White-Collar Blindspot

**Rudra Sinsinwar

“Mental health issues should not only be treated as the right thing in the workplace, but it might also be the best thing for the business.”

— World Health Organization (WHO)

Introduction To The Unseen Battle

India’s labour laws overlook the mental health struggles of white-collar employees, failing to recognize how long hours, relentless pressure, and job insecurity push many to their limits. While physical injuries are acknowledged under labour statutes, the psychological strain of excessive workloads remains invisible. Stress, anxiety, and burnout are not classified as workplace harm, leaving employees with no legal protection or recourse. Without clear laws holding employers accountable, organizations are not required to safeguard mental well-being. As a result, employees navigating high-pressure work cultures are left to manage these challenges alone, with no formal recognition, protection, or compensation.

Though conversations around mental health are gaining momentum, the legal system has yet to catch up. This lack of recognition raises urgent questions. How do we define a toxic work environment? Should disputes be resolved within companies or by external bodies? How can laws ensure fairness without discouraging productivity? How do we determine whether mental health struggles stem from work or personal life? Can mental health laws protect employees without enabling complacency? Where does employer responsibility end and personal accountability begin?  Addressing these questions is not easy, but ignoring them allows workplace-induced distress to persist in silence. 

This blog aims to examine these gaps in India’s labour laws, analysing how can white-collar employees be protected. It will further propose principles for workplace mental health protections, explore adjudication mechanisms, and address counter-arguments on employer liability. Finally, the blog concludes by noting that while legal reform may present challenges, the first step is to acknowledge the issue and begin the process of legislative change.

The Missing Pieces

While various laws exist to ensure physical safety and financial security, the absence of such recognition for workplace-induced psychological distress means that employees suffering from burnout, anxiety, or depression due to toxic work environments cannot claim protections or remedies under labour laws. The absence is clearly illustrated in the codified labour law of India. 

The Industrial Disputes Act, 1947 (ID Act)– S. 2(s) defines “workmen,” as anyone employed in manual, skilled, unskilled, technical, operational, clerical, or supervisory work but excludes those in managerial or administrative roles and supervisors earning above ₹10,000 per month. This exclusion effectively disqualifies most white-collar professionals from protections under the Act. This results in no entitlement to safeguards under s. 25F, which mandates one month’s notice or severance pay before retrenchment; neither to s. 25N, which mandates a 3-month notice period in large establishments and retrenchment compensation of 15 days’ pay for each completed year of service.

The Occupational Safety, Health, and Working Conditions Code, 2020 (OSH Code)- S. 6(1)(d) mandates employers to ensure a safe working environment, but the term “safe” is not explicitly defined to include mental health hazards. Unlike international labour standards, such as ILO Convention No. 155, which recognizes psychosocial risks, the OSH Code lacks any explicit mention of mental health hazards. Similarly, s. 18(2) authorizes the government to set occupational safety standards, including for hazardous conditions. However, the Second Schedule, which lists occupational diseases, does not include psychological disorders like burnout, chronic stress, or depression caused by toxic work environments or sudden layoffs. Further, s. 6(1)(c) requires employers to provide annual health check-ups, but there is no mandatory mental health screening. 

The Mental Healthcare Act, 2017– S. 18 grants the right to access mental healthcare, obligating the government to provide affordable, quality mental health services. Although the act suffers from critisicm suggesting that while it is progressive in principle, it remains largely unimplemented due to inadequate infrastructure, lack of trained professionals, and insufficient government funding. However, there is no provision mandating employer-funded mental health support for employees subjected to extreme workplace stress, retrenchment trauma, or burnout. Likewise, s. 29 tasks the government with promoting mental health and preventive programs, yet no corresponding duty is imposed on private employers to ensure workplace mental health safeguards.

The Code on Social Security, 2020 (SS Code)– Section 2(78) defines “social security” as measures ensuring access to health care, and income security in cases of unemployment, sickness, invalidity, work injury, and loss of a breadwinner. However, the SS Code does not explicitly recognize mental health conditions as a qualifying factor for social security benefits, leaving employees suffering from layoff-induced depression, anxiety, or burnout without financial or medical relief. 

Layoffs in white-collar sectors too remain largely unregulated due to the exclusion of these employees from the Industrial Disputes Act, 1947. This legal gap forces affected employees into prolonged civil litigation with no immediate recourse. A former tax consultant was explicitly told: “You are not counted as labour under Indian laws,” when he approached the labour authorities in Mumbai. These stories highlight how white-collar workers are susceptible to abrupt corporate downsizing because they lack legal protections against arbitrary terminations and endure job instability.

