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COPING WITH COVID-19 AND UNDERSTANDING ITS POSSIBLE IMPACT ON EMPLOYERS AND EMPLOYEES

April 10, 2020

By: Vikrant Rana & Vibhuti Vasisth

On March 24, 2020, the Country’s Prime Minister, very significantly, announced a 21-day nation-wide lockdown. This lockdown, consisting of nearly one-fifth of the world’s population has been implemented so as to ensure effective social distancing norms, thereby preventing and containing the spread of COVID-19.

While the lockdown is indisputably critical to contain the pandemic, the impact on businesses and the economy can also not be ignored. There have been several measures that the Central Government and the State Governments are contemplating and putting in place, keeping in mind the interests of the people as also duly considering the rapidly evolving limitations and restrictions on various Indian establishments and employers.

The Ministry of Labour and Employment Law in its letter[1] dated March 20, 2020, addressing the Chief Secretaries of all the States, emphasised that in view of the present challenging situation, all the Employers of public/private establishments may be advised to extend their coordination by not terminating their employees, particularly casual or contractual workers from job or reduce their wages.

For the benefit of Indian establishments and employers, we have endeavoured to set out a list of questions that we have been asked over the last couple of weeks by employers on managing their businesses and coping with COVID-19.

  1. What is a lockdown, and whether all establishments need to close-down?

A Lockdown has not been specifically defined under any statute. However, under Sections 2, 3 and 4 of the Epidemic Diseases Act, 1897, the Government of India (“GOI”) may take certain special measures and prescribe regulations so as to prevent the spread, and contain the outbreak of dangerous epidemic diseases.

All establishments, except the ones engaged in services relating to essential commodities, as listed in the guidelines[2] issued by Ministry of Home Affairs (“MHA”) on March 24, 2020 and the addendums[3] to the same are required to stay shut. Several State Governments have also issued notifications describing and elaborating the scope of ‘essential services’ and the permissions required to continue operations thereof.

To stay operational during this lockdown, the employer’s establishment must be expressly exempted from the lockdown, either by the Central or the State Government. Further, employees who are working in such exempted establishments must be provided with passes or letters that would enable and permit them to travel during the lockdown. Also, all health and safety directions prescribed by the Government to contain the pandemic would require strict adherence.

  1. Can employees be asked to work from home during the lockdown? If yes, do they also need to be paid in full for such work?

Yes, employees can be asked to work from home during the lockdown to the extent that the nature of their work allows for the same. During this period, the employees would have to be paid their full salaries.

  1. In the context of industries where employees cannot work from home, do they still need to be paid during the period of this lockdown?

Yes, even in industries where the employees cannot work from home, they would be required to be paid during the period of the lockdown. The Central Government, in respect of a place of employment which has been made non-operational due to COVID-19, has issued a circular that the employees of such unit(s) shall be deemed to be on duty[4]. Similar directives have been issued by the State Governments of Karnataka, Haryana, and Maharashtra. Additionally, the Ministry of Home Affairs on March 29, 2020, addressed the State Governments and Government ministries/departments, requiring employers of all industries, shops and establishments to pay wages to all workers without deductions, during the period of the lockdown[5]. The Government of Telangana[6] has directed all shops and establishments (other than those exempted) to be closed during notified lock down period, and declare such days as paid holidays for all categories of employees.

  1. During the lockdown, can employees be asked to utilize their accrued annual leave? Once it has been exhausted, can the employee be placed on an un-paid leave?

No, employees are entitled to use their accrued annual leave at their discretion, subject to due-approvals from their managers. While employees may be encouraged to use their accrued annual leave, they cannot be mandated or directed to do so.

As a general rule under the domestic law, employers cannot mandate employees to proceed on unpaid leave. Therefore, even in the context of the lockdown, if an employer requires or mandates its employees to not show up to work as a preventive measure or let’s say, for the duration of the lockdown, the employees would still have to be paid for such days.

  1. In industries exempted from the lockdown, can employees be forced to take sick/ annual leave if they have had recent travel history or have been in contact with persons who are infected, or are exhibiting symptoms of COVID-19?

Most States have issued certain notifications/orders prescribing that persons who have come in contact with people who have been infected or have had recent travel history self-quarantine for 14 to 28 days.

In this regard, where an employer is allowed to work during the lockdown under law, but the employee is unable to attend work due to the requirement to self-quarantine, the employer may possibly require the employee to take his/her annual leave or sick leave, subject to any specific Government notification. However, if the employee had travelled because of work or came in contact with a sick person due to this work, the employer may not be able to force the employee to utilize their sick or annual leave.

