, I’m delighted to be joined by the author of our India guide. We publish 44 international guides in total. Swarnima, who is a partner at Trilegal, which is one of the leading firms in India, and Swarnima focuses in particular on labour and employment law. Welcome to the podcast, Swarnima.

Swarnima: Hi Robert. Thanks.

Robert Shore: So we thought this would be a good idea because first of all a lot is happening in India and a lot is happening in the UK at the same time. Both are sort of undertaking major overhauls of their labour laws. And so let’s begin by sketching in the legislative process in India.

So obviously there is the federal government and then there are the state governments. How does this work in relation to the passing of laws and in particular workplaces?

Swarnima: Right. So India is at a very interesting space right now, Robert, with I think it’s the most massive overhaul of labour laws since the independence. And the way the laws work in India is we have the federal structure and the state government. And employment is a subject on which both central and state has the ability to legislate.

So we have two layers of law, one flowing from the centre and another flowing from the state. And as you can imagine, they often end up saying different things, which makes it difficult for companies to read the two together, and that’s the most interesting and the most challenging part of Indian law.

Robert Shore: And so obviously if there are any subjects that we touch on today where there are particular kind of contradictions then perhaps we’ll return to those briefly.

As an opening question, HR in India and in Indian businesses, what are the sort of big issues facing HR at the moment, would you say?

Swarnima: I think one of the important issues and most frequently faced is absenteeism and how to deal with that. And absenteeism could range from people just not showing up for 20 days together or people showing up sporadically and not informing their managers. And coming up with medical sort of [unclear – 0:02:37.7] sometimes, which talks about illness, which talks about mental health issues, and the question is how much accommodation do we need to grant as an employer or can we take action, because the person is just not available regularly. And that’s one of the most challenging situations to navigate through.

Robert Shore: And this is a big shift at the moment? I mean, we’re seeing a rise in this sort of absenteeism?

Swarnima: Absenteeism was always an issue. Earlier it was more for physical illness, which was easier to verify through medical certificates and documents. With mental illness it’s a little more challenging to navigate the issues and consider what actions you want to take.

Robert Shore: What sort of approaches are being taken? So what are the main lines of thought around how businesses must deal with this?

Swarnima: Yes, so generally as an approach, employment law or courts in India are very employee-friendly. So any sort of termination is looked at very closely, right? And there was a case where an individual was absent for over three months and just didn’t inform, and the company terminated the employment. And he challenged it in the courts, who ordered reinstatement, saying, ‘You didn’t make enough efforts to reach out to the person and know what happened to him.’ So it’s very protective.

And when it comes to mental health issues, we see a lot of certificates being submitted and it becomes tricky to assess whether it’s genuine, whether it’s not, or how frequent or how long would the absenteeism be, right?

And there are a few approaches. One is where the absence is for a very long period of time and the person is just not able to work. You have the ability to terminate employment on the grounds of ill health. But again, courts have said you need to assess, offer accommodation.

I think an interesting case was a constable who carried a gun and he threatened shooting people, and the employer terminated the employment and the court said, ‘That is harsh because he is suffering mental health concerns. Maybe look at redeploying him into another position where he’s not a danger.’

Robert Shore: Yes, so the sort of grounds for dismissal were challenged…

Swarnima: Yes.

Robert Shore: …not that there was an issue that needed to be dealt with but how it should be dealt with…

Swarnima: Yes, yes.

Robert Shore: …rather than, yeah. So as we said, the UK is currently undergoing a major reform of its workplace laws in the form of the Employment Rights Act 2025, first introduced by the then new Labour Government in 2024 and implementation of individual measures is continuing well into 2027 and perhaps beyond.

At the same time, India is introducing four new labour codes. This is really a major restructuring, isn’t it? Can you tell us a little about them?

Swarnima: Yes. I think, like I said, it’s one of the most significant changes and overhaul in labour laws in India. Our laws are generally 1927 and 1948, in that era. So this has been in talks for a very long time. Since 2015 there have been attempts to streamline the laws. Finally on 21 November 2025 the four labour codes were introduced, which replaced 29 different central laws. So this is at the central level and they replaced 29 laws, and they cover issues relating to wages, issues relating to third-party contract workers or agency workers, timeline for payment of wages, terminations etc. Even union-related issues – and there have been some interesting changes there.

