The Kerala High Court (“KHC”), in its decision dated November 26, 2021, in the case of Mangala A.G. v. Union of India & Others, tackled a significant and contemporary issue pertaining to the territorial jurisdiction of courts in the era of remote working. The judgment provides critical guidance for companies, corporates and employees, especially as digital workspaces challenge traditional jurisdictional boundaries.
Factual Background
The petitioner, Mangala A.G., a Chartered Accountant, joined HIL (India) Limited as Finance Manager on August 16, 2010. She was posted as Deputy General Manager (Finance) at the Rasayani Unit in Navi Mumbai on May 10, 2017. Due to the COVID-19 pandemic and the subsequent restrictions in Maharashtra, Mangala was permitted to work from home. Initially, she worked from Panvel and later relocated to her native Ernakulam, Kerala, continuing her duties remotely. She voluntarily resigned on October 31, 2020, and alleged non-payment of her final salary and terminal benefits, seeking relief from the KHC.
Legal Issue
The central issue before the KHC was whether the mere fact of an employee working from home within a territorial jurisdiction without a contractual provision or active employer facilitation could confer jurisdiction upon the courts of that area.
The Court’s Rationale and Judgement
The KHC reiterated that, is a well-established legal principle, that a company may be sued at its headquarters or in the location where the employee is posted. KHC further reasoned that if every employee working from home were allowed to litigate in their home’s jurisdiction, it could create chaotic, multi-jurisdictional litigation for employers, particularly multinationals.
KHC referred to Melissa Perry v. National Association of Home Builders, where a U.S. Federal Court held that mere remote work, without deliberate corporate action to establish business activities in the employee’s jurisdiction, does not give rise to personal jurisdiction. Purposeful availment such as recruiting, providing infrastructure, or encouraging business growth in the employee’s territory is required.
The consistent view taken by the US courts was that, mere knowledge of the defendant that an employee happens to reside in the forum state and conduct some work from home, does not confer jurisdiction on the forum state court.
With regards to employment terms and convenience, KHC observed that permission for petitioner to work remotely was a concession during the pandemic, not a contractual right or an employer-driven initiative to establish a business presence in Kerala. She remained on the payroll of the Mumbai unit, reported there, and her functional responsibilities were tied to Mumbai.
Accordingly, KHC held that when a person is permitted to work from home merely as a concession or a convenience, place from where the person so work is not sufficient to confer any jurisdiction.
Legal and Business Implications
This judgment is particularly important for HR professionals, in-house legal teams, and businesses with remote employees. It underscores the following implications:
- Jurisdiction is Not Determined by Remote Work Alone: Employees cannot invoke jurisdiction of their home courts simply because they work remotely, unless there is clear employer intent or contractual provision connecting their work to that territory. The KHC has categorically said that where the employee was merely permitted to remain at his home station and permitted him to telecommute from his place of residence to the head office situated within another jurisdiction, as a temporary convenience, without anything more, will not confer jurisdiction to the court within her jurisdiction to try the matter.
- Necessity of Express Jurisdiction Clauses: It is suggested that employers should explicitly define jurisdictional provisions in employment contracts, especially for roles involving remote or telecommuting arrangements, to preclude future disputes. The KHC explicitly observed that the employer will be free to include appropriate clause relating to jurisdiction in the contract of employment in cases where work from home becomes a permanent feature.
Conclusion
The Kerala High Court’s ruling is a landmark in Indian jurisprudence amid the digital transformation of workspaces. It offers clarity on territorial jurisdiction for employment related disputes in the context of remote working, ensuring employers are protected from multiplicity of litigation, while also guiding employees on correct procedures for redressal. Businesses should heed this precedent to structure robust, future-proof employment contracts and policies as remote work continues to evolve within the Indian corporate landscape.