Case in Point: The EY Pune Incident

The consequences of this legal neglect became tragically evident in July 2023, when Anna Sebastian Perayil, a 26-year-old audit executive at EY in Pune, died in an incident linked to extreme work stress. Following her death, Maharashtra’s Labour Commissioner inspected EY’s Pune office and found that it was operating without a mandatory registration under the state’s Shops and Establishments Act, which caps working hours at nine per day and 48 per week. This raises a crucial question: If even existing protections related to working hours are ignored, what hope is there for mental health safeguards? Additionally, the legal tools currently available remain confined to procedural or registration-related violations, offering no framework to address the deeper mental health harms caused by such work environments.

Layoff Stress Isn’t A ‘Real Injury’

The most affected group of employees by the issue of poor mental health are usually the employees facing layoffs. To assist their situation the Code on Social Security, 2020, could have come to help, but unfortunately, it limits an “employment injury” to physical accidents and occupational diseases. Consequently, retrenched employees who may be suffering from anxiety, depression, or loss of self-worth receive no legal protections or compensation.

 A study on Mumbai’s Voluntary Retirement Schemes (VRS) highlights the mental toll of forced retirements. While framed as a voluntary measure, employees, especially those aged 50 and above, often accept VRS out of fear of retrenchment, leading to severe emotional distress. Many struggle to reintegrate into the workforce, facing financial instability, social isolation, and psychological distress. Notwithstanding these widely known effects, neither required support networks nor financial compensation for psychological distress are in place for impacted workers.  Those who are still working are also impacted by layoffs, which can lead to increased stress at work, survivor’s guilt, and ongoing job instability.  Researches, such as one on the Airbnb layoffs during COVID-19 show that widespread layoffs generate toxic work situations for those who survive them. 

 In corporate India, losing a job frequently results in an identity crisis that goes beyond monetary repercussions.  Professionals devote years to developing their careers and reputations, in contrast to blue-collar workers whose skills may be transferable to other jobs.  Social disengagement, anxiety, and depression are exacerbated by unemployment and a stigmatised mental health society.  This crisis is sustained by the lack of organised employer action, which deters impacted professionals from obtaining psychological assistance. Overwork is glorified in Indian business culture, which normalises burnout and discourages open discussions about mental health. Workers fear that admitting they are experiencing mental stress would make them appear weak or unfit for employment. This silence also applies to layoffs, when the absence of post-termination assistance exacerbates psychological effects that last for a long time.

Legal changes must specifically include mental health conditions brought on by the job as compensable injuries under the 2020 Code on Social Security. Employers have to be required to offer organised mental health services, such as severance-linked healthcare and post-layoff therapy. Psychological discomfort will continue to be legally invisible in the absence of such reforms, worsening the social and economic repercussions for impacted employees.

Recent empirical studies highlight a serious oversight in India’s labour law framework regarding white-collar mental health. A 2022 Deloitte report estimated that mental health-related challenges cost Indian employers $14 billion annually due to absenteeism, presenteeism, and attrition. Alarmingly, 80% of employees reported facing mental health issues, with a significant proportion either continuing to work under distress or resigning to cope. Complementing this, the 2023 Mpower survey found that nearly 48% of India’s white-collar workforce is at high risk, particularly in sectors like e-commerce, FMCG, and healthcare. These statistics expose the urgent need for statutory recognition of mental health risks under laws like the OSH Code and the Social Security Code.

Searching for the Right Balance in Defining ‘Toxic’ Workplaces

The primary concern in enacting such laws is misuse, where employees could falsely attribute poor performance to a “toxic” work environment. Without objective legal parameters, claims of workplace toxicity risk being highly subjective, leading to frivolous complaints and weakening legitimate cases.

Further, not all workplace stress is employer-driven. An individual’s mental health is shaped by both professional and personal circumstances. Determining whether an employee’s psychological distress arises from their 10-hour workday or their 14-hour home life is difficult. The law must, therefore, establish clear, work-related metrics for identifying toxic environments while excluding external personal factors from employer liability.

Guiding Principles For Future Laws

To ensure workplace mental health laws are enforceable and fair, they must be built on objective standards rather than subjective experiences. Overwork is a key contributor to workplace toxicity. Many countries recognize excessive working hours as a mental health hazard. India lacks clear guidelines on this. Laws should set maximum weekly work limits (e.g., 60 hours) and require mandatory rest periods. Employers exceeding these thresholds should be legally liable for mental health risks.

A structured mental health audit mechanism would create accountability. Companies should be legally required to conduct annual employee mental health surveys, assessing workload, stress levels, and job satisfaction. These audits should be anonymous in nature and be reviewed by neutral third parties or labour authorities. In case of persistent patterns emerge, corrective measures must be implemented by the employer.

As a workplace element, toxicity varies by industry and specific job roles. The IT sector might face prolonged screen time and isolation, the finance sector would have to deal with high-pressure deadlines and burnout situations, while consulting usually demands extensive travel and irregular hours from employees. A one-size-fits-all standard will rarely be applicable to such situations. Labour laws should mandate sector-specific mental health frameworks, for example restricting non-essential communication after official work hours in IT, or limiting overnight shifts in finance. If India bases its legal reforms on measurable, industry-relevant standards we can ensure a genuine healthy workplace environment for everyone without enabling misuse.

