What are the obligations of employers during lockdown?

The Novel Coronavirus (COVID-19) has affected almost every country in the world and India is no exception. To control the spread, the Indian government has imposed a mandatory countrywide lockdown. Only establishments and workplaces that provide essential services can continue operations, subject to adopting necessary measures to contain COVID-19.

Most companies across India had stepped up precautions and created task forces comprising senior leaders to monitor and respond to the evolving situation. With the nationwide lockdown that began on March 25, 2020, all offices and factories across the country are shut with few exceptions. Most have switched to a work-from-home policy for all employees, which brings its own challenges.

The government has issued various directives for the employers to be followed during lockdown foreseeing the hardships of the employees during the COVID-19 outbreak. These directives include paying wages to the employees, non-termination of the employees, etc. However, whether the same is binding on the employees or not is what is needed to be considered.

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Implications over employers during lockdown

As the business world 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 in light of the prevalent law of the country. Let’s take a look as to what the law says about the legal implications of an employer during the lockdown.

Employer’s obligation to not terminate employees

The employers may terminate/retrench their employees in accordance with the applicable rules. However, until the nationwide lockdown remains in effect, the Government of India has asked all employers to not terminate employees on humanitarian grounds.

Employer’s obligation to not reduce wages

In the absence of any specific law in this regard, the government lacks the authority to mandatorily obligate private organizations to pay wages to their employees. The Central Government has invoked the provisions of the Disaster Management Act, 2005 to declare the lockdown, and the State Governments have invoked the provisions of the Epidemic Diseases Act, 1897 to frame regulations and issue guidelines/directions to deal with the pandemic. However, the directions issued by the governments to the employers to pay wages to all the contractual and permanent employees neither comes within the scope of the Disaster Management Act nor the Epidemic Diseases Act. A simple reading of these two Acts makes it clear that neither the Central nor State governments have the power to direct private employers to pay wages to their employees during a lockdown situation. The Acts merely empower the committees established within its scope to frame strategies to deal with the disaster. Therefore, the directions issued by the governments to pay wages/or to not deduct wages can only be considered as advisory and cannot act as an obligation on private organisations.

Consult: Top Labour & Service Lawyers in India

Employer’s obligation to not defer/avoid payment of bonuses/raises

While observing the statutory obligations of an employer under the Payment of Bonus Act, 1965. Payment of bonuses/raises to employees is at the discretion of the employer. However, bonus must be paid to employees who are eligible under the Payment of Bonus Act, 1965. The Act regulates the payment of bonus of employees whose wage is below Rs. 21,000/- per month. The bonus provisions under the Act, applies to establishments (including factories) that employs or employed, on any day during an accounting year, 20 or more employees. Every eligible employee is statutorily entitled to receive a statutory bonus ranging from 8.33% to 20% of the wage. Under the Act, bonus is to be paid to employees within a period of 8 months from the close of the accounting year.

Employer’s obligation to provide pay to their employees if they are unable to come (or prohibited from coming) to work due to the COVID-19 outbreak

So far as the period of lockdown is concerned, until the nationwide lockdown remains in effect, the Government of India has directed all the employers to pay the wages to their workers on the due date without any deduction. After the period of lockdown is over, if the employee avails leave in excess of the leave available to him, the Employer is entitled to deduct wages in accordance with its extant policies. There is no legal bar on the Employer from deducting salary for days of absence (after the lockdown is over) in excess of the days provided for under the relevant policies/contract of employment. However, given the present scenario, it will be advisable for the employer to not deduct wages in the event an employee is suffering from COVID-19.

What legal implications should employers keep in mind while implementing work-from-home?