The Government of Karnataka has also issued a notification in this regard, mandating the grant of 28- days paid leave for employees who are infected with COVID-19.  Also, the Government of Uttar Pradesh has required that employees who are infected by COVID -19 or who are suspected to be infected are to be provided with 28-days paid leave by the concerned employer.

  1. Would it be okay to ask the employees to share their medical test reports with the employer? Are there any concerns here, taking into account a data-privacy perspective?

Generally, medical data in the electronic form is considered personal and sensitive data, employers may require employees to submit a fitness/medical certificate from a registered medical practitioner, stating the employee is healthy and eligible to work.

Where a medical/fitness certificate is being provided in its electronic form, the employer would be bound to strictly adhere the requirements prescribed under the Information Technology Act, 2000 (“IT Act”) and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (“Security Practices Rules”).

  1. Would employers have any obligation to report employees who have had recent travel history, or are exhibiting symptoms of COVID-19?

Presently, there are no obligations placed on an employer to report employees suspected of being infected with COVID-19. However, as a best practice, it is always recommended that the concerned employers advise such employees to seek medical help and/or inform the local authorities of their condition.

  1. In industries exempted from the lockdown, can employees refuse to report to work fearing possible contraction of COVID-19?

Currently, an employee cannot refuse to report to work where the employer has been permitted by the government to carry on operations, unless on the contrary, minimum standards of health, safety, and hygiene to contain the spread of the virus are not being followed by the concerned employer.

  1. Is it possible for employers to pause benefits and incentives till the business situation normalises?

No.  The Ministry of Home Affairs issued a notification dated March 29, 2020, addressing all State Governments and Government ministries/departments, requiring employers of all industries, shops and establishments to pay wages to all workers without deductions, during the period of the lockdown[7].

  1. Would an employer be allowed to implement a reduction in force because of the COVID-19 impact on the business?

As stated in the preceding paragraphs, the Central Government has issued a circular stating that where place of employment is made non-operational due to COVID-19, the employees of such unit would still be deemed to be on duty[8]. Similar circulars advising/requiring/directing employers to not reduce or stop salary payments or to terminate employment(s) have been issued by various State Governments including the Government of Karnataka, Haryana, Telangana[9] and Maharashtra.

Having said that, in light of the present circumstances, it may be possible that employees may challenge their termination in labour courts as wrongful termination, and given that the termination was during the COVID – 19 outbreak, it may also be possible that the courts may take an approach that could be sympathetic to the employees.

  1. What happens when an employee has contracted the virus?

As of now, there is no requirement for an employer to compensate employees who have contracted the virus. However, as mentioned in the preceding paragraphs, certain State Governments have issued notifications/orders/directives requiring employers to grant 28-days of paid leave to the employees who have been infected with COVID – 19.Where an employee gets infected as a result of coming to work, it may also be possible for the employee to file a tortious claim for damages against the employer.

RECENT COVID-19 UPDATES

Furthermore, with the rapid increase in the number of novel coronavirus cases in the Country, as mentioned hereinabove, the Central as well as State governments have issued various notifications, regulations and guidelines. Key takeaways from the same (as on April 02, 2020) are listed herein below:

A) Ministry of Home Affairs directs penal action for violation of Lockdown guidelines:

On April 02, 2020, the Home Secretary wrote to the Chief Secretaries of all States seeking strict compliance with the nationwide lockdown guidelines and measures. It was reiterated that strict action by the concerned Authorities would be taken against the violators. Please find here, the first[10] and second[11] clarifications issued by the Ministry in respect of the lockdown, in this regard.

B) To assist in easing the economic burden and to provide certainty for workers during these uncertain times relating to COVID-19, the following States have issued certain relief measures:

State Measure
1. Maharashtra On March 31, 2020, the Industries, Energy and Labour Department of Maharashtra issued a directive to all private establishments including factories, companies, shops (excluding the essential services), stating that all workers, whether contractual, outsourced, temporary, or daily wage workers, who are forced to stay home/ quarantine as an effect of the lockdown, are presumed to be on duty. Employers have been directed to ensure that such workers are paid their entire wages and allowances.
2. Telangana On March 28, 2020, the Government of Telangana has declared paid holidays to all categories of employees/workers who are employed in factories (that have been forced to shut-down their operations, in the light of COVID-19).

Further, on March 30, 2020, the State Government notified certain relief measures for the migrant workers, including but not limited to, provision of ration and money to enable such workers to take care of their requirements, provision of cooked food, provision of basic amenities such as shelter, drinking water and medical care.

