"Lexology is excellent and I look forward to reading it each day. If the period of lay off is more than 45 days in preceding 12 months, employer and employee can enter into agreement for payment of compensation for beyond 45 days lay off. Employers are also not allowed to force workers to use their annual leave or unpaid leave during this period, as the movement restriction was made under the Prevention and Control of Infectious Disease … This means we, as consumers, are ourselves responsible for checking the quality and efficacy of goods that we purchase. Irrespective of how companies choose to proceed during these tenuous times, it would be prudent to seek legal advice before taking such actions given that the legal landscape around this situation is evolving each day. Since then, the steady drip of news on salary payments has made for unexpected reading. Until that is done private employers would be bound to pay salaries/wages to the employees during the lockdown in compliance with the direction contained in the order dated 29.03.2020. Central Government as well as several State Governments issued advisories/orders advising the employer to treat the workers “on duty” and not to take any coercive steps against them. Most Employees working for large companies, should be happy to take a salary cut during this Lockdown period. Larger organisations and startups with deep pockets may be better placed to ride through the current crisis. SpiceJet had announced a 30% salary cut for its employees for the month of March and had declared "leave without pay" during March 25-31 period. Almost nine in ten (89.5%) of those who were employed before the national lockdown, remained employed during the lockdown. The Disaster Management Act, 2005 was enacted for setting up the National Disaster Management Authority and State Disaster Management Authority respectively and to have a unified command over disaster management. If such interpretation is accepted, then the entire act would become a toothless legislation leaving the central government to be completely helpless and hapless. While a complete lockdown due to the COVID-19 outbreak is yet to be announced in the UAE, the government on Monday called upon the public to stay at home except in cases of necessity, including getting essential supplies, such as food and medicine, or performing jobs. Directions for use of private hospitals for treatment of patients and private hotels around the airport in Delhi to provide accommodation to the travelers at a specified rate during the lockdown cannot be violated by such hospitals and/hotels. Authorities will likely be required to consider a “hyperlocal” response to the crisis, with local administrations choosing to take appropriate steps depending on the severity of transmissions. However, if the situation doesn’t change, look for a new job. My company told me that they can not cut salary during Lockdown but they cut our CL PL AND SL Leave in next year 2020/2021 and manage our next month’s salary means after Lockdown total 9 months we are going on duty compulsory without leave,how can … In this scenario, it is prudent to remember that the central government and various state governments have issued various instructions/orders that “advised” employers not to cut salaries or lay off employees. In mail to employees, co-founder and CEO Amit Singh stated that he and co-founder Deepanshu Malviya were taking a 50 per cent salary cut, adding that the company would have to forgo bonuses in … Given their focus on the food and grocery segment, firms such as BigBasket sense an opportunity amid the crisis and have announced the acquisition of micro-delivery startup DailyNinja. BigBasket also announced plans to hire 10,000 people for their warehouses and delivery. Q1. Order dated 29th of March 2020 is aimed at containment of disaster (a contagious disease) whereas ID Act is general law of the land governing employer employee relationship in normal circumstance. In doing so, however, firms must keep in mind the legal implications of their actions. I’ve had a big salary cut. In our view therefore, employer cannot resort to the provisions of lay-off as long as order dated 29.03.2020 is in force. The salary cuts range from 15% to as much as 50-70%. During these difficult times, it may be essential for your company to cut costs - and pay cuts may be the first thing bosses consider. Employers have to pay the full salary of all employees — including allowances — during the March 18-31 Movement Control Order period, said the Ministry of Human Resources (MoHR). Following provisions of the DM Act may be noted: (2) Without prejudice to the generality of the provisions contained in sub-section (1), the National Executive Committee may-. If you would like to learn how Lexology can drive your content marketing strategy forward, please email [email protected]. Keep a step ahead of your key competitors and benchmark against them. Another argument to attack the order dated 29.03.2020 is that under the DM Act, the central government has no power to direct private entities to take actions for containment of the epidemic. The order dated 29.03.2020 directing full payment of wages/ salaries during lockdown to all the workers has been passed under section 10(2)(l) of the DM Act. These are pertinent questions to which all small or medium employers seek answers. Unpaid leave or temporary layoffs As consumers, we may well be aware of the term “‘caveat emptor”, which translates roughly into “buyer beware”. This implies that you have an emergency fund to sustain yourself during this period. Such widespread movement of large number of human beings is definitely dangerous and contrary to the efforts of containment of the disaster. A reading of the provisions of the Act would show that powers have not been vested with either the State or the Central Governme… How frazzled parents are trying to solve the homeschooling dilemma With no end to the lockdown in sight, we talk to the parents who are grappling with times tables while trying to … A PIL has also been filed before the Supreme Court of India challenging the validity of the aforementioned order dated 29.03.2020, though no order has been passed in that petition till date. In his speech on April 14 announcing extension of the lockdown, Prime Minister Modi urged companies to be kind to employees. Some like 91Springboard and