Key employment law considerations that employers should keep in mind when implementing work from home are:

Hours of Work: The concept of work from home is not specifically regulated or governed by statute. Therefore, in the absence of a specific statute, the employment laws that would otherwise be applicable to employee when they are working from the employer’s establishment would continue to apply. In this regard, work hour and overtime laws would continue to apply to employees. Hence, an employer would have to be mindful that employees do not work beyond their regular working hours and adhere to relevant overtime requirements.
Confidentiality and Data Security: One of the primary considerations when it comes to allowing employees to work from home is confidentiality and data security. Therefore, it is recommended that employers take additional data security measures to ensure that their IT infrastructure and resources are protected. Certain employers have resorted to geo-tagging of their devices to ensure that their data security and confidentiality is not breached.
Productivity and Performance Tracking: Given that in most instances the standard processes for productivity and performance tracking have been developed for employees working out of the employer’s establishment, employers would have to now adapt these methods to employees working from home. In this regard, there are a number of applications that are available for employers to monitor their employees work remotely. In certain circumstances, employers also require their employees to periodically provide summaries to their managers of the work that they are doing.
OSP Licences: To facilitate employers to allow employees to work from home, the Department of Telecommunications has through circular dated March 13, 2020, issued certain relaxations in the terms and conditions prescribed for Other Service Providers (OSPs), with respect to the ability of their employees to work from home. The exemptions/relaxations are available till April 30, 2020. This circular inter alia exempts OSPs from the requirement to pay a security deposit and have an agreement to enable work-from-home options or seek prior permission to allow work from home. Further, OSPs have been exempted from the requirement of having a secured VPN from an authorized service provider. OSPs may now use secured VPNs configured using ‘static IP’ addresses by themselves to enable interconnection between the home agent position and the OSP center with pre-defined locations.

Connect with an expert lawyer for your legal issue

How can a lawyer help?

During this time of unrest, issues related to employment are most likely to arise due to a lot of confusion going on around in the minds of the employees. Moreover, a situation like this is an unprecedented one and requires the help of a legal expert in case an issue arises. This is why it is important to have a labour lawyer by your side who can guide you with the right steps to be taken and help you in doing the needful to avoid such issues. A labour lawyer, being an expert in the service sector laws, can help you understand the options available to you in situations like these and can also assist you with the necessary procedures in order to resolve salary or job-related issues.

The Novel Coronavirus (COVID-19) has affected almost every country in the world and India is no exception. To control the spread, the Indian government has imposed a mandatory countrywide lockdown. Only establishments and workplaces that provide essential services can continue operations, subject to adopting necessary measures to contain COVID-19.

Most companies across India had stepped up precautions and created task forces comprising senior leaders to monitor and respond to the evolving situation. With the nationwide lockdown that began on March 25, 2020, all offices and factories across the country are shut with few exceptions. Most have switched to a work-from-home policy for all employees, which brings its own challenges.

The government has issued various directives for the employers to be followed during lockdown foreseeing the hardships of the employees during the COVID-19 outbreak. These directives include paying wages to the employees, non-termination of the employees, etc. However, whether the same is binding on the employees or not is what is needed to be considered.

Connect with an expert lawyer for your legal issue

Implications over employers during lockdown

As the business world 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 in light of the prevalent law of the country. Let’s take a look as to what the law says about the legal implications of an employer during the lockdown.

Employer’s obligation to not terminate employees

The employers may terminate/retrench their employees in accordance with the applicable rules. However, until the nationwide lockdown remains in effect, the Government of India has asked all employers to not terminate employees on humanitarian grounds.

Employer’s obligation to not reduce wages

In the absence of any specific law in this regard, the government lacks the authority to mandatorily obligate private organizations to pay wages to their employees. The Central Government has invoked the provisions of the Disaster Management Act, 2005 to declare the lockdown, and the State Governments have invoked the provisions of the Epidemic Diseases Act, 1897 to frame regulations and issue guidelines/directions to deal with the pandemic. However, the directions issued by the governments to the employers to pay wages to all the contractual and permanent employees neither comes within the scope of the Disaster Management Act nor the Epidemic Diseases Act. A simple reading of these two Acts makes it clear that neither the Central nor State governments have the power to direct private employers to pay wages to their employees during a lockdown situation. The Acts merely empower the committees established within its scope to frame strategies to deal with the disaster. Therefore, the directions issued by the governments to pay wages/or to not deduct wages can only be considered as advisory and cannot act as an obligation on private organisations.

