Employer’s obligation to not reduce wages during lockdown
23-Apr-2023 (In Labour & Service Law)
As per the Indian law, there is no specific provision that deals with a situation wherein employers are required to pay wages to its employees during a lockdown. However, the Industrial Disputes Act, 1947 talks about a similar situation. Under Section 2 (kkk) of the Industrial Disputes Act the term ‘lay off’ has been defined which states that when an employer is unable to provide employment to an employee due to a natural calamity or a similar situation the same would fall under ‘lay off’.
Subsequently, the Act also speaks about the terms on which an employee can be laid off. Under Section 25 C of the Act, the employers laying off workmen are required to pay compensation to the workmen being laid off which shall be equivalent to 50 percent of the wages. Moreover, the Act mandates any industrial establishment with more than 100 workmen to take prior permission before laying off the workmen. Although the permission is not mandatory if the laying off is due to a natural calamity.
However, the question again arises whether COVID-19 can be considered as a natural calamity. The Ministry of Finance through its notification dated 19th February 2020 has stated that the disruption of the supply chain due to the spread of novel COVID-19 will be considered as a natural calamity. Therefore, the workmen can take resort in the above-mentioned Sections on being laid off.
Labour laws in India protect the rights of the workmen, who are blue-collar workers operating plant and machinery. But the latest directives by the government do not make any distinction between workmen and white collar employees, and those hired on contract by companies. These directives do not make a distinction between workmen and non-workmen. They interchangeably use the terms, worker, employee, outsourced worker, employer, principle employer thus trying to cover every category of workforce. It must be noted that any reduction in wages must have consent from the employees.
However, there is no blanket prohibition on changes to any and all terms of employment. As far as terminations and lay-off's go, where a state has passed an order restricting any termination, under duly delegated authority under the National Disaster Management Act, then there could be prosecution for violating the same.
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