Who Should Adjudicate? Internal vs. External Committee

To settle disputes fairly, organizations need a clear and balanced process that ensures both speed and impartiality. Relying only on internal committees can lead to quicker decisions, but it also raises concerns about bias. These committees might help resolve issues before they turn into long legal battles, yet there is always a risk of conflict of interest. Employers may focus more on business priorities than employee well-being. At the same time, employees might hesitate to speak up if they fear backlash or feel unsupported. 

An alternative is to turn to external bodies such as labour tribunals or independent regulatory organizations. These groups can offer a fairer and more neutral way to make decisions, giving employees and employers a level playing field where concerns are heard and addressed without fear or favouritism. These bodies prevent employer influence over the resolution process. However, such external adjudication is often time-consuming and legally complex which again discourages employees from pursuing complaints & employers also often resist external oversight.

A hybrid model might offer the best balance between efficiency and fairness. Under this proposed system, an internal committee would conduct the initial review, allowing for quick resolutions in cases where both parties can reach an agreement. However, if an employee is dissatisfied with the outcome or suspects bias, the dispute should be escalated to an external authority. To ensure the proposed system functions seamlessly, HR teams must be sensitised to develop a sense of care towards affected employees and figure out reintegration strategies to help employees transition back to regular work with motivation and resilience. One such method could be clear anti-retaliation policies and periodic check-ins which can ensure employees feel supported post-resolution. Companies like Deloitte have introduced mentorship programs to provide career guidance, which fosters employee loyalty and long-term engagement. This is a temporary system which is to be reviewed after a few years of putting into use by taking feedback from both employees and employers and if the results are unsatisfactory, the system shall be revisited.

Addressing Counter-Arguments: Are Companies Really Responsible

One of the primary arguments against employer liability for workplace mental health is employee responsibility. Critics argue that stress is often a result of poor time management, lack of resilience, or personal issues, rather than employer negligence. If an employee procrastinates, fails to set boundaries, or struggles with workload management, should the company be held accountable? Employers provide tasks, but how an employee handles them is an individual concern. If we impose blanket liability it could lead to misuse as employees might blame workplace “toxicity” for personal inefficiencies. 

An additional challenge is the financial burden put on employers. This burden kicks in when workplace mental health protections such as counselling services and structured wellness programs are mandated or with regulated working hours which could increase operational costs for the business. Small and medium enterprises (SMEs) may struggle to afford such measures and increased compliance requirements could discourage businesses from expanding. As a result of these challenges, companies may face legal risks over employee mental health claims which would cause them to apply rigid hiring policies, fewer job opportunities, or greater reliance on independent contractual workers to avoid liability. 

In my opinion, these concerns are overlooking the long-term financial and structural benefits of mental health investment for these businesses. Today, global corporations already allocate resources for workplace wellness because they recognize that unchecked burnout leads to reduced productivity, high attrition, and reputational damage. They understand very well that such preventive mental health measures mitigate absenteeism, presenteeism (working while unwell), and frequent job turnover. Due to these issues business run costs are far more than the proposed proactive investment. Therefore, legal frameworks should not impose excessive burdens but must establish baseline employer responsibilities.

Conclusion: Where Do We Begin?

To sum up, when we attempt to implement any form of workplace mental health protection in India, we are bound to face significant challenges. Resistance from the employer is inevitable as many fears linger in the legal atmosphere surrounding the situation today. Additionally, it will prove to be difficult for courts and labour authorities to shape objective standards to distinguish genuine cases from frivolous claims, ensuring that the law is neither misused nor unfairly burdensome for any party.  Legal recognition shall act as the first step to countering the arising problems. Normally, laws often have the chance to be amended to evolve and address emerging issues, and mental health should be no different. Several countries have demonstrated that well-designed policies improve both work-life balance and corporate productivity. France’s “right to disconnect” laws, Japan’s karoshi (death by overwork) regulations and Sweden’s strict mental health mandates prove that protecting employees doesn’t have to come at the cost of productivity.

The conversation around workplace mental health protections in India is long overdue. The absence of clear legal safeguards leaves employees vulnerable and employers unaccountable. While challenges exist, they should not be a reason for inaction. Public discourse, industry consultation, and phased legal reforms can help craft a framework that benefits both employees and businesses.

**Rudra Sinsinwar is a third-year B.A. LL.B. (Hons.) student at the National Law School of India University, Bangalore. His interests lie in the fields of corporate law, financial market regulation, and competition law, and he enjoys thinking about how legal systems adapt to a changing economy. He has interned with multiple law firms and policy organisations, and writes on questions that sit between law and business. He remains curious about how rules shape markets, and how ideas move between courtrooms, boardrooms, and legislatures.

**Disclaimer: The views expressed in this blog do not necessarily align with the views of the Vidhi Centre for Legal Policy.