Termination of Employees amid COVID

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This post is written by Kavya Agrawal a student of Gujrat National Law University, Gandhinagar.

The covid-19 pandemic has led companies all over the world to downsizing and firing of employees without any valid and reasonable cause. The companies that were new and were in their first stage of struggle distinctly faced the problem of paying out remuneration to their employees as they were not earning any revenue during the period of closure of their business due to the lockdown. According to the official figures, around 2 lakh people were terminated from their jobs between March and May especially in the tourism and hospitality sector as these were the sectors which were hit hard.

The current lockdown due to the covid-19 outbreak has been imposed on the nation under the Disaster Management Act, 2005. The main purpose of creating the Disaster Management Act was to provide effective measures in the time of a disaster like this, where businesses have been shut down for months and there’s no revenue and paying wages and salaries is very burdensome for the employers. The Ministry of Home Affairs, under the Disaster Management Act, 2005 distinctly states that during this crisis, all the employers are supposed to pay the wages to workers at the workplace without any delay or reduction in the payment for the duration their establishments have been under closure. But, this statement was held to be vague as it did not mention as to who was included in the term workers and also failed to define the term wages, hence this could lead to misinterpretations of the order. By looking into the payment of wages act, 1993, we get to know which class of workers needs to get paid wages and as per section 3 of the Act, wages need to be paid to workmen engaged in factories, industrial and establishments defined under this Act. Employees carrying out superior functions like managerial and administrative work aren’t covered under this Act. The POW Act only cover employees who are not paid wages more than 24,000 per month. The term worker is defined under the factories act, 1948, as “person employed directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer whether for remuneration or not in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with the manufacturing process.” A workman is a person employed for manual, unskilled, skilled, technical, operational, clerical or supervisory work in an industry according to the Industrial Disputes Act, 1947.

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The termination of employees who are earning wages as defined under the POW Act, 1993, is not possible under the order by MHA till the time this lockdown continues. Such an action is not permissible unless stated in a contract between the employer and the employee or if the employee has given his consent for the same. As for the employees earning “salary and not wages”, there is no statutory mandate for the same. The government only protects the employees earning wages. However, the employers can settle on salaries personally through an employment contract with their employees. These employees, who are not covered by the MHA order can also be terminated by the employers if paying them a regular salary is leading to a loss for the business. This process would have to be carried out by the company, in accordance with the employment contract or the shops and commercial establishments act, 1958. This may include procedures like providing a notice period of at least 1 month before terminating the employee or giving a valid reason for the same. The termination letter should however be properly written so as to provide a clear reason for firing the employee from the job, as this matter may end up in the court later.

I am personally of the opinion that the employers should pay remuneration to the employees during the lockdown on a compassionate ground as everyone is going through a financial crunch at this point and if they want to, they can adjust that money later, once the lockdown reopens. If the employee is terminated from his job on unreasonable grounds, he can also approach the cobid-19 helpline number, and there is a high possibility that this forum would not go by the law and just overstep its jurisdiction and would look at this situation from a sympathetic point of view.

I would hence like to conclude by saying that wages are to be paid to specific categories of employees which include workmen of the industries and factories and employees of the shops and establishments which are not exempted by the SCE Act of the respective State. Employees who are not covered under of payment of wages act can be terminated from their jobs given that this has been stated in the employment agreement earlier. A huge number of workers have lost their jobs amid this coronavirus outbreak and according to the official figures of Centre for Monitoring Indian Economy (CMIE), around 122 million people lost their jobs in the month of April itself and almost 75% of them were either daily wage earners or small traders.

References:

  1. https://www.mondaq.com/india/employment-and-workforce-wellbeing/923218/faq39s-for-indian-employers-can-employees-be-terminated-during-covid-19
  2. https://www.latestlaws.com/articles/employment-issues-during-covid-19-crisis-an-analysis-of-the-mha-s-order/
  3. https://www.moneycontrol.com/news/business/economy/explained-lost-your-job-during-covid-19-heres-what-to-do-5286711.html
  4. https://www.theweek.in/news/india/2020/04/26/covid-19-and-the-ambit-of-the-disaster-management-act.html

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