EMPLOYMENT LAW TOPICS

1. INFLUENCE OF GST REGULATION ON FLEXI-STAFFING

INDUSTRY

SOURCES –

https://www.india-briefing.com/news/flexi-staffing-industry-india-gst-regulation-15356.html/

https://www.financialexpress.com/economy/rs-27000-cr-flexi-staffing-industry-to-benefit-
from-gst-heres-why/716917/

https://economictimes.indiatimes.com/news/company/corporate-trends/gst-boon-for-flexi-
staffing-industry/articleshow/64420451.cms?from=mdr

 Under the pre-GST era

In the pre-GST regime, service tax was a deterrent, so cost-conscious companies tried to
insource staff even though hiving it to a third party made strategic sense. Some unorganised
staffing units had a pricing advantage because they didn’t charge service tax. The organized
flexi-staffing agencies needed to comply with applicable labour laws, and pay service tax at
the rate of 15 %. With the introduction of GST, the staffing industry has been fixed with the
rate of 18% by the GST Council, higher than the existing service tax rate of 15%.  The GST
regime brought in much needed pricing parity between organized and unorganized agencies
by eliminating the pricing advantage enjoyed by unorganized agencies.

 Introduction of GST – immediate impact on flexi staffing industry

GST would also ensure stricter compliance which would expose any malpractices and getting
away with that would be difficult for informal players in the staffing industry. This would not
only ensure formalisation of the informal firms, it would also help the industry, country and
for the candidates, who so far might have been exploited. The input tax credit benefit under
GST prompted companies to increase their hiring of temp employees such as sales and
support staff, resulting in an up to 60% annual growth for staffing firms
  Impact on businesses
With the introduction of GST, hiring flexi-staffing services will be more cost efficient for
companies doing business in India as it ensures easy dispensability of employees, relatively
cheaper workforce, low monitoring and administrative costs, as well as input tax credit
benefits. Firms operating using new age technology such as machine learning, artificial
intelligence, and block chain as well as start-ups and firms engaged in emerging industries
stand to gain from flexi-staffing as it helps them avoid the burden of hiring permanent
employees in a volatile market, thereby minimizing liabilities.

 Regulations on flexi staffing

At present, the primary law in India regulating flexi-staffing is the Contract Labor

(Regulation and Abolition) Act, 1970 and allied Rules. The Act applies to every
establishment as well as every staffing agency, which has employed 20 or more contract
workers in the preceding 12 months.

2. LEGAL CHALLENGES FACED BY FLEXI-STAFFING

INDUSTRY

SOURCES –

https://www.peoplematters.in/article/life-at-work/the-indian-flexi-staffing-industry-2187

https://www.businesstoday.in/opinion/interviews/story/flexi-staffing-fastest-growing-job-
creation-engine-suchita-dutta-73847-2017-01-17

https://businessindia.co/magazine/labour-reforms-to-immensely-boost-the-contract-staffing-
sector

https://www.business-standard.com/article/news-ians/why-regulation-and-national-licensing-
are-important-for-contract-staffing-in-india-commentary-special-to-ians-
116050400179_1.html

 Problems
In the absence of regulation, flexi-staff is often left at the mercy of contractors in the
unorganized market who do not follow any labor legislation. Thus, these contract staff faces
challenges in the absence of any wage, employment and social security. As the current legal
provisions are not geared towards addressing tripartite relationship which is the job mobiliser
of the country, there is a lack of clarity on many of the relevant issues including individual
responsibilities of flexi staffing agency and the user company.

Keeping in mind the major legal issues facing the industry, the government should focus on
some of the legislative initiatives in select countries creating landmark regulation towards
recognition of flexi-staffing.

 Rise in staffing services despite challenges

 Need for new reform

 New labour codes

OSH Code will allow organised growth for contract staffing industry; bring ease of doing
business for principal employers, wage and social protection for the contract workers.  It has
increased the threshold limit of contractor employees from 20 to 50 under the OSH Code,
while opening up hiring of contract workers in all areas will ease the compliance for
employers.

 Impact under new codes

3. IT FLEXI STAFFING – THE NEW HYPE

SOURCE –

https://www.livemint.com/news/india/it-firms-recruit-more-flexi-staff-forprojects-
11615833528259.html

https://www.betterplace.co.in/blog/why-flexi-staffing-is-a-no-brainer-for-the-it-industry/
#Investing_in_IT_Staffing_Services

https://economictimes.indiatimes.com/tech/ites/tech-turns-to-flexi-staffing-to-keep-its-bench-
from-idling/articleshow/70763840.cms?from=mdr
https://careernet.in/blog/six-reasons-to-consider-flexible-staffing-during-times-of-
uncertainty/

 Why flexi staffing

Flexi-staffing is gaining traction among technology firms as they rush to meet the growing
need for people with digital skills for short-term projects. The pace has intensified during the
pandemic as a rapid shift towards digitalization and automation has brought down the
average tenure of projects.

