What an employer needs to do and what an employee can expect from the employer in this COVID-19 epidemic under the current law and advisory provided by the Ministry of Labour & Employment and Ministry of Home affairs.
The central and state governments of India have taken effective and concrete steps, showing strong will, including lock-down, has been strongly complied by the government authorities in three faces till 17th May 2020 i.e. of 54 days as a major step to break the virus chain through effective social and physical distancing.
80-90% private/ non-government employers and employees have been affected by this lockdown, and it’s imperative to understand the relation between these two under the existing laws and government advisories as existing labor laws apply to the normal situations and there is no particular statute to manage this ongoing crisis.
Central and State Governments have invoked Disaster management act 2005 and Epidemic Diseases Act, 1897. Advisory issued by the Ministry of Labour and Employment dated 20th March 2020 and order on 29th March 2020 by the Ministry of Home Affairs are most important and have significant relevance.
There is also a ruling by honourable Supreme Court of India dated 30th of March 2020 in Sri Alakh Alok Srivastava Vs Union of India. It’s imperative to keep maintain employees on payroll during the lockdown, whereas the employer can take commercial decisions regarding manpower/workforce after lockdown period.
In the way of protecting interest of employer’s and employee the government has shared various orders and advisories.
Benefits to the Employer
There are certain benefits has been announced by the central government, some of listed below:
- PF contribution from Government of India: Central government to pay entire 24% PF contribution for businesses having less than 100 employees 90% of whom earn monthly wages up to INR 15000 for 3 months i.e. March, April, and May.
- Extension to comply statutory compliances: Government has extended the statutory timelines for making ESI contribution, filling unified annual returns under labor laws for 2019, filling electronic challan-cum-return under EPF act by employers who have disbursed March wages.
- Withdrawal of PF: Also EPF Scheme amended to reduce employee’s dependence on income from employers and enable them to withdraw up to 75% of PF accumulation or up to 3 months wages, whichever is lower.
- CSR Benefits: Ex-gratia paid to employees to combat COVID-19 admissible towards CSR expenditure on an onetime exception.
- Insurance: Insurance companies directed to cover claims reported under COVID-19 if the company’s medical insurance cover for employees includes hospitalization.
Obligation related to wages and salary payment to the employee:
Ministry of Home Affairs (MHA) ordered on 29th March 2020 “All the employers, be it in the Industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their workplaces, on the due date, without any deduction, for the period their establishments are under closure during the lock-down”
The above statement says the employer will avoid any kind of reduced (employer cannot give fewer days of salary), deferred (Employer cannot say pay you the due salary after few months) or deducted wages. However the definition of workers and wages is not clear.
Definition of Workers:
Here we can see worker is used as in general term this would include workmen, non-workmen governed by Shop and establishment act. Managerial and supervisory exempt from Shop and establishment act e.g. employees working at corporate offices.
Definition of wages:
As far as wages are concerned one can follow “Payment of Wages Act, 1936”
“Wages” means all remuneration, whether by way of salary allowances or otherwise payable to a person employed in respect of his employment terms.
As per the description of wages under this statute the employer will pay all remuneration, this includes part of the amount payable under the settlement or court order/award, also part of the payment in the form of overtime/holidays/leave period, etc. Other remuneration (whether bonus or anything else) under employment terms also needs to be paid to the respective employee
Choose to Not pay:
As per the description of wages under this law an employer can choose to not pay certain component of salaries like the employee bonus that is payable but not under the employment terms, house allowances, food allowance, pension, and provident fund contribution, traveling allowance, gratuity, special allowances/expenses
No work, no pay:
Many employers argue to implement the principle of No work, no pay, but it is only applicable if the employee is willfully absent from work, but here the employment premise mandated to be closed and employees have been directed to stay home. Hence it is not applicable and violation of an order issued by the Ministry of home affairs on 29th March 2020.
Modification complying minimum wages law:
After the lock-down period the employer can reduce salaries through mutual agreement by way of modification to their employment agreements in adherence to minimum wage requirements for both workmen and non-workmen employees.
Employers may opt for nonpayment of contractual bonus, depending on employment agreement or bonus policy but the statutory bonus to be paid to eligible employees.
By the order of Ministry of skill development and entrepreneurship dated 30th march 2020 provision of full stipend payment to apprentice during this lock-down period has also been made.
The next concern for an employee and employer is the options for the accumulation of various leaves during this lock-down period. Employers can encourage but not compel employees to avail earned leaves during this lockdown period. Because earned leave is a statutory entitlement.
Treat employees as “being on duty”:
In various lock-down orders from certain states it has been mentioned that employers shall treat employees as “being on duty”. In this way employers cannot say employees to opt for unpaid leaves.
In UP and Karnatka if the employee is affected by COVID 19, the employer has to give an additional 28 days of paid leave to the employee. However it’s not an obligation in other states. Employers can give sick leave in other states, as this is an employer’s duty to provide employees a safe environment to prevent this fast communicable disease.
Lay-off as in Natural Calamity:
There is a catch as Ministry of Finance’s office of memorandum considers Covid-19 as “Natural calamity” under Finance ministry clauses of Government of India’s manual for procurement of goods, 2017. This may lead to COVID-19 induced business disruption that may be considered as “natural calamity” in labor matters. As section 25M of the ID Act states certain factories need the prior permission of labor authorities before laying of workmen, and Natural calamity is an exception.
Now for lay-off It is basically keeping employees on payroll on reduced wages due to lack of work, the employer gets more flexibility not dependent on a grant of prior permission from labor authorities.
In the same way termination is not possible during the lockdown period. Probationers, temporary and contract employees also protected but fixed-term employments expiring during lockdown need not be renewed. Also there is no obligation to renew contract labor agreements whose term is expiring during the lockdown.
For new Joiners:
The other question arises for new joiners, for which employers are advised to mutually defer joining date or revise employment terms.
To get the more details one can refer https://www.mha.gov.in/notifications/circulars-covid-19
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