Recognizing that hybrid working is here to stay, at least for the time being, the commerce and industry ministry has added a new regulation to the special economic zone (SEZ) rule book: 43A (work from home, or WFH). This allows for 50% of all employees to be in WFH mode. Permission can be given for larger groups.
The latest change will allow the IT and ITeS (information technology-enabled services) sectors to retain staff who demand flexibility. Several major to medium-sized enterprises, including industry titans like TCS and Infosys, have facilities in SEZs.
While numerous employees in this industry favored a hybrid work strategy, many employers were looking to bring people back to the office due to a lack of legislative certainty. Until now, different jurisdictional authorities have issued varying guidelines, often on a short-term basis. The announcement from the government will allow for a standard WFH policy for SEZ units across the nation.
The new guideline specifies which workers (including contractual staff) will be allowed to work from home. Employees of IT and ITeS SEZ units, those temporarily disabled, those traveling, and those working offsite are among those included.
Other standards have also been established. "The 50 percent limit for work from home of total employees (including contractual employees) with discretionary powers to approve higher limits appears to be the regulator's way of striking a balance between the IT/ITeS industry's demand for full flexibility and the real estate sector's demand for getting employees back to the office," said EY-India tax partner Pramod Achuthan.
SEZ units would be obliged to keep correct attendance records and provide them to the regulator regularly. "The guidelines do not appear to address a situation where all employees may be obliged to work from home due to a Covid epidemic; at the very least, the proposed SEZ law should consider this," stated one IT consultant.
"In the context of WFH, the sector would also appreciate clarification on the availability of income tax exemption under section 10AA to avoid needless litigation," Achuthan added.