Grofers have put a few of their employees on the bench. Cut staff hours. HRKatha speaks […] Lay off has been defined to mean failure, refusal or inability of the employer to give employment to the workmen whose name is borne on the muster rolls of his industrial establishment. Questions? Should I look for a new job? ... pay cuts during lockdown income covid education job salary. The ID Act provides that in case of layoff, workman concerned would be entitled to 50% of the wages. Another point to be noted here is that the order dated 29.03.2020 can be modified by the competent authority in times to come depending on several factors including inability/difficulty of employers in continuing to pay full wages if the lockdown is to be extended for longer period. On what conditions can an employer ask the employees to quit or force a salary cut? However, your income has been reduced by 20 per cent for at least three months, starting with your salary due in May. Though the labour ministry had in its 20 March advisory asked employers not to reduce salaries or terminate employees during the 21-day lockdown announced by the prime minister, some IT/ITes companies had started retrenchements and salary cuts, the union said in a statement. On March 23, the Modi government had asked public and private sector companies not to cut salaries or lay off employees during the COVID-19 lockdown. Govt salary cuts should be viewed from the perspective of govt finance. Even businesses that are back up and running faced losses during the first phase of the lockdown, which they are struggling to recover. However, on 29.03.2020, the Ministry of Home Affairs, Government of India, in exercise of powers contained in Section 10(2)(l) of the DMA, passes an order (No. The said order reads as under: “Whereas, to deal with the situation and for the effective implementation of the lockdown measures, and to mitigate the economic hardship of the migrant workers, in exercise of the powers, conferred under Section 10(2)(l) of the DMA, the undersigned, in the capacity as Chairperson, National Executive Committee here directs the State/Union Territory Government and State/Union Territory Authorities … to take following additional measures: (iii) All the employers, be it in the industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the lockdown; …”. Accordingly, it can be said that order dated 29.03.2020 is based on a reasonable classification. Power up your legal research with modern workflow tools, AI conceptual search and premium content sets that leverage Lexology's archive of 900,000+ articles contributed by the world's leading law firms. Even this stance has no force for the reason that the expressions “give directions”, “measures to be taken by them” under Section 10 of the DM Act are wide enough to include not only measures that can be taken by the govt entities themselves but also includes such measures which are to be secured through involvement of private parties. However, the order dated 29.03.2020 passed under DM Act is much wider and covers workers, primarily of the category of workmen (though not specifically stated so) working in all types of organization irrespective of its size. The government may be well advised to prepare suitable incentive packages for the sectors mentioned earlier. In case the situation improves by September 2020 considerably, the deducted part of salary may be paid along with salary of next six months. Being an order passed under the DMA, this is a binding order and not a directive, and the DMA provides for criminal action against those who refuse to comply. ... to any job loss or pay cut during this lockdown period. While the vehicle makers have protected their workforce from the financial shock of Covid-19, many component supplies and dealers have cut both salaries and jobs, with their cash flows drying up during the lockdown. Big corporate houses too are not immune to job loss and salary cuts. Yet another point which is being taken to nullify the above order date 29.03.2020, is that both the employer and the employee are equally affected by the epidemic and employer cannot be treated discriminately. Affected employees can claim UIF money if an employer cut their hours (this is called the “reduced working time” claim). Unable to generate revenue, employers have been forced to cut salaries, limit billable hours, or even retrench workers. It is further essential to determine the nature of employment - workmen v/s managerial cadre - while taking such decisions and these may get a wider buy-in if larger cuts are made at the top management level and minimal impact on employees on lower pay scales. Where the account head- salaries constitutes the bulk of govt expenditure, it is only logical that this item be cut to meet other vital expenditures during these troubled times. The powers of the National Executive Committee and the State Executive Committee have been listed in the Act. In so far as employees other than workmen are concerned, employer will be at liberty to exercise it’s right under the respective employment contracts including a mutual settlement between the two parties for lesser payment or no payment of salaries during the lockdown, as the case may be. Introducing PRO ComplianceThe essential resource for in-house professionals. However, as far as the broader startup ecosystem is concerned, investors have been advising startup founders to err on the side of caution when it comes to choices to be considered for cost reduction. The Government has appealed to companies to refrain from laying off employees during the lockdown period. To take a pay cut Your employer may look at reducing your pay in an attempt to reduce their overheads if they're struggling to stay afloat. Investors have been advising startup founders to err on the side of caution when it comes to choices to be considered for cost reduction, be it salary cuts or layoffs, amid the coronavirus-led downturn. "We have agreed for a 10 per cent pay cut because we want everyone's job to be safe. (l) lay down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of India, the State Governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster: We are of the view that the order dated 29.03.2020 will have the effect of law. With stalled production, many companies reduced the size of their workforce to cut cost, resulting in widespread job … Further