RIGHTS AND OBLIGATIONS OF EMPLOYERS & EMPLOYEES DURING COVID-19

Gunjan Chhabra, Partner, Adwitya Legal LLP[1]

The CoronaVirus Infectious Disease, or COVID-19 has been declared a pandemic and Epidemic by several countries all over the globe. It is still growing and at present seems to be having a long-lasting and deep effect on global economies. In such a scenario, various Organizations, Employers, workmen, labour and Employees, are interested to safeguard their revenues, incomes and economic interests. This article focuses on the rights and obligations of Employers and Employees during the times of COVID-19 outbreak, lockdown and social distancing.

SALARIES

An oft asked question in this time is, whether Employers and Companies have a continued obligation to pay salaries or not. Most preferable in such a scenario would be of course that, if the Employer can afford to continue to pay salaries at the rates they’ve been doing so, they should do so. However, the difficulty arises when it is not viable for the Employer to continue doing so because of the nature of the industry.

If the Employer is being unable to pay salaries at the current rates, it is always advisable to come up with a solution that can be decided mutually between the Employer and the Employees. However, that being said, any reduction in salaries is subject to be the minimum guarantees provided under law. For instance, any obligations under the Minimum Wages Act, cannot be overridden even by express consent.

Usually, there is no Force Majeure clause included in the Employment Letter or Appointment letter of the Employee, but in case it is wide enough to allow a salary cut in these extraordinary circumstances, then even that can be taken recourse of. That being said, salary cuts or so-called “leave without pay”, would of course invite the consequences of Retrenchment as per law, and the same safeguards need to be followed. Conversely, Employees have the right to take legal actions against Employers if the pay cuts are induced forcibly, especially if they are violative of the law, or the Employment contracts in question.

Of course depending on the kind of industry we’re talking about, there could be a method of continuing to render services, and concomitantly continue salary obligations of the Employees. For instance, where a work from home could be a viable option, the same can be used not only to generate revenues for the organization, but also in turn pay out the salaries.

TERMINATION

As previously mentioned, Termination of Services or Layoffs should be avoided, if an amicable resolution can be achieved by means of entering into a mutually decided course of action. However, if tooth comes to nail, yes, Employers are permitted to terminate or lay off Employees. The only condition which would need to be fulfilled would be to follow the mandates provided by law for these actions to be taken. 

INSURANCE OBLIGATIONS

Questions have also arisen whether Employees would be duty-bound to keep paying their ESI Contributions, as mandated, or can they save money and use it for payment of salaries/wages. In this regard it is important to note, that the Government has recently issued a slight relaxation. From March, 2020 onwards, a relaxation has been given that instead of the usual 15 days time period for depositing the ESI Contributions, a relaxed time period of 45 days is provided for compliance. This does seem to give some ray of hope to Employees.

On the other hand, Employees have been assured that they will be able to utilize their Insurance entitlements, even if the illness or death is caused due to COVID-19. The Life Insurance Council of India, by a press release, has stated that all COVID-19 related death claims shall be honoured, and the same will not be ignored under the Force Majeure clause of Insurance Contracts. Similarly, Workmen will also be entitled to use their ESIC entitlements for illness or death caused due to COVID-19 and the same will not be covered under Force Majeure event.

WORK FROM HOME

The Government Advisory which has been issued, states that all commercial and Industrial Establishments which are not engaged in providing essential services have to now be closed. This is to ensure the social distancing norms are followed to prevent further spread of the epidemic.

In view of the same, The Employer is well within its rights to ask its Employee to work from home, even during the COVID-19 lockdown, subject to some conditions. Of course in the question, where the Employee is rendering manual labour, it may very well be impossible to impose a “work from home”.

However, in other circumstances, wherever possible the employer has a right to ask the Employee to Work from Home. This is because under the Indian Law, a mere closure of the office premises does not mean, and is not defined to be, declaration of a Holiday. 

In this case, the risk that Employers may run is, to end up giving personal access to the Confidential Data and Trade Secrets of the Company, from a remote working environment. It goes without saying, that all clauses of Non-Disclosure and Confidentiality under any normal Employment Contract would apply equally to the Employees who are working from home. So the risks which a Company runs for providing Work From Home may even be confidentiality related, but that is a call to be taken by each Employer or Company.

EFFECT OF GOVERNMENT ADVISORY

After the declaration of COVID-19 as a pandemic here in India, there have been government advisories, issued from time to time, for the following:-

  1. The Imposition of Work from Home;
  2. The employers should not terminate their employees, particularly casual or contractual employees or reduce their wages;
  3. If any employee takes leave(s), he/she should be deemed to be on duty without any consequential reduction in wages; and

This has been troublesome for various Employers who simply cannot afford to pay out full salaries in this time. However, now in April, 2020 the Government has clarified that the payment of salaries by employers during lockdown is non-mandatory. It is now reduced only to a “moral obligation” and not a “statutory obligation”. So as long as the above-stated pre-conditions for any kind of reduction are followed, it would not really impose a threat to the Employers or Companies.

If you’re interested to read about whether COVID-19 & the lockdown can be termed a Force Majeure event under Commercial Contracts, please read here.


[1] Gratitude is expressed to Mr. Soumya Bhattacharjee, currently a student of law interning with Adwitya Legal LLP, for his research inputs on the subject.

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