Decrees, orders or guidelines in effect and pertaining to reopening facilities.
- The Central Government of India as well as respective State Governments, in the last 2 months, has imposed several lock downs within the country, as a measure to combat the rapid spread of COVID-19. However, in order to ensure that the economic adverse effects are somewhat restricted, the Central Government, vide a notification dated May 30, 2020 (“Central Government Notification”) has announced a strategy to re-open facilities in a phased manner in areas outside containment zones (with the lock down being extended up to June 30, 2020 in the designated containment zones). While multiple State Governments have also passed similar orders with respect to phased re-opening of facilities, some States (e.g. Telangana, West Bengal and Mizoram) have however extended the lock down for an additional period of time.
- The Central Government Notification provides for certain guidelines and standard operation procedures that are to be mandatorily observed whilst resuming operations. Examples are: (a) wearing of face covers; (b) following social distancing measures; (c) working from home as far as possible; (d) staggered work hours at offices, industrial and commercial establishments; (e) provision of thermal scanning, hand wash and sanitizers at all entry and exit points in common areas; and (f) frequent sanitization of entire workplace. In light of the guidelines prescribed under the Central Government Notification, the Ministry of Health and Family Welfare by means of a notification dated June 04, 2020 has also prescribed detailed standard operating procedures to contain the spread of COVID-19 (“SOPs”).
Optimal approach to keep track of the latest updates.
- The optimal approach to keep track of the latest updates and notifications with respect to COVID-19 is to keep a check on the Central Government’s and respective State Government’s websites, where such notifications are published. IndusLaw, as part of its own COVID-19 response process, has also been tracking the notification and orders, and our analysis of some of them can be found here: https://induslaw.com/publication
Government subsidies and special relief resources allocated to support employers, and workers, in their efforts to maintain employment and pull through the crisis.
- The Central Government on May 13, 2020 announced a special economic and comprehensive package of USD 270 billion which is equivalent to 10% of India’s GDP, to revive and boost the Indian economy which has predictably been impacted due to COVID-19 (“Package”). The Package was introduced as a part of the Government’s Self-Reliant India Movement. As a part of the Package, the Indian Government has granted several relief measures to different sectors to boost the economy and aid the employers to revive the losses that they have suffered due to Covid-19.
- Further, with respect to social security contributions, certain relaxations have been brought in place to provide relief to both employers and employees during this crisis. Under the provisions of the Employees’ Provident Fund Act, 1956 and the rules and schemes made thereunder (“EPF Law”): (i) the rate of provident fund (PF) contribution has been reduced to 10% instead of 12% for the month of May, June and July 2020; (ii) penalties for late filing/payments have been removed for the lock down period; (iii) employees are permitted to claim advances from the PF account, subject to certain limitations. Certain compliances under Employees’ State Insurance Act, 1948 and certain state specific labour laws such as the profession tax law and labour welfare fund law, have also been eased out for the benefit of both the employees and the employers.
- Certain States have currently exempted specific kinds of factories from complying with the provisions related to daily and weekly working hours, subject to certain limitations and conditions. This has been done with the intent of providing an opportunity for businesses to increase their productivity levels in the near future.
 The EPF Law is a social security legislation wherein both employers and employees of certain establishments are required to contribute 12% employee’s compensation (certain components of the compensation) to a government-controlled social security fund.
Requirements mandated by law or any official guidance.
- Various protocols and measures have been mandated both by the Central as well as several State Governments. The SOP of the Ministry of Health and Family Welfare of the Central Government can be found here: https://bit.ly/2C75Ps5
Measures typically implemented by employers and the associated legal risks, limitations, obligations and issues to consider.
- Apart from complying with the mandatory requirements under the Central Government Notification and the SOPs which inter alia include provisions with respect to frequent sanitation, fumigation, health checks, restricted meetings, reduced cafeteria services and various other social distancing measures, most employers are now focusing on ensuring work from home protocols (including home infrastructure) are robust and they adequately comply with prescribed standards.
Policies and procedures for telework once the business reopens.
- Although the Central Government as well as certain State Governments (with stricter restrictions) have permitted private and commercial establishments to re-open and resume operations, most sectors have reconciled that working from home would be a reality for the near future for most of their employees. To that end, Central and State Governments have actively encouraged employers from all sectors to ensure that employees who can work from home continue to do so. While no specific guidelines or protocols have been notified by the Government with specific reference to teleworking as yet, we expect to see the situation change soon.
Management of quarantine, childcare and medical leave for employees affected by COVID-19.
- From a general industry and legal perspective, with respect to COVID-19, employees affected by COVID-19 will be considered to be on paid leave. There are also strict quarantine measures that have to be mandatorily adopted, as prescribed by various Government executive orders. There is however no clarity as yet on whether an unfortunate condition such as COVID-19 would affect any other leave entitlements of employees.
