A Wide look upon the SACKING of Employment during novel Covid-19 Pandemic
Introduction of Corona: Date of Birth 31.12.2019
Full Name: Corona Virus, Known as Covid-19
Place of Birth: Wuhan China
Award: Declared as pandemic disease by WHO
Achievement: Worldwide
The more life of this Lockdown is extending, the more list of its impact in the human life is extending. In the first week of the lockdown, people were posting their relaxing gesture, happy & excited face on social media as they were feeling free from their regular workload but with the dwelling of the time lockdown become frantic and scared, motivation to get ready for office and face new challenge is being lost. But on the other hand, we also realize so many things i.e. Power of nature ‘How refresh button of nature works’, we came to realize the essential need of life ‘which is not expensive accessories and branded clothes but the food and family’, certainly some of us are focusing on improving their inner strength, reading lots of books to feed the mind, learning some new online courses and cherishing their hobbies etc. But during this lockdown, we also learned the importance of our hard-earned savings.
Meanwhile we also can not ignore the misdemeanors. As various complaint received to concern authorities regarding ‘Domestic Violence, Employee retrenchment, Rent Recovery, Cyber Crime, violation of contract and agreement & Cyber-crime’ etc. So, in this article we tried to widely discuss the legal & humanitarian ground of unemployment during lockdown with its best possible remedies available to employers and employee and try to mention the initiative took by top countries of the world and initiative taken by our govt.
SACKING OF EMPLOYMENT
Since the government has announced the lockdown, business of the industries/organizations is paused, and everyone is likely to surviving on their savings/profit/fund/reserves. Yet it is hard to calculate how long this lockdown will be continued. Since this lockdown, almost every day we read news about the sacking of employment-related to some big organization. Mr. Mahesh Vyas, Managing Director, and CEO of Centre for Monitoring Indian Economy (CMIE), noted that the unemployment rate has spiked to 23 percent post lockdown – a huge increase from 7.2 percent in January. In its latest findings, CMIE has discovered that between January and March, the number of unemployed increased from 32 million to 38 million. Even Indian economy is hugely impacted by this, analysts and industrial bodies said that the world’s biggest lockdown may have cost the Indian economy Rs 10-15 lakh crore during the 28-day period, Acuity Ratings & Research Ltd earlier in mid of this April month estimated that the lockdown will cost the Indian economy almost USD 4.64 billion (over Rs 35,000 crore) every day and lockdown will result in a GDP loss of almost USD 98 billion (about Rs 7.5 lakh crore). In this regard below are some important news about sacking of employment which inspired us to take a wide look on the matter:
> Recently on April 30, 2020 Reliance Industries has cut the pay of employees by up to 50 percent, according to a company letter, in wake of the coronavirus pandemic.
> One of the worst hit so far seems to be Fareportal, whose employees claimed online that over 500 people have been laid off, with termination letters coming in at 3 am in the night. Employees have been venting their anger on Twitter and asking for government intervention.
> Oyo gives pink slips to US staff, Expecting a long lull due to Covid-19.
> Centre of Indian Trade Unions (CITU) has said that at least 496 people working in Bengaluru’s IT and ITES sectors have already lost their jobs.
> Indian social commerce startup Meesho sacks over 200 people from jobs.
> Several Tech Start-ups Sack Employees Due to COVID-19 Lockdown Crisis, Experts Says Worst Is Yet to Come. Fareportal, tech companies like Meesho, Oyo, MakeMyTrip, GoIbibo, and many more have also trimmed their staff or announced furloughs. In the wake of this pandemic, many employees face the risk of being unemployed as businesses continue to remain shut for the third week.
> UDAAN lays off nearly 1,000 Contract staff to conserve Capital.
> MMT Makemytrip is reported to have plans to fire over 60 percent of its headcount that is not on its payroll.
> Insurance startup Acko reportedly let go of 45 to 50 employees.
> TravelTriangle has reportedly terminated about 50 percent of its workforce in just 10 days. Over 250-300 people have been asked to leave since March 20.
> Job‘s data suggests that the travel and transportation sector is one of the worst-hit sectors.