So that’s a significant change. In terms of what has changed, I would say not too much substantively but a lot of effort to streamline definitions, for example. And one interesting thing in India is your salary structures are often split into various components. And what component is used for one payment, and what component is used for another payment gets challenging. So payroll teams are always stressed as to, ‘How do you really calculate?’

Robert Shore: So there, where you’re talking about the different components of pay, can you give us an example?

Swarnima: So for example, in India you will not have a base salary and total. You will have basic salary, conveyance allowance, [unclear – 0:07:06.1] allowance, special allowance. So they go into various allowances, and that’s because each of them typically have a tax benefit for the employee. And then earlier, when you had to make a social security contribution, it would be certain components of the salary. And again, a hugely litigated area for over 20 years what components to include. Then you had to calculate gratuity, which is an end-of-service payment. It would be only basic salary. And when you had to calculate severance it would be all guaranteed components. So you needed to understand the legal definition under each different statute, break it up and apply it differently for each payment, which of course led to mistakes and of course led to challenges.

So that’s one of the most significant changes where we now have a uniform definition of wages across all laws.

Robert Shore: And is it helpful, would you say? I mean, is it broadly a simplification?

Swarnima: Not as much as we would have liked. But yes, it is definitely helpful because there’s a uniform definition and similar principles. But is also has led to significant cost increase for organisations. And one of the biggest areas is gratuity, which is an end-of-service payment. So just to explain that, an employee who has completed five years of service was entitled to 15 days of pay for every year of service. Earlier it was only calculated on basic, which would typically be 40% of your total comp. Now it is on wages, which ends up being 80 or 90% of your total comp. So that’s a significant cost increase for organisations, which now they are struggling with as to how to restructure your salary to mitigate some of that impact.

Robert Shore: Yeah. So what other areas are there of the labour codes that we should discuss?

Swarnima: The second most significant change has been around agency workers or third-party employees working for you, right? And the biggest…and it’s extremely common in India for companies to outsource, engage a third-party employer to assign people to do work not only your ancillary work like housekeeping, security, but also your core technical work. And now there is a prohibition on engaging contract workers in core activity. So whatever was core or is core to your business, what your business is set up for, you can’t engage them in that.

So just to give an example, if you’re talking about a software company, you can’t engage them for information technology development, coding etc., but you also can’t engage them for things which are ancillary and perennial. So your finance function, your HR functions, which are something which is core to keep the business running, is also core. So you can’t outsource that kind of activity.

Robert Shore: And that’s then less of a consolidation of what has happened before than actually a real shift in practice. Is that right?

Swarnima: It is a real shift in practice. So in fact, there are two levels of changes here. The positive is who is falling within the scope of contract labour is now much narrower. And that’s something that the industry and employers were really pushing for.

So earlier, whether you went for a services arrangement or a time and material, or a manpower services, it didn’t matter. As long as there are third-party employees working on your premises, they were contract labour. Now the definition is much narrower, in the sense that if they are third-party employees and they are regular employees of the vendor, right, so the vendor has hired them, deploys them to you for some assignment, moves them to another client once the assignment is over, that’s a regular employee of the vendor and they don’t fall within that definition and the restriction. But if you tell the vendor, say, ‘Hire this person for me,’ and their contract is then co-terminus with your engagement so that when you end the SOW the vendor ends the employment, that falls within contract labour and that’s where the restrictions apply.

So the push is towards direct employment and mitigate, you know, measures to have employment where, you know, people are deprived of their employment benefits.

Robert Shore: So there you said some of these changes are well viewed by employers.

Swarnima: Yeah. Robert Shore:  Where is the sort of pressure coming from in terms of, you know, the desire to not have contract workers a part of the core business? Where does the pressure for that kind of change come from? Is that a global pressure? ‘Cause we talk a lot here, for instance, about Britain has obviously departed from the EU but the kind of pressure with changes that are made within the EU, for instances with the Pay Transparency Directive recently that it will have effects in the UK for employers who work directly with the EU but also just generally changes expectations.