Consult: Top Labour & Service Lawyers in India

Employer’s obligation to not defer/avoid payment of bonuses/raises

While observing the statutory obligations of an employer under the Payment of Bonus Act, 1965. Payment of bonuses/raises to employees is at the discretion of the employer. However, bonus must be paid to employees who are eligible under the Payment of Bonus Act, 1965. The Act regulates the payment of bonus of employees whose wage is below Rs. 21,000/- per month. The bonus provisions under the Act, applies to establishments (including factories) that employs or employed, on any day during an accounting year, 20 or more employees. Every eligible employee is statutorily entitled to receive a statutory bonus ranging from 8.33% to 20% of the wage. Under the Act, bonus is to be paid to employees within a period of 8 months from the close of the accounting year.

Employer’s obligation to provide pay to their employees if they are unable to come (or prohibited from coming) to work due to the COVID-19 outbreak

So far as the period of lockdown is concerned, until the nationwide lockdown remains in effect, the Government of India has directed all the employers to pay the wages to their workers on the due date without any deduction. After the period of lockdown is over, if the employee avails leave in excess of the leave available to him, the Employer is entitled to deduct wages in accordance with its extant policies. There is no legal bar on the Employer from deducting salary for days of absence (after the lockdown is over) in excess of the days provided for under the relevant policies/contract of employment. However, given the present scenario, it will be advisable for the employer to not deduct wages in the event an employee is suffering from COVID-19.

What legal implications should employers keep in mind while implementing work-from-home?

Key employment law considerations that employers should keep in mind when implementing work from home are:

Hours of Work: The concept of work from home is not specifically regulated or governed by statute. Therefore, in the absence of a specific statute, the employment laws that would otherwise be applicable to employee when they are working from the employer’s establishment would continue to apply. In this regard, work hour and overtime laws would continue to apply to employees. Hence, an employer would have to be mindful that employees do not work beyond their regular working hours and adhere to relevant overtime requirements.
Confidentiality and Data Security: One of the primary considerations when it comes to allowing employees to work from home is confidentiality and data security. Therefore, it is recommended that employers take additional data security measures to ensure that their IT infrastructure and resources are protected. Certain employers have resorted to geo-tagging of their devices to ensure that their data security and confidentiality is not breached.
Productivity and Performance Tracking: Given that in most instances the standard processes for productivity and performance tracking have been developed for employees working out of the employer’s establishment, employers would have to now adapt these methods to employees working from home. In this regard, there are a number of applications that are available for employers to monitor their employees work remotely. In certain circumstances, employers also require their employees to periodically provide summaries to their managers of the work that they are doing.
OSP Licences: To facilitate employers to allow employees to work from home, the Department of Telecommunications has through circular dated March 13, 2020, issued certain relaxations in the terms and conditions prescribed for Other Service Providers (OSPs), with respect to the ability of their employees to work from home. The exemptions/relaxations are available till April 30, 2020. This circular inter alia exempts OSPs from the requirement to pay a security deposit and have an agreement to enable work-from-home options or seek prior permission to allow work from home. Further, OSPs have been exempted from the requirement of having a secured VPN from an authorized service provider. OSPs may now use secured VPNs configured using ‘static IP’ addresses by themselves to enable interconnection between the home agent position and the OSP center with pre-defined locations.

Connect with an expert lawyer for your legal issue

How can a lawyer help?

During this time of unrest, issues related to employment are most likely to arise due to a lot of confusion going on around in the minds of the employees. Moreover, a situation like this is an unprecedented one and requires the help of a legal expert in case an issue arises.This is why it is important to have a labour lawyer by your side who can guide you with the right steps to be taken and help you in doing the needful to avoid such issues. A labour lawyer, being an expert in the service sector laws, can help you understand the options available to you in situations like these and can also assist you with the necessary procedures in order to resolvesalary or job-related issues.

Advocate Chikirsha Mohanty

4.0 | 2+ user ratings

Greater Kailash - 1, Delhi

5 years

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