INVOKING PROVISIONS & STATUTORY LAW ABOUT EMPLOYMENT
The Central Government, invoking the provisions of the Disaster Management Act 2005 (DMA, 2005) has declared a lockdown until April 14. The State Governments invoking the provisions of Epidemic Diseases Act, 1897 (EDA) have framed certain regulations and have issued certain directions/guidelines/communications. The directions issued by the governments to employers to pay wages to all the workmen neither comes within the framework of the DMA and EDA nor is backed by a statutory law. Section 2 of the Act enables the government to prescribe measures to prevent the outbreak of such disease or the spread thereof.
Moreover, no law— including the Industrial Disputes Act, 1947, Payment of Wages Act, 1937, Code on Wages, 2019, Contract Labour Act, 1970, Inter-State Migrant Workmen Act, 1979, etc. do not envisage any situation of force-majeure or intervening circumstances like the present wherein the work is ceased owing to an epidemic or its implication relating to payment of wages. NOTE: “At first to stop the spread of bubonic plague, Mumbai Govt. introduced The Epidemic Diseases Act in 1897 to prevent the spread of epidemic diseases”.
GOVERNMENT CIRCULARS REGARDING PAYMENT OF WAGES & SALARIES
At a time when wages & salaries feels like a burden and when organizations aren’t generating any revenue, Government issue circulars to pay FULL wages to the workforce seems just like the cherry on the cake.
Recently, on March 20, the Ministry of Labour and Employment issued a circular advising all industry bodies, companies and enterprises to not retrench any employee during this time and keep paying them their full wages or salaries. Circular dated March 20, 2020 by Ministry of Labour and Employment
Subsequently, on March 29, the Ministry of Home Affairs issued an order to constitute an Empowered Committee under the Disaster Management Act of 2005, directing full payment of wages to the workmen. Circular dated March 29, 2020 by Ministry of Home Affairs
CUMULATIVE INTERPRETATION AND CLARIFICATION OF ABOVE CIRCULARS
The Government of India and State governments have called upon employers to pay wages for the lockdown period not only to the permanent workmen of an industrial establishment but also to contract workmen and inter-State migrant workers through Disaster Management Act of 2005, wide circular 29.03.2020, which covers workmen not the employee. As our Govt through ‘The union labour and employment ministry’ has set up control rooms across the country to receive and address on a war-footing, the grievances of workers who have been denied wages or retrenched during the national lockdown. Further labour ministry has made public a list of 60 officers- essentially labour commissioners in 20 regions across the country- along with their e-mail address and contact numbers. They will deal with distress calls from workers who are working under the ‘central sphere.
But circular dated March 20, 2020 issues by Ministry of labour and Employment for the payment of the salary of the employee is an advisory, not a mandate to follow for the employer as it would be a subject matter of the health in terms of profit/reserves of the company, moreover based upon the humanitarian ground.
FOR EMPLOYERS
From the circular issued by the Govt. it is clear that this is an advisory not a mandate for the employers so we can say that if it is possible for the employer to get the work done from home, then employer must comply with govt. circular dated 20.03.2020 and if it is not possible to get the work done from home and business in question is incurring financial losses then employer is not under any compulsion to follow circular. As there is no legislation in India mandating the payment of wages and salaries by the employer in case of forced shutting of businesses for a duration due to force majeure conditions. FICCI ‘Federation of Indian Chambers of Commerce and Industry’ has been seeking legal opinion on whether organizations are bound by law to provide remuneration to employees in the current crisis-like situation.
Rather than retrenchment employers may take any below measures to mitigate the losses:
1. One of the famous treatment is, reducing the cash component of the salary and compensating it with stock options, offering employees a share in revenues or profits while the company is in stress, and reducing number of hours or temporarily sending employees on sabbaticals or leave-without-pay.
2. Another way to keep employees motivated would be through non-monetary benefits such as promotions, bigger titles, and better flexibility.
3. Further employer can postpone the increment and the promotion of the employee.
4. Employer must keep in mind that he can reduce or deduct the salaries of employees who do not fall under the category of workmen. The reduction includes pay, not full but the part of the salary.
5. if the employer is able to break-even or support the business activities, he can keep the salaries/wages in abeyance for the period of lockdown in situations were owing to cessation of work, the company is incurring huge losses and on the verge of closure or become sick or insolvent.