Employees who fear infection and refuse to work
- Given that the Central Government and respective State Government have eased the lock down restrictions, an employer, who has been permitted to remain operational, has the right to take disciplinary actions (subject to the provisions of applicable laws, employment contracts of employees and the organization’s internal policies) against employees who refuse to report to work unless: (i) such employees have been infected with COVID-10; or (ii) such employees reside in designated containment zones; or (iii) it can be established that the employer itself is not enforcing adequate health and safety measures as prescribed by the Government.
Disclosure of employees who are infected.
- When one or a few employee(s) who share a room/close office space is/are found to be suffering from symptoms suggestive of COVID-19, the employer must immediately inform the nearest medical facility (hospital/clinic) or call the state or district helpline. While the suspect case(s), if assessed by health authorities as moderate to severe, will be treated as per health protocol in an appropriate health facility, necessary actions by employers for contact tracing and disinfection of work place will have to be undertaken as well. In such instances, employers must also abide by all other instructions issued by the appropriate public health authority. As a best market practice, employers may also consider disclosing to other employees if there are positive cases inside the workplace without ever disclosing identity and other personal information.
To what extent can employers implement the following cost-reduction strategies as a result of COVID, and what are the primary limitations on each?
The below-mentioned cost reductions strategies are commonly followed by employers in India. However, each of them has certain limitations and must be undertaken in accordance with due process established under law. At the outset, it is important to state that Indian labour and employment legislations categorise employees into ‘workmen’ and ‘non-workmen’ with service conditions of workmen employees being subject to far greater statutory protection. The service conditions of non-workmen/managerial employees are governed mainly by their employment contract and the internal policies of an organization.
Furloughs (or as commonly known as ‘lay off’ under per Indian laws) are a frequently used cost-reduction strategy adopted. Under law, the term ‘lay off’ is inter alia defined as the failure, refusal or inability of an employer, on account of a natural calamity or for any other connected reason, to give employment to a workman on its rolls. With respect to workmen employees, the law prescribes processes and compliances/payments for lay off with respect to certain categories of establishments such as factories, mines and plantations. A non-workman employee can be placed in this process by way of a mutual agreement.
- Salary reductions.
Salary reduction is one of the most commonly implemented cost-reduction strategies as it has the least impact on the employees from a financial perspective, in comparison to the other cost reduction strategies. For a workman employee, a salary reduction amounts to a change in service condition of the workmen and before implementing the same; the employer is required to give them a notice of change, the time period of which is 21 days (but may vary for certain States). Further for non-workmen/managerial employees, the employer will be required to execute individual mutual agreements with the concerned employees to amend the terms of their employment contract to record the reduction in their salaries. That being said, certain Government notifications have specifically discouraged salary reductions during the crisis. Given that, specific legal advice should be taken for a nuanced analysis.
The laws with respect to termination of services of employees due to redundancy are far more stringent for workmen employees as compared to non-workmen/managerial employees. In order to terminate the services of a workman employee, certain requirements under law need to be fulfilled (retrenchment compensation, notice pay etc.) along with provisions of the employee’s employment contract, organization’s internal policies, certified standing orders (if applicable). A non-workmen/managerial employee can be dismissed as per his/her employment contract (i.e. as per the notice period requirements specified therein) and in accordance with the organizations’ internal polices (to the extent applicable).
- Facility closure.
Closure of a facility/industrial establishment is usually the last resort for an employer for reducing its operational cost. Depending upon the market conditions and the business requirements, the employer may also choose to shut down a particular section of the establishment. For both permanent and partial closure of an establishment, various compliances and filings under the Indian employment laws and company law need to be undertaken by the employer. Further, the nature of compliances also differs depending upon the type of establishment and geographical location. In certain cases, prior approval of the government authorities is also required.
Tips, recommendations and common pitfalls.
- In order to ensure continuity of operations and to ensure the safety of its employees, it has become important for employers to update their internal policies and practices in line with applicable laws in light of the Covid-19 crisis. This has in several instances compelled employers to also execute work from home agreements. Till the time the pandemic is not considerably contained and to the extent possible, employers should allow employees to work remotely. However, internal policies of the organization should be amended inter alia to ensure that the employees: (a) are available during work hours to attend virtual meetings /discussions or calls; (b) do not travel without applying for leaves as it may disrupt continuity of work; (c) employees are appropriate dressed for video conferences; (d) sanctity of company data is always maintained; and (e) there is no conflict of interest in any manner. Travel with respect to business requirements should also be restricted unless it is urgently required for business purposes. Additionally, organizations may also consider modifying its leave policies and overtime policies to accommodate contemporary demands. Further, having a dedicated team which keeps track of government notifications, guidelines and standard operating procedures is also helpful for both employer and the employees to comply with the same.
If you have any questions, please contact the following representative:
T: +91 80 4072 6600
T: +91 80 4072 6600
T: +91 80 4072 6600