Swarnima: I think that yes, it’s a global pressure but it’s also increased focus on ensuring people are not deprived of their employment benefits because a lot of vendor contracts, we’ve seen instances where vendors are not paying out salaries. And these are smaller-time vendors, right? And as a service recipient, if you’re taking on services, you are held responsible and accountable.

So the entire focus is on pushing people to employ their own employees. Of course there are exceptions to it. If there is a sudden increase in business activity and you suddenly need a higher number of employees then you can engage people directly. So there are exceptions that you can leverage, but I would say yes to the global changes around supply chain management and more focus on vendor accountability and putting some of the responsibility on the service recipient. I think we see that reflected here. And second, just more India focused on ensuring employment rights are protected.

Robert Shore: Hmm. So this comes from central government. Is it equally applicable in all parts of India? Does some of it get transposed into sort of state… Which is again with the EU, if there’s a directive then often it’s transposed into national law afterwards.

Swarnima: Right. So both these issues that I talked about are equally transposed across states in India. The one issue where, you know, the conflict between state and centre becomes interesting is on leaves. And that’s, again just to give you a little bit of context, services companies in India – like IT companies or other establishments – when it came to leave and it came to working hours it was only state laws, which is the state-specific shops and establishments. There was no law at the central level. Now with the codes there is a law at the central level. So there would be a state which says you need to give 15 days of annual leave, and now there’s a central law which says you need to give 18 days of annual leave. So there is a contradiction and of course the central law prevails when there’s a conflict. That’s the general principle. But sometimes if the state law has come out later and it’s received Presidential Assent, then the state laws can prevail. So that’s an interesting aspect. I think one area where companies are grappling with right now is the central law provides for annual encashment of leave, which none of the state laws provide for except [unclear – 0:15:03.7, which is one state which has up to 8 days of leave that can be encashed. And so it’s suddenly something which you need to accrue for, which organisations didn’t plan or accrue for earlier. So that’s a question that’s coming up often. The carry-forward limits a lot of states. The carry-forward limit is 45 days and the central law says 30 days. So the question is, ‘Is 30 more beneficial? Is 45 more beneficial? And what do I comply with so that I am reading the two laws harmoniously?’, which is the requirement in India. 

Robert Shore: What other challenges are there for HR in the labour codes?

Swarnima: One thing which is more administrative but people are complaining all the time, is you need to make out exit payments within two days. It may seem like a very small thing because yes, okay, it’s just a timeline for payments, but procedurally it’s extremely difficult to get to that, and we don’t know where it’ll land because most organisations are like, ‘I really don’t think I can do it.’

Robert Shore: Yes. So these changes for labour codes, it’s being rolled out across what period? Is everything being introduced at the same moment?

Swarnima: Yes.

Robert Shore: Quite challenging then.

Swarnima: Yes. Suddenly on Monday we know, on 21 November 2025, it was brought in force. And that’s where, you know, the panic did strike and a lot of questions on, ‘Are you really telling me that from today I need to make these changes?’ and the answer unfortunately is yes.

So the way the laws work is there’s a central law and then there are state rules to supplement the law. So the central law will set out your substantive provisions and the state rules will say what forms to file, how to notify the Government, how to register. So the more procedural aspects.

The interesting bit is that the central law is in force but the state rules are not published and in force already. There is an ambiguity, there’s a confusion. The way it is framed right now is still the time the states don’t come out with the rules. Rules under the old law need to be read with the codes, and that’s an interesting way to read some of them.

Robert Shore: Yeah, that is quite a challenge, isn’t it? So with the Employment Rights Act in the UK – so this was passed in December 2025 – at the same time it’s being implemented in stages. And there are, I thin, 29 strands. And they’re only implemented really at the point where there is secondary legislation, which is where that sort of detail comes in. But yes, that can be quite confusing as well, as often the secondary legislation arrives quite late on…

Swarnima: Yes.