When a niche skill is required for a short-term project, organizations can choose to hire a
contract employee or gig worker. Flexi-staffing will manage such staffing peaks and troughs
and help them scale up easily

 Benefits of flexi staffing

1. Increased competitive edge
2. Cost optimisation
3. Accelerated talent acquisition
4. No hiring aftershocks
5. Enhance business operations efficiency
6. Grow your network

 Preference of flexi staffing in IT Sector

IT and ITeS, e-commerce, retail, logistics, and hospitals were among the top hiring sectors in
Q3 FY22 with around a dozen out of every 100 employees being contractual or flexi-staff. IT
flexi staffing industry is expected to register 14-16 per cent growth per annum in the next few
years

 Upsurge in flexi staffing during/after the pandemic

4. IS WFH THE NEW NORMAL WORK CULTURE?

SOURCE –
http://sezindia.nic.in/upload/uploadfiles/files/(Third%20Amendment)%20Rules%2C
%202022.pdf (primary source)

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1842710 (primary source)

https://www.firstpost.com/business/explained-centres-new-work-from-home-rules-and-how-
it-allows-for-more-flexibility-10932541.html

https://timesofindia.indiatimes.com/business/india-business/50-of-sez-employees-can-work-
from-home/articleshow/92941443.cms

https://www.mondaq.com/india/employee-benefits-compensation/1169442/work-culture-in-
2022-hybrid-is-the-new-normal (hybrid mode)

https://www.indiatoday.in/business/story/centre-brings-new-work-from-home-rule-in-special-
economic-zones-1977733-2022-07-20

 WFH in India – pandemic era

 WFH - continued after the pandemic (example of Netherland)

In January last year, a standing order was issued by the Government of India asking employers
and employees to fix working hours and other conditions of service on the basis of mutual
agreement. This move of the government was being considered as a symbolic step towards
work from home at that time, because at that time employees of most companies were doing

work from home due to Covid in the country. a new survey has shared that 73% of India
firms are evaluating if hybrid working arrangements will become a part of their
future work model.

 most people prefer hybrid mode of working

 New rule by government – explained

Rule 43 (A) introduced by the Ministry of Commerce and Industry allows employees in
the special economic zone to avail of the work-from-home model for a period of one
year, which can be extended by the Development Commissioner.

 Future of WFH

5. GREAT RESIGNATION – THE LATEST CRISIS

SOURCE –
 https://www.michaelpage.co.in/talent-trends/the-great-x

(primary source)

https://www.newindianexpress.com/business/2022/jun/07/86-staff-plan-to-resign-in-next-
6-months-report-2462609.html

https://timesofindia.indiatimes.com/business/india-business/adapt-to-new-gens-needs-to-
avoid-great-resignation/articleshow/92067683.cms

https://www.livemint.com/news/over-86-of-employees-in-india-may-resign-in-next-6-
months-report-11654686876443.html

https://indianexpress.com/article/explained/what-is-great-resignation-7728419/ (impact)

https://english.sakshi.com/news/career/covid19-induced-great-resignation-tsunami-
intensify-fy2022-23-michael-page-report-153939 (hybrid mode)

 Why are people leaving

Top reasons why staff are resigning include career progression, higher salary, role change
and job satisfaction.

 effect of Covid-19 of the resignation surge

 What is Employer, employee expectations gap

Though salaries, bonuses, and rewards are unequivocally the most important motivator for
candidates. The surge in resignations is being driven by people searching for the right job
at the right company with the right values and culture.

 impact of mass resignations

 Call for a hybrid system of work

6. CHALLENGES IN EMPLOYMENT – NEW HURDLE FOR IT

SECTOR

SOURCE –
https://www.thenationalnews.com/business/technology/2022/03/14/heres-why-indias-it-
sector-is-facing-a-talent-war/ (skill gap)

https://www.business-standard.com/article/companies/back-to-the-office-new-challenges-
await-it-companies-as-employees-return-121111001697_1.html

https://www.shrm.org/resourcesandtools/hr-topics/global-hr/pages/coronavirus-india-it-
challenges.aspx?loc=india (revenue)

 What the employees want

 Benefits of returning to office
 Revenue issued faced by the industry
 Skill gap between demand and supply of employee