How to take hard decisions while managing your workforce amidst the COVID-19 scare?

Last Updated at: April 22, 2020
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How to take hard decisions while managing your workforce amidst the Covid-19 scare_

The fight of the Nation against the Coronavirus pandemic is intensifying day by day. Our daily lives have been disrupted and economic activity has come to almost a standstill. The business community has borne the brunt of all these even more and companies are having a roller-coaster ride, to say the least!  Significant concerns related to business continuity are being raised from all quarters.

What should you do to keep your business afloat?

Almost all industries are affected by the ‘claws’ of the COVID-19 pandemic and managing cash flow has been a key issue for companies, in this ‘test of time’. Lots of deliberations are going on in the discussion rooms on how to identify and manage the optimum workforce, to keep the company functioning. Some companies are having no options but to resort to employee lay-offs and reduction of monthly payments, despite the recent MHA advisories against these measures. No wonder you come across news of such hard decisions taken by companies, every time you click your mouse, in search of business news in India these days.

Are you going through similar dilemmas?

Are you weary of the legal, employment, and labour laws associated with such hard decisions?

We have it covered for you!

get free legal advice

Frequently Asked Questions

  1. What are the classes of employed persons that fall under the ambit of the PoW Act, 1936?

The PoW Act of 1936 defines wages and regulates wage payments to certain groups of employed persons. These include-

  • Workmen employed in an industrial establishment, railways, factories and other such establishment specified in the Act
  • Employees of shops & establishment who are not exempted by the SCE Act of the State concerned

Under section 1 (6) of the Act, employees receiving an average monthly wage up to Rs 24,000 (vide a notification to revise the salary threshold, dated August 28, 2017)

Those who are working in administrative, managerial, and supervisory functions in factories, industries, and other establishments are not governed under this Act.

  1. Can the employees earning wages be terminated or can their employment contract be effectuated unilaterally?

No. They cannot be terminated, as per our interpretation of the recent MHA order. They will get their dues till the lockdown continues or until further notice from the Govt. in this regard.

No unilateral amendment in their employment contract is possible unless the same is stated explicitly in the contract. However, any change to the terms & conditions of the employment contract, that may affect the employment, can be made after obtaining the prior consent of the employees, either express or implied.

  1. If the employees are not earning wages under the PoW Act, are they eligible to get salaries during the lockdown?

Only the employees who earn ‘wages’ as mentioned in the PoW Act, can get the protection of different Indian labour legislations. Therefore, the employers are not mandated statutorily to pay salaries to the employees who do not come under the ambit of the PoW Act.

  1. Can we terminate the employees who are not required to be paid wages as per the MHA Order?

Yes, you can. However, you need to carry out such terminations in adherence to the employment contract executed earlier or to the SCE Act of the concerned jurisdiction.

  1. While terminating such employees, what are the steps or safeguards an employer may consider?

Before deciding to terminate such employees, the employer should consider taking the below-mentioned safeguards-

  • The employer should ensure compliance with the provisions of termination mentioned in the particular employment contracts
  • He should comply with the SCE Act of the jurisdiction where the employee is engaged or located.
  • He should issue a carefully-drafted termination letter to the employee. Else, the employee may insist that he is not a ‘wages’ earner and thus, cannot be terminated.
  • The employee may register a complaint with the Government and seek relief against the action of the employer. Owing to this epidemic situation, the Govt. may adopt a sympathetic view in favour of the employee. The labour department may overstep its jurisdiction. And may eventually direct the employer to pay wages to the employee on compassionate grounds. In such a situation, we recommend the employer should pay the employee his dues ‘under protest’, with a disclaimer, stating the employer’s right to recover the same, after the epidemic ends.
  • The employer should create appropriate documentation, should such a termination ends up in a Court on a later date.
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How to take hard decisions while managing your workforce amidst the COVID-19 scare?

323

The fight of the Nation against the Coronavirus pandemic is intensifying day by day. Our daily lives have been disrupted and economic activity has come to almost a standstill. The business community has borne the brunt of all these even more and companies are having a roller-coaster ride, to say the least!  Significant concerns related to business continuity are being raised from all quarters.

What should you do to keep your business afloat?

Almost all industries are affected by the ‘claws’ of the COVID-19 pandemic and managing cash flow has been a key issue for companies, in this ‘test of time’. Lots of deliberations are going on in the discussion rooms on how to identify and manage the optimum workforce, to keep the company functioning. Some companies are having no options but to resort to employee lay-offs and reduction of monthly payments, despite the recent MHA advisories against these measures. No wonder you come across news of such hard decisions taken by companies, every time you click your mouse, in search of business news in India these days.

Are you going through similar dilemmas?

Are you weary of the legal, employment, and labour laws associated with such hard decisions?

We have it covered for you!

get free legal advice

Frequently Asked Questions

  1. What are the classes of employed persons that fall under the ambit of the PoW Act, 1936?

The PoW Act of 1936 defines wages and regulates wage payments to certain groups of employed persons. These include-

  • Workmen employed in an industrial establishment, railways, factories and other such establishment specified in the Act
  • Employees of shops & establishment who are not exempted by the SCE Act of the State concerned

Under section 1 (6) of the Act, employees receiving an average monthly wage up to Rs 24,000 (vide a notification to revise the salary threshold, dated August 28, 2017)

Those who are working in administrative, managerial, and supervisory functions in factories, industries, and other establishments are not governed under this Act.

  1. Can the employees earning wages be terminated or can their employment contract be effectuated unilaterally?

No. They cannot be terminated, as per our interpretation of the recent MHA order. They will get their dues till the lockdown continues or until further notice from the Govt. in this regard.

No unilateral amendment in their employment contract is possible unless the same is stated explicitly in the contract. However, any change to the terms & conditions of the employment contract, that may affect the employment, can be made after obtaining the prior consent of the employees, either express or implied.

  1. If the employees are not earning wages under the PoW Act, are they eligible to get salaries during the lockdown?

Only the employees who earn ‘wages’ as mentioned in the PoW Act, can get the protection of different Indian labour legislations. Therefore, the employers are not mandated statutorily to pay salaries to the employees who do not come under the ambit of the PoW Act.

  1. Can we terminate the employees who are not required to be paid wages as per the MHA Order?

Yes, you can. However, you need to carry out such terminations in adherence to the employment contract executed earlier or to the SCE Act of the concerned jurisdiction.

  1. While terminating such employees, what are the steps or safeguards an employer may consider?

Before deciding to terminate such employees, the employer should consider taking the below-mentioned safeguards-

  • The employer should ensure compliance with the provisions of termination mentioned in the particular employment contracts
  • He should comply with the SCE Act of the jurisdiction where the employee is engaged or located.
  • He should issue a carefully-drafted termination letter to the employee. Else, the employee may insist that he is not a ‘wages’ earner and thus, cannot be terminated.
  • The employee may register a complaint with the Government and seek relief against the action of the employer. Owing to this epidemic situation, the Govt. may adopt a sympathetic view in favour of the employee. The labour department may overstep its jurisdiction. And may eventually direct the employer to pay wages to the employee on compassionate grounds. In such a situation, we recommend the employer should pay the employee his dues ‘under protest’, with a disclaimer, stating the employer’s right to recover the same, after the epidemic ends.
  • The employer should create appropriate documentation, should such a termination ends up in a Court on a later date.
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