6. Support the workmen/migrant workmen/casual works/contract workers who are unable to support and sustain during such challenges times as per the requirement of the Central Government, State Governments and on humanitarian grounds as termination or non-payment or reduction of wages would deepen the crisis and further weaken the financial condition.
7. An employer can lay off employees without payment of wages, but he has to follow the provisions of Industrial Disputes Act.
8. Layoffs and salary cuts have happened in many tech companies like Oyo, Meesho, Vogo, Koovs, Shuttl, TripActions, Holidayme, Hopscotch, Cleartrip, RentoMojo, Fareportal, Capillary, TravelTriangle, Quikr, Droom, UpGrad, Instamojo, Drivezy, GoIbibo, Ninjacart, Curefit, HealthifyMe, and Treebo. MakeMyTrip, GoIbibo, and RedBus have announced salary cuts across senior and managerial levels.
FOR EMPLOYEES
Despite of lack of any support from the government, employees cannot compel their employer to pay the salary however employees must be aware with their available rights. There are several important clauses in any employment agreement which can help the employee to fight injustice and ensure their rights are protected. Few of more important clauses to look for are:-
i. Force majeure: Current situation under COVID19 has been declared a pandemic classified as natural calamity by the World Health Organisation (WHO). Such situations generally hinder any business or contractual agreements materially and significantly. To safeguard one’s interest at such times force majeure clause plays a vital role. It specifies that the terms & conditions of any contract shall be relaxed and not be enforced in the event of failure to perform the duties. This clause hence provides a relief to the defaulting party and ensures that they are not penalized/ sued for non-performance of the duties as per the agreement/ contract. Thus employee are advised to invoke these clauses as required.
ii. Another important clause is the ‘Termination clause’ which is a mandatory clause of any contract. Termination clause defines the condition of termination of an employee i.e. ‘what should be the notice period before termination’ ‘duties to be performed during notice period’ etc.
Both the employer and the employee are bound by the terms and conditions mentioned in the employment agreement/contract. Neither employer nor the employee can go beyond the T&C mention in the agreement, if any of the party violate the contract then the aggrieved party may take the legal aid against the defaulting party and organization.
There are few remedies available for the employee, which one must be aware of:
1. Under Section 25C of the Industrial Disputes Act, which mandates employers laying off workmen also mandate the employer to pay a compensation equivalent to 50 percent of the wages subject to the terms and condition mentioned in the Act.
2. The Industrial Disputes Act 1947 mandates payment of lay-off compensation to the employees in the event of a natural calamity or other connected reasons.
3. Employee can file a legal suit if the employer fires him/her beyond the term signed in the letter of appointment/ contract.
4. In case any employee is in the course of travel for his official functions and is unable to return home, the employer should provide for safety and necessary accommodation requirements.
5. Employers (in India) are obligated to pay compensation to employees who are injured (which includes partial or permanent disablement) or die due to accidents arising out of or in the course of employment.
Citi India is offering a special compensation award to employees who are most likely to be impacted by Covid-19, a first-of-its-kind initiative in the country. It is providing Rs 18,000, subject to income tax, to each employee whose annual base salary is up to Rs 10.8 lakh. Employees who qualify will have the amount credited to their salary accounts in April.
IN THIS REGARD, GOVERNMENTS ACROSS THE GLOBE HAVE TAKEN MEASURES TO AID THE EMPLOYERS:
1. Australia has framed a “Jobkeeper” wage subsidy plan. An employer will be able to claim a fortnightly payment of $1,500 (before tax) per eligible employee from March 30, 2020, for a maxim.
2. Ireland has announced a Wage Subsidy scheme, which refunds employers up to 70 percent of an employee’s wages — up to a level of €410 to allow employers to pay their employees during the current pandemic.
3. The Netherlands allocated a package covering compensation of up to 90 percent of labor costs for companies expecting a reduction in revenues of 20 percent or more
4. New Zealand is to pay a lumpsum 12-week wage subsidy to support employers severely affected by the impact of Covid-19 (NZ$9.3 billion)
5. Malaysia is providing a wage subsidy of RM 600/month for three months for employees earning less than RM 4,000.
6. Canada has implemented a wage subsidy scheme. England has provided for 80 percent of average earnings to be subsidized.
