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IN LAW

Q: I am interested in taking up a job with a US-based BPO in Calcutta. I want to know whether my contract of employment will be drawn up in terms of the law of the US or that of India. If there is a legal dispute can I approach the courts in India? I have heard that in the US they follow a “hire and fire” policy. Can the Indian courts protect me from such arbitrary action? Will Indian law be relevant at all?

Dev Banerjee

A:Where the parties to a contract belong to different countries, they usually expressly agree upon and stipulate the identity of the law applicable to the contract. Thus your contract may stipulate that either the US or the Indian — or for that matter, the law of any country — would govern the contractual relationship between the parties. This “choice of law” would normally be respected by all courts as long as it is shown to be bona fide and not contrary to the public policy of that country in which the court is situated.

However, where there is no express choice, one will have to interpret the terms of the contract in order to ascertain which law will prevail by applying the principles of private international law. Like all other countries, the courts in India have developed their own body of rules to deal with situations concerning the “conflict of laws”, whereby they take into account and balance various factors to determine the law which has the closest nexus or the most real and intimate connection to the transaction and parties with which the contract is associated.

Irrespective of whatever the lex contractus (law of the contract) may be, Indian law would still be of some relevance to employment contracts where the services are being provided in India. This is because in India as a matter of public policy there are many laws which cannot be excluded by contract. Hence, Indian law will be relevant in issues concerning conditions of employment, confidentiality laws, data protection and other information technology policy, intellectual property rights, industry-specific regulations, provident fund and taxation issues.

The concept of “hire and fire” is not necessarily an arbitrary one. It is based on the principle of “employment at will” which means that the employer and employee are dependent solely on terms of the contract of employment, including the manner of termination of employment.

In India, however, most employees usually get far greater protection under the law. Whereas, the job security of government or state employees is enshrined in the Constitution, even private employees enjoy a certain amount of statutory protection from arbitrary dismissal or abuse. In particular, if the employee can demonstrate that he or she comes within the purview of the definition of a workman, as defined in Section 2(s) of the Industrial Disputes Act 1947, he or she will have recourse to the rights and remedies therein. Other than this, employees enjoy some protection of their basic rights under the applicable Shops and Establishment Act which binds employers in India and ensures that good employment standards as prescribed therein are maintained.

In the circumstances, it is doubtful that your intended foreign employer can completely ignore the applicability of Indian law in relation to employment contracts.

As far as the identity of the proper forum to entertain any disputes, parties coming from different legal systems usually try and agree upon a particular place at the time of entering into the contract by including a forum selection clause. Such clauses are considered valid as long as the chosen court actually has jurisdiction to try the dispute. The reason for this is obvious since parties cannot confer jurisdiction to a court which has otherwise no connection to the dispute in question.


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