Robert Shore: …so you know long in advance that something is happening but you don’t necessarily know exactly what that’s going to entail.

Swarnima: Yes.

Robert Shore: Okay. Good to know that around the world employers are facing the same challenges.

Swarnima: Similar challenges.

Robert Shore: One element of the labour code that’s quite intriguing relates to grievances. What’s happening?

Swarnima: So there’s an interesting concept and it’s not new, but employers need to set out a grievance redressal committee if you have 20 or more workers in your organisation. It was there under the previous regime as well. But the previous regime had a language with saying, ‘If you have alternate grievance redress mechanisms you don’t need to set this up in the same format and manner,’ which everyone said, ‘We have a hotline, we have a global mechanism to approach it,’ which works well globally, right? But now that exception has gone. So every organisation with 20 or more workers needs to have a grievance redressal committee which needs to have equal representation from employers and workers. And the workers have to be elected, and that becomes a challenge because no one – unlike, I think, in some jurisdictions in Europe where, you know, people are very comfortable with collective bargaining agreements or having worker representation – people in the services sector are not comfortable with unionisation in India. It’s something that you would stay away from. And giving workers or employees the right to elect a representative is something that people are always worried about and what to stay away.

So that’s an interesting change, and the questions we are dealing with is, ‘How do we do it in a manner where we are really not giving them the right but we are complying with the law?’ And some companies are thinking, ‘Should I just send out a list of names and then say, “If anyone has an objection let me know,” and that goes in a newsletter with 20 other things so no one really raises an objection and we are complying with the law.’

Robert Shore: And is this new system then being trialed at all before introduction? I mean, has it already been operational somewhere or…?

Swarnima: No. I mean, it’s more operational I would say in where there are unions, which is typically your manufacturing setup in India or maybe even the airlines and the like. But you don’t typically see it in the GCCs, the global capability centres and the service industry.

Robert Shore: So when a grievance is submitted then, how exactly is the committee involved in looking at that?

Swarnima: Right. So in the earlier regime and the general practice currently also that organisations have, is a grievance is raised, someone from the HR or the employer relations team looks into it, does a fact-finding investigation, comes up with a report, and based on that if you need to take any action then the disciplinary process starts.

So you have your HR teams, you have your ER teams who are specialised, who know how to run these, dealing with it, right?

Under the grievance redressal committee you need to have representatives from both worker and employer who are sitting together on the committee. And then the committee hears the grievance and does the investigation and fact-finding, and then concludes on that.

 Now, the challenges are: Is that committee equipped with the right skillset to conduct it? Will they really be neutral, unbiased, fair to the process and looking at it with the right lens? So those are some of the challenges that employers are facing.

Robert Shore: Hmm. I think there’s been a rise in the UK in the use of AI and gen-AI to write grievances. Is this a phenomenon in Indian workplaces as well?

Swarnima: Quite a bit, and sometimes we are just reading AI-generated challenges like you’ve sent out an email, you’ve sent out a report and there’s a beautiful crafted challenge to it, and when you read through it, it doesn’t make sense and you need to then write back and respond to it. It’s quite a challenge. We are getting legal notices which are drafted through AI. And I think that’s led to an increase in employee disputes because it’s so much more accessible and easy now to raise a dispute.

Robert Shore: What’s the longest grievance you’ve had to read recently? ‘Cause I’ve heard of really very, you know, extensive grievances, as well as ones that have citations in, don’t necessarily contain the detail of what actually happened.

Swarnima: I think around 20 pages long.

Robert Shore: 20 pages. Okay, that’s…

Swarnima: That’s not bad.

Robert Shore:  …that’s okay, yeah. Okay. Great. So I think we want to move onto harassment at this point. Some of the most interesting and challenging, from an HR point of view, reforms in the Employment Rights Act UK 2025 in the UK concern harassment. From October of this year employers will need to take all reasonable steps, not just reasonable steps, to prevent sexual harassment, and there will be employer liability for third-party harassment, and that’s all forms of harassment. So I think there’s significant activity in India around sexual harassment laws specifically, isn’t it? Could you clarify that?