7. Denmark has announced that it will cover 75 percent of wage bills.
TO RECOVER ONGOING SITUATION SOME MAJOR FINANCIAL STEP TAKEN BY INDIAN GOVERNMENT:
> The government in the State of Telangana decided a huge pay cut for its employees ranging from 10 percent to 75 percent. According to the proportion of cut, there shall be 75 percent cut in the salaries of the Chief Minister, state cabinet, MLCs, MLAs, state corporation chairpersons, and local bodies representatives and 10 percent cut in the salary for the Class IV retired employees and for all the Public Sector Undertakings (PSUs), Institutions employees.
> Government of Maharashtra has also announced a 60 % cut for all ministers and representatives of local bodies whereas a cut by 50 % in the salaries of Class 1 and 2 of the employees.
> Our hon’ble prime minister Narender Modi allowing CSR donations to CM Relief Funds.
> Extension of Time For Filing Of Returns On Account Of COVID-19.
> Health emergency funds: Rs 15,000 crore The central government recently announced an emergency health response package of Rs 15,000 crore. The details show that only Rs 7,700 crore is meant for the current fiscal and the rest (Rs 7,300 crore) for four years. Moreover, all “essential medical equipment and drugs” would be procured centrally.
> Ministries looking at scaling up activities after lockdown.
> World Bank emergency fund of $1 billion: In the meanwhile, the World Bank has granted $1 billion emergency fund to India for strengthening its infrastructure to contain COVID-19. This would mean the availability of Rs 7,600 crore (an exchange rate of Rs 76).
> Govt to deposit Rs 1,000 in women PMJDY accounts in two installments.
> NGOs, charitable trusts to get food grains from FCI for providing cooked food to poor.
> After 30% salary cut, MPs to lose another Rs 27,000 per month in allowances.
> TN CM announces Rs 1,000 to ration card holders, additional dole to workers.
In a post-COVID-19 era, recovery is going to be tough and shall require the support of all stakeholders, including the governments across the world, to get the economies back in shape. It’s remarkable to see that our government is already making a lot of efforts to provide the stimulus to the people of India but to revive the economy one could certainly consider officially subsidizing the wage cost for the lockdown period likewise other countries rather than announcing an advisory or directing the employers to mandatorily pay full wages to all. As per FICCI “India cannot afford a prolonged lockdown’, and urged the government to come up with a calibrated “exit strategy“ that aims towards bringing about a fine balance between normalizing economic and social activity and taking measures to contain COVID-19.
SOME IMPORTANT CASE LAWS IN THIS REGARD:
> All India Central Council of Trade Unions Seeks Intervention In Plea Against Full Payment Of Wages To Employees Amid Lockdown.
> If Business Does Not Start, How Long Will People Sustain Without Jobs?” SC Issues Notice In Plea Against Media Houses Laying Off Employees Amid Lockdown.
> A Writ Petition has been filed in Supreme Court by Karnataka Based Company ‘Ficus Pax Private Limited’ challenging the constitutional validity of Notification issued by the Central Government to pay full wages of workers during the lockdown.
> Government employees will not get a hike in DA, pensioners will also be affected.
Bibliography / Source
https://www.ndtv.com/business/reliance-industries-announces-pay-cuts-mukesh-ambani-to-forego-entire-salary-amid-coronavirus-covid-19-2221150
https://gadgets.ndtv.com/others/features/vc-backed-tech-companies-oyo-fareportal-makemytrip-big-jobs-data-job-losses-coronavirus-outbreak-2210991
https://entrackr.com/2020/04/exclusive-acko-insurance-layoff/
https://www.arabianbusiness.com/comment/445306-force-majeure-clauses-sword-or-shield
https://economictimes.indiatimes.com/industry/banking/finance/banking/citi-india-to-compensate-employees-impacted-by-covid-19/articleshow/75064806.cms
DISCLAIMER- This article is for informational purposes only and is intended, but not promised or guaranteed, to be correct, complete, and up-to-date. The author does not warrant that the information contained in this article to be accurate or complete, and hereby disclaims any and all liability to any person for any loss or damage caused by errors or omissions, whether such errors or omissions result from negligence, accident or any other cause. The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this article are for general informational purposes only.
The writer of this Article is Advocate Parul Agrawal, to contact for any query or related assistant you can write a mail on having email ID – Advparulagrawal@gmail.com.
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