A code called ‘The Occupational Safety, Health and Working Conditions Code, 2020’ (‘OSH Code’) and rules have introduced specific provisions relating to the issue of appointment letter And there are prescribed formats for this (Section 6 of the OSH Code read with Rule 7 of the OSH Rules). 13 Existing regulations do not have specific provisions regarding the format, issuance of appointment letters.
Appointment letter: a legal contract
Appointment letter is a legal contract between employer and employee. It is issued by the employer, confirming the job role/position of the employee in the organization and detailing the terms and conditions of employment.
As explained above, under the OSH Code, an employer is mandated to issue appointment letters in a format that may be prescribed by the appropriate government authority to each employee on his/her appointment.
The OSH Code further states that if an employee has not been issued such an appointment letter “on or before the commencement of the Code”, the employer must issue one within three months of the commencement of the Code. This is in contrast to the current scenario in which there is no prescribed format.
Thus, even if an employee has already been issued a letter of appointment before the new law came into force, a fresh appointment letter has to be issued within three months from the date of the new law coming into force. The fresh appointment letter should be in the format prescribed by the Code.
Information to be mentioned in the appointment letter
As per OSH rules, the following information is required to be mentioned in the appointment letter –
(i) the name of the employee;
(ii) the name of the father;
(iii) Aadhaar Number;
(iv) Labor Identification Number (LIN) of the establishment;
(V) universal account number ,UAN)/Insurance Number (ESIC);
(vi) designation;
(vii) the category of skill;
(viii) the date of joining;
(ix) wages in accordance with the Code on Wages 2019;
(x) other allowance including accommodation (as applicable);
(xi) what are the avenues for getting higher pay/higher post, i.e. development/promotion options available to the employee;
(xii) applicability of social security – Employees’ Provident Fund Organization and ESIC benefits;
(xiii) health check-up;
(xiv) the broad nature of the duties to be performed; And
(xv) any other information.
some aspects like aadhar numberLabor Identification Number (LIN), Universal Account Number (UAN), route to get higher salary/higher post (based on increment, promotion etc.), which are presently not covered under letter of appointment, are now mandatory. will have to be included.
In addition to the above, the appointment letter and its clauses with respect to social security, gratuity etc should also be reviewed to re-align and reflect the changes required under labor codes other than OSH. Amendments would also need to be implemented to include and communicate the specific benefits available to women employees and fixed-term employees.
This is a welcome move as it will bring in more transparency and introduce standardization in the content mentioned in the appointment letter.
In addition, while issuing the letter of appointment, the employer should also mention the OSH code and rules notified by the respective states and any other state laws such as the Shops and Establishment Act, to ensure that all applicable provisions are complied with.
One should also note the fact that non-compliance with the provisions of the OSH Code and Rules will attract a stiff fine ranging from Rs 2 lakh to Rs 3 lakh on the employer. Continued non-compliance will also attract an additional fine of Rs 2,000 for each day such violation continues.
Therefore, it is imperative for employers to keep an eye on the notification of the effective date of the Labor Codes, identify and understand the changes required under it, be prepared to ensure compliance and also notify their employees.
(Saraswati Kasturirangan is a partner of Deloitte India. Radhika Viswanathan is the director and Vivek Mistry is the manager with Deloitte Haskins and sells the LLP.)