On July 14, 2022, the Ministry of Commerce and Industry in India released the Special Economic Zones (Third Amendment) Rules, 2022, which amends the Special Economic Zones Rules, 2006 (“Rules”), pursuant to Section 55 of the Special Economic Zones Act, 2005 (“SEZ Act”). The SEZ Act was enacted to provide for the establishment, development and management of the Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto.
Rule 43A under the Rules has been enacted which specifies that a “Unit” may authorise its employees, including contractual employees, to work from home or from any place outside the Special Economic Zone (“WFH”). SEZ Act, defines “Unit” to mean a unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre, whether established before or established after the commencement of SEZ Act
The Rules provides work from home for a certain category of employees of a Unit in SEZ
- Employees of IT/ ITeS SEZ Units
- Employees, who are temporarily incapacitated
- Employees, who are travelling
- Employees, who are working offsite
Key amendments are as follows
- The Unit must submit its request for permission to work from home to the Development Commissioner (“DC”) via email or physical application. This proposal must include all of the terms and conditions for working from home, including the start date for using the permission and the names of the employees who will be covered by it.
- The approval to the proposal of the Unit may be granted by the DC if he or she is satisfied that it complies with this rule. This permission is effective for a period of one year from the day it is granted.
- If the DC is satisfied with the proposal and that the Unit and its workers have followed with this regulation, he may, upon receipt of an application for extension of the permit, extend the authorization for such duration, not to exceed one year at a time.
- Except in cases when an employee is temporarily incapacitated or on the travel, the DC must receive any requests for permission to work from home or requests to extend an existing authorization at least fifteen days in advance.
- The Unit shall maintain accurate attendance records for the duration of the permission for work from home and shall periodically submit them to the DC. The proposal for work from home shall cover a maximum of fifty percent of the total employees of the Unit, including contractual employees.
- The DC may approve a higher number of employees to work from home for any bona-fide reason to be recorded in writing.
- Within ninety days of the Rules being made effective, a unit whose employees are working from home or from any other location outside the Special Economic Zone must submit a request for approval to the Development Commissioner.
- The work that must be done by an employee who is granted permission to work from home under this regulation must be in accordance with the services that have been approved for the Unit and must be related to one of the Unit’s projects.
- The Unit shall guarantee that the Unit to which the employee is assigned accounts for export income of the resulting goods or services. An employee must be untagged from the unit and the unit must surrender the identity card if they no longer work on the unit’s project.
- With the prior approval of the Specified Officer, the Unit may provide to an employee such goods, including laptops, computers, video projection systems, other electronic equipment, and secured connectivity (for virtual private networks, virtual desktop infrastructure), in order to connect the employee to work associated with the unit’s project. This is done without the need to pay duty on the goods or provide integrated goods and services.
The Rules are useful for SEZ units (especially for IT/ITeS companies operating in SEZs), given the work from home policy presently adopted by many companies and certainly a welcome step. The Covid-19 pandemic has been an eye-opener and work from home is a fairly acceptable practice these days not only in India but also worldwide and as a result of which legislative changes are also taking place to facilitate it.
Nevertheless, the Rules on one hand provide for a limit of 50% of the employees at a Unit in a SEZ to WFH, but one the other, also provisions for higher number of employees to WFH with due permission, with bonafide reasons, from the DC. It would have been helpful if atleast few indicative reasons could be provided in this context, for the company’s to make objective decision and future planning, as this would have a bearing on their operations and the related costs.
From an operation stand point, considering also the real estate and operations costs that a company incurs to run its operations, a permission valid for one year to operate in an quasi WFH model may not be very exciting for a company to make its long term operating plans, as the continuity of the permission beyond a year is not certain. Hence the tenure of the permission for reasonably longer period would have been more beneficial.
While WFH is a welcome development, however the Units will need to provide facilities in term of IT infrastructure for the employees to WFH, especially with respect to address issues of IT security, data privacy etc, for which Units may need to incur expenses.
Evidently, WFH as a concept is here to stay, and legislative efforts being taken in this direction is a right step. The Industrial Relation Code, 2020 (enacted but not effected yet) contains provisions relating to Standing Orders that mandate employers in certain establishments to adopt certain work rules for their employees. The draft model Standing Orders published by the Ministry of Labour and Employment by the Central Government (to be finalised and notified) contains a reference to “work-from-home” arrangements for employers in the services sector.
– Dhwani Shah & Anupam Prasad
