In my opinion, work-from-home is more or less similar to "out-work" as in vogue in Beedi and Cigar Industry. It is discernible from your post that already he is a regular employee and the only change required is that he should be permitted to work from home on permanent basis. Hence the employer-employee relationship and the conditions of employment continue as before after approval of the proposal. Since the allotment, monitoring and control over the work assigned to such a work -from-home employee and remuneration paid by the employer etc., emanate from the premises of the employer, all the laws applicable to the establishment will also be applicable to him with necessary modifications. However, since the employee earns the income working from home, PT is to be paid to the local body of hos home town. Refer to your State P.T Act as well as to the employee's State, if it is different.