Swarnima: Yes. So India is, I would say, one of the jurisdictions across the world which came out with a specific law on the prevention of sexual harassment at the workplace. And this law was brought into force in 2013 and it followed a horrific incident of rape in the national capital, which received a lot of global attention, to the extent where there were press releases saying India is not safe for women to travel. And that, as you can imagine, put a lot of pressure on the Government.

So we very quickly had a law. And I would say it’s an extremely well thought-through, robust law, which talks through in great detail the process in dealing. So you need to have a committee. And you need to set up this committee, this committee has a very specific constitution. So it needs to have a senior female member. It needs to have an external member who can be a lawyer or from an NGO who’s experienced in dealing with sexual harassment complaints, and the intent is that person brings in the neutrality and the experience. And you have local members from the same office. So if you have three offices in India, you need to have people from each office, again the intent being that, ‘I feel comfortable to raise a complaint if I want to.’

So there’s a very specific requirement on this committee constitution. At least 50% of the members of the committee should be female. There are requirements around training to be conducted both for the committee and the employees. Annual reports to be submitted to the Government at the end of each year that says how many complaints you’ve received, how long you’ve taken to dispose them, and there’s a timeline of 90 days that you finish redressing the compliant within. How many trainings you have done. So you need to report all of this to the Government.

So the framework is quite detailed, quite set out. And what we’ve seen in the last year is – and you would have seen a lot of news reports on – instances where people have gone to the police, where their complaints were not addressed internally.

So there’s been, I guess, both positive views…if I were to tell you 15 years ago when the law wasn’t there, we would deal with one sexual harassment complaint a year, and the nature of the complaint would be molestation so something really, you know, grave in that sense. Today there are organisations who get 30, 40 complaints a month. And they are like, ‘He asked me on a date and I didn’t like it and I told him no.’ That, I feel, is a very positive move where people are comfortable to speak up.

Robert Shore: Yeah. Which is very much encouraged…

Swarnima: Yes.

Robert Shore: …in the law and this is a sort of measurable way of saying, well, this must be working in some degree…

Swarnima: Correct.

Robert Shore: …and that you’re actually free to say…

Swarnima: Correct.

Robert Shore: …’This made me feel uncomfortable and…’

Swarnima: Correct.

Robert Shore: Hmm, so.

Swarnima: So that’s positive. We’re also seeing a little bit of a negative side to it, which is a fair number of cases we’ve been involved in where you put someone on a performance improvement plan and then there is a sexual harassment complaint. And a lot of these statements are made behind closed doors, so it’s difficult for organisations to really investigate and walk through it. My only…and as we work through some of the cases, I think one of the common mistakes employers make is get their judgement coloured by the performance and assume it is a false complaint to start with, right? And just keeping the two elements distinct, dealing with your sexual harassment complaint in the normal course with an open mind, and dealing with performance, you don’t need to stop that process. Separately would be the right balance.

Robert Shore: Yes. These things are always complicated, aren’t they? We like to give people tips to end on. We’ve covered a lot of ground today, so maybe three tips for things to look out for for employers.

Swarnima: I would say three focus areas that I would say is one, the labour codes, and there I pick up your wage structure, look at the break-up to see whether you’ve structured it correct and whether you’ve optimised things from a cost impact perspective. The second, go back to your leave and absenteeism policies and ensure you have the right safeguards. For example, ability to require employees undergo medical checks if there is continuous absenteeism. So ensure the policy gives you the right ability to ask for documents to require employees undergo checkups. And that will help you manage a lot of absenteeism issues more efficiently. And the third would be relook at your compliances on prevention of sexual harassment at the workplace. That’s something which the Government is focusing quite a bit right now, from including your displays at the workplace to the training. So that’s something that employers should relook at.

Robert Shore: Wonderful. Well, thank you so much, Swarnima, for joining us today. Swarnima of course authors our India employment guide for us. We have 44 guides in total. We also have comparative tables, so this is a good starting place. I will put some links to some articles in the show notes, and of course a way to find Trilegal.

Beyond that, I just need to say, until next time.