INTRODUCTION
Less than six months after introducing a provision for units in Special Economic Zones (SEZs) to allow up to 50% of their employees to work from home or anywhere outside of the SEZ (WFH) (as described in a separate update, available here), the Government of India has substantially liberalised the WFH framework by way of an amendment notified on 8 December 2022 to the Special Economic Zones Rules, 2006 (SEZ Rules). The WFH option continues to be available to SEZ units which provide Information Technology and Information Technology enabled services (IT / ITeS), while non IT / ITeS units may still allow WFH for employees who are temporarily incapacitated, travelling or working offsite.
KEY CHANGES
WFH allowed for all eligible employees:
The 50% limit on employees being permitted to WFH has been done away with, and the WFH facility may now be extended to all eligible employees in an SEZ unit, including those under direct contract.
No prior permission required:
SEZ units are no longer required to seek prior permission from the Development Commissioner (DC) for providing a WFH facility for its employees, and a prior intimation to the DC will now suffice. SEZ units who had implemented a WFH facility prior to this amendment and intend to continue the same must give such intimation by 31 January 2023. SEZ units are also no longer required to submit to the DC the details of employees who are allowed to avail the WFH facility, but need only maintain these records for verification when required by the DC.
A separate permission was also required from the specified officer for the SEZ for SEZ units to allow duty-free goods to be removed from the SEZ by their employees availing the WFH facility. This requirement has now been done away with, and the temporary removal of such duty-free goods is now permitted for as long as the WFH facility is being offered. However, failure to return the duty-free goods to the SEZ would then leave the SEZ unit liable to pay duty on the goods.
Validity of WFH facility:
SEZ units are now generally permitted to allow their employees to WFH until 31 December 2023.
TAKEAWAYS
The amendment to the SEZ Rules represents a significant relaxation for SEZ units seeking to provide a WFH facility for their employees by simplifying the processes involved. As highlighted in our earlier update, the original provision did not clarify whether a hybrid WFH model would be permissible. While the amendment does not make an express reference, the increased flexibility given to SEZ units seems to indicate that a hybrid model may be feasible, though some guidance from the DC or the government would be helpful in this regard.