3. West Bengal The Government of West Bengal issued additional directions relating to migrant workers and the lockdown guidelines on March 29, 2020, directing that all employers, including the Industrial and commercial establishments to make wage payments to their workers on the due date, without any deduction for the period such establishment was closed due to COVID-19.

Further, where the workers, including the migrant workers are living on rent, the landlords are directed to not ask for rent for a period of one month.

4. Haryana Vide a letter dated March 29, 2020[12], the Government of Haryana issued similar guidelines in respect of workers including the migrant workers. The employers were directed to not deduct salaries, provide for adequate arrangement of temporary shelters, food etc., for stranded workers, etc. Landlords were directed to not ask for rents from such migrant workers for a period of one month, and it was further emphasised that landlords who are forcing labourers and students to vacate their premises, would be subjected to strict penal action.
5. Uttar Pradesh On March 29, 2020[13], the Uttar Pradesh Government issued certain relief measures to contain the spread of COVID-19, which include but are not limited to the following:

Advise to the owners/ employers of the factories to not remove migrant workers, to provide for leave with wages, etc.

6. Karnataka The Government of Karnataka, on March 31, 2020, issued guidelines thereby extending the period of lockdown up to 00:00 hrs of April 14, 2020. All establishments providing essential services have been exempted from this notification, and all other conditions and instructions mentioned in the previous orders remain unaltered and in-force.

 

On Termination and Payment of wages:

Certain State governments, such as Government of Haryana, Gujarat, Telangana, Karnataka and Uttar Pradesh have issued advisories/orders to employers to refrain from terminating their employees and workers and from reducing their wages.

Employment schemes adopted by Germany[14]:

Amid the all-round disruption caused to the economy by the novel coronavirus outbreak, a concern across the world is the possibility of loss of jobs. Various governments have unveiled various measures to address such concerns, and one of the most talked about is Kurzarbeit, Germany’s existing scheme that provides for partial compensation for a worker’s earnings in such situations, and now modified to account for the current crisis.

How the scheme works

Kurzarbeit is German for “short-work”. The policy provides for a short-time work allowance, called Kurzarbeitgeld, which partially compensates for lost earnings during uncertain economic situations. The short-time work scheme cushioned the impact of the economic downturn on unemployment, with an average reduction in working hours by one-third. Further, while the scheme allows employees to work for shorter hours it also guarantees at least 60% of the employee’s net pay. Certain reports also suggest that even where an employee is not working during the closure (as a result of the nature of their job), the employee would still get his salary.

The policy was rolled out during the 2008 economic crisis and was intended to ease the economic burden of the employers and also maintain the labour-market structures by helping the employees retain their jobs.

We are continuing to track the latest updates in this regard, and shall keep you updated.

 

[1] D.O. No. M 11011/ 08/ 2020- Media, issued by the Ministry of Labour and Employment Laws at https://labour.gov.in/sites/default/files/file%201.pdf

[2] https://mha.gov.in/sites/default/files/Guidelines.pdf

[3]https://mha.gov.in/sites/default/files/MHA%20order%20with%20addendum%20to%20Guidelines%20Dated%2024.3.2020.pdf and https://mha.gov.in/sites/default/files/PR_SecondAddendum_27032020.pdf

[4] https://labour.gov.in/sites/default/files/Central_Government_Update.pdf

[5]https://mha.gov.in/sites/default/files/MHA%20Order%20restricting%20movement%20of%20migrants%20and%20strict%20enforement%20of%20lockdown%20measures%20-%2029.03.2020.pdf

[6] https://covid19.telangana.gov.in/wp-content/uploads/2020/03/GO-45.pdf

[7]https://mha.gov.in/sites/default/files/MHA%20Order%20restricting%20movement%20of%20migrants%20and%20strict%20enforement%20of%20lockdown%20measures%20-%2029.03.2020.pdf

[8] https://labour.gov.in/sites/default/files/Central_Government_Update.pdf

[9] https://covid19.telangana.gov.in/wp-content/uploads/2020/03/GO-45.pdf

[10] No. 40-3/2020-DM-I (A), dated March 29, 2020 https://mha.gov.in/sites/default/files/MHAorder%20copy.pdf

[11] https://mha.gov.in/sites/default/files/PR_4thAddendumDated_03042020totheLockdownmeasures.pdf

[12] http://csharyana.gov.in/WriteReadData/Notifications%20&%20Orders/COVID-19/10920.pdf

[13] No. 157/2020-CX-3, dated March 29, 2020

[14] https://indianexpress.com/article/explained/explained-germanys-kurzarbeit-scheme-for-payment-of-staff-hit-by-lost-work-hours-6329831/

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