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Termination of Employees amid COVID-19

The year 2020 will go down in history as the year when the world stood still. Businesses, tourism, life everything alike, has been put on hold. It can even be argued to say that in this year, batman may not necessarily be everyone’s favorite superhero.


India is one of the countries currently fighting the pandemic. India was proactive in terms of taking action against the disease as soon as the threat of widespread of the virus dawned upon them. A nationwide lockdown was announced commencing March 23, 2020.


Due to the adverse condition, certain companies that could not curb their losses due to the lockdown, or similar grounds, started laying off their employees or giving pay cuts in their salaries.


In order to maintain socio-economic welfare, on 29.03.2020, the Ministry of Home Affairs issued an order exercising their powers conferred u/s 10(2)(I) [1] of the Disaster Management Act, 2005 (which was implemented nationwide on 23.03.2020). The order laid down measures to be taken by the State Government and other appropriate authorities concerning certain migrant workers, workers, laborer’s and students living on rent.


One of the measures read and I quote,

“All the employers, be it in the industry or in the shops and commercial establishments, shall make payment of wages to their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the lockdown.”


This pointer clearly states that the employees have to be paid for the period of this lockdown without pay cuts. Now, some would argue that this does not state that companies are not allowed to lay off their employees, which in essence is true. But it is also pertinent to note here that there is no law or order issued by the Government that gives companies and businesses the freedom to lay off or terminate their employees amid this pandemic.



There have been advisories issued by the State governments and also by the Joint Secretary of Ministry of Labor and Employment [2], requesting the employers and businesses to not terminate employment their employees so that the crisis can be controlled and not further deepen. This again, legally speaking, did not put a mandate on the employers to not terminate or lay off their employees.


Thus indicating that the employer still has a right to terminate the employment of the employees as they deem fit. What is imperative to note here is that there are laws and rules in place that the employer has to abide by, even amid pandemic, if they wish to terminate their employees.


Broadly, employees can be segregated into two categories based on which law would govern them; employees governed by their employment contract and workmen falling under the purview of Industrial Dispute Act, 1947.



Employees governed by their employment contract: All private sector companies/business owners, as a practice and procedure, enter into a contract with their employees at the commencement of their term of employment. This employment contract lays down all the essentials of the term of employment of the employees ranging from, inter alia, the effective date of employment, duties of the employee, hours of work to termination of service.


The clause of termination of service essentially lays down when an employer can terminate the employment of the employee and the conditions thereto. This clause also addresses the repercussions of voluntary termination of employment from the employee.


The elements of this clause often refer to the notice period that the employee has to serve and the compensation they would/would not receive towards the completion of the said notice period.


This means, that should the employer terminate services of an employee, amid pandemic/lockdown, or even post lockdown, they would be required to comply with the employment contract including the clause of termination.


Workmen falling under the purview of Industrial Dispute Act, 1947: Workmen falling under this category are defined u/s 2(s) of the Industrial Dispute Act, 1947. Should the employer choose to lay off or retrench a workman from the industry, they have to follow specific guidelines.


Section 25F of the Industrial Dispute Act, 1947 deals with the conditions of retrenchment. It specifies the notice period that has to be served by the employee and the compensation they will receive as a result of their termination. There are other conditions of the period of notice that differ depending on the term of continuous service of employment.


Furthermore, the provision also states that the employer has to serve the notice of such termination in a prescribed manner to the appropriated government and publish it in the Government Gazette.


This essentially means that should the employer choose to retrench or lay off workmen, even amid pandemic, they are required to follow the procedure established u/s 25F of the Industrial Dispute Act, 1947.


Although, it is pertinent to note here that none of these rules would apply to the company, should the employees choose to voluntarily terminate their service of employment? With the mutual agreement of the company, the employee can also have their notice period waived off. This rule applies to both, employees governed by their employment contract as well as workmen falling under the purview of the Industrial Dispute Act, 1947.


It can be concluded that even though the times are difficult, the law, more or less, remains the same. The government does have the authority u/s 10(2)(I) to draw special powers and implement nationwide measures which would prevent the disaster to spread further, but as of the present day and time, they have implemented measures for employees already in their continuous employment and not against termination of employment per se.


The analysis mentioned above clearly states that an employer is not prohibited legally to terminate the employment of their employees. All they need to furnish is the rules and procedures set by law regardless of the pandemic.


References:

[1] https://www.mha.gov.in/sites/default/files/PR_MHAOrderrestrictingmovement_29032020.pdf

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


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Drishti Saxena is a lawyer and an independent content creator.

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