Give Flexibility of Meal Cards to the Workers to Suit Modern Workforce Trends: AIOE-E&Y Report

AIOE-EY Report Released on Canteen and Meal Cards- Enhancing Employee Welfare through Meal Cards in Modern Workplace 

AIOE-EY Report on Canteen and Meal Cards- Enhancing Employee Welfare through Meal Cards in Modern Workplace highlights the need for giving flexibility to employers for providing meal cards in place of canteens given the changing nature of work environment. The practice has been followed worldwide in countries like UK, France, Brazil etc and offers a beneficial solution for employers and the employees. The report was released during the 90^th AIOE Annual Convention. AIOE is an allied body of FICCI which caters to a myriad of issues pertaining to labour & employment in enterprises to foster amicable industrial relations, built on mutual understanding, respect commonality of interest between employers and workers.

The report aims to examine the requirement for employers to provide canteen facilities to employees, assess the benefits and challenges, and analyse the viability of electronic meal cards as an alternative. It explores the evolution of workplace canteens and meal cards in India, statutory regulations, and their impact on employee productivity, performance, and job satisfaction. It also explored the international landscape, highlighting businesses operating across the world are investing in canteen facilities, meal cards and other employee benefits solutions with a focus on employees’ health and wellbeing. The concept of meal cards, though predominantly prevalent in Europe, South America and Mexico, has also now grown across Asia. Meal cards have been prevalent in countries including the United Kingdom, France, Belgium, Brazil, Mexico and Japan.

The importance of adequate nourishment for general health and productivity at the workplace has also been highly emphasized by the ILO through the Welfare Facilities Recommendation (No. 102), which specify guidelines for the establishment of canteens, cafeterias, mess rooms and other food facilities. The study included a survey across sectors to gather practical insights, a comparison with similar flexible practices in labour welfare laws, and a review of international practices.

Based on an analysis of the responses of the survey, it was concluded that it may be beneficial for organizations to have meal cards as an alternate option for a canteen facility, considering the following aspects:

• Considering employees‘ dependency on the employer for providing daily meals, there needs to be some alternate mechanism in place to support provision of meals to employees, especially considering it may not be feasible for all organizations to setup a canteen facility (such as start-ups, SMEs, organizations following hybrid / remote working model, etc.).
• Additional cost / burden of managing a canteen facility and its capacity in a hybrid model – where number of employees attending office is variable and can change on a day-to-day basis. Also, since these organizations follow a hybrid working model, employees will not have access to an in-house canteen during days they work from home.
• Availability of alternate facility (restaurants / cafes, etc.) near office premises whereby meal cards can be used.
• As majority organizations outsource management of canteen facility to third party contractors, there will be additional burden in managing compliances with respect to contractor / contractual workforce.

Out of the surveyed respondents, around 52% of the total respondents have confirmed that they are providing meal cards or are considering providing meal cards to employees.

The report concludes with recommendations as below to promote meal cards as a flexible and beneficial alternative aligned with modern work trends, benefiting all parties –

1. Suitable amendments to be made in the statutory provisions to allow meal cards to be provided as an alternative to setting up of canteen facilities (specifically, Section 46 of the Factories Act, 1948 / Section 24 of the Occupational Safety, Health and Working Conditions Code, 2020 and the state specific shops and establishments laws).
2. The tax exemption for meal cards was fixed at Rs 50 in 2001 and has not been increased since. Considering the inflation and cost of healthy meals, it is recommended that the tax exemption limit may be increased in line with the inflation trend. Alternatively, the Ministry of Finance and / or the Ministry of Labour and Employment could periodically revise the tax-exempt amount under this category, taking into consideration the amount required to purchase a decent meal given the inflation trend.
3. Currently, as per the survey, 50% of the employers are offering meal cards to employees. The quantum of benefit is generally only to the extent of the tax exemption available (i.e., INR50 per meal). However, where meal cards are being considered as a replacement to canteen facility, employers may need to provide a higher entitlement under meal cards (irrespective of the tax benefit) considering the actual expense that is likely to be incurred by the employees on meals. The quantum of benefit to be provided may be prescribed by the central / state governments or be decided by each establishment in consultation with the existing trade union, if any, by way of an agreement. Since provision of meals through canteens is considered part of welfare measures to be provided by the employer to employees, the quantum of benefit to be provided via meal cards should also be treated as a statutory welfare measure for ensuring wholesome meals to employees, instead of being treated as a perquisite in lieu of salary.
4. Investment in research and development initiatives focused on optimizing meal card systems and enhancing the user experience based on feedback should be encouraged as the same will be a critical aspect in the development of meal cards as a better alternative.
5. Industry-wide collaboration between employers, meal card providers, food vendors and government agencies should be encouraged to establish industry-wide standards for meal quality, hygiene, and nutritional value, ensuring consistency and transparency. Spreading awareness on the use of meal cards and encouraging food vendors to collaborate with meal card providers is a key factor in ensuring success of this initiative. It will also be important for employers to collaborate with restaurants to set up their outlets in / near the workplace so that it is convenient for employees to use the meal card facility.