As the world of work undergoes drastic changes due to the sudden outbreak of the Coronavirus, there are so many questions pertaining to the legal implications of some actions that employers might take due to the COVID-19 crisis. Should they reduce salaries or withhold bonuses? Can they retrench employees? Should they provide pay to their employees if they are unable to come (or prohibited from coming) to work due to the COVID-19 outbreak? There are many questions like these that have a legal implication and must be answered by legal experts.
People Matters in collaboration with Economic Law Practice (ELP) brings to you this weekly FAQ series that addresses the many employment-related issues that employers are facing in the wake of the COVID-19 coronavirus.
In this weekly series, we have created a Frequently Asked Questions (FAQ) document, which will be posted every Friday and will be continuously updated with frequently asked questions by employers and employees.
Q1. What are standard operating procedures and are all establishments required to adhere to the same?
All industries must follow the Standard Operating Procedure (‘SOP’) as prescribed by the Government in Annexure I and II of the Order No. 40-3/2020-DM-I (A) dated 15.04.2020, till the time the restrictions are applicable. Some of the SOP which establishments are required to follow are:
- Regular sanitization of all areas in the premises;
- For workers coming from outside, special transportation facility is to be arranged;
- Thermal screening of everyone entering and exiting the workplace;
- Medical insurance for the workers to be mandatory;
- One-hour gap between two shifts; and
- Social distancing norms
Q2. Can hours of work and wages be reduced to absorb the impact on the business, during the lockdown and thereafter?
Till the nationwide lockdown remains in effect, the Government of India vide its order dated 29.03.2020 has directed all the employers to pay the wages to their employees/workers on the due date without any deduction. The said order has been challenged before the Supreme Court of India and the matter was directed to be listed after two weeks.
Unless there is any extension or amendment in the order or adjudication by any court of law on the issue of validity of the order dated 29.03.2020, Post the lockdown, in case the employer intends to change the conditions of service of ‘workmen’ covered under the Industrial Disputes Act, 1947 (ID Act), the employer has to follow the procedure prescribed under Section 9-A of the ID Act.
Section 9-A of ID Act makes it obligatory upon an employer who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule to give notice of desired or intended change. It cannot do so without giving to the workmen likely to be affected by the change, a notice of 21 days in the prescribed manner of the nature of the change sought to be proposed. Some of the entries which find mention in Schedule IV are:
- Wages, including the period and mode of payment;
- Compensatory and other allowances;
- Hours of work and rest intervals;
- Leave with wages and holidays;
- Withdrawal of any customary concession or privilege or change in usage;
As regards to non-workmen, generally, the terms and conditions of employment are governed by the contract of employment and the State Specific Shops and Establishments Legislations. Unless, there is a specific bar in the contract of employment and/or in the State Specific Shops and Establishments legislation, it will be open for the employer to reduce the working hours and the wages following the process agreed in the contract.
Q3. Is it possible for employers to pause the benefits and incentives until the business situation is normalized?
If the benefits and incentives are discretionary the employer may choose not to pay them to the employee. However, if the benefits and incentives form part of the remuneration/wages, the employer is bound to follow the procedure prescribed under the ID Act and/or the State-Specific Shops and Establishments Legislation (as applicable).
Q4. Have there been relaxations provided to employers in relation to social security contributions on behalf of their employees or compliance under employment laws?
The Government of India announced Pradhan Mantri Garib Kalyan Yojana Package. Under the said scheme, for the businesses employing less than one hundred employees, the Central Government has decided to pay 24 percent (i.e. the entire employee’s EPF contributions-12% and employer’s EPF & EPS contribution -12% ) of the monthly wages into their EPF accounts for three months i.e. March 2020- May 2020.
For availing the benefit of the above scheme, the establishment/factory (i) should already be covered and registered under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. (ii) The total number of employees employed in the establishment should be up to 100 (one hundred), with 90% or more of such employees should be drawing monthly wages less than Rs.15000/-.
Further, the Government has vide Notification No. P-11/14/Misc/1/2019-Rev dated 16.03.2020 extended the due date for ESI contributions for February and March to 15.04.2020 and 15.05.2020 respectively.
I am working in a private limited company since March 2019. During this lockdown period, I am working from home since 21 March 2020 till date. Last week I have received a call from my manager that the company has decided to deduct 25% of the salaries for each employee. I understood the situation of crises due to COVID C- 19, and so have accepted the same and now today I have received a call from them that I should take leave without pay for at least 3 months or till the time everything gets normal from COVID-19. I want to know, whether this is legal that the employer can ask any employee to take unpaid leaves and that too for the undefined period in the time of nationwide lockdown? I am even worried that they are trying to terminate me from the job, and so they are asking me to take unpaid leave for the time period... At least till everything gets normal. Please help.
As many businesses are facing a reduction in revenue due to the lockdown, they may choose to reduce the wages of lay off their employees. For the above query, we have assumed that the employee is not a ‘workman’ as defined under the ID Act. The terms and conditions of employment of a ‘workman’ can only be changed after the following procedure prescribed under Section 9-A of the ID Act. For detail please refer to query No.2
The terms and conditions of employment (including termination) is governed by the contract of employment, the State-Specific Shops and Establishments Legislations / Standing orders as may be applicable. The remedy available for an employee is to approach the court designated under the Shops and Establishments legislation seeking payment of any unpaid dues if the termination was against the terms agreed by the employer. The employee may invoke the Dispute Resolution mechanism under the Employment Contract/ Appointment Letter for redressal of disputes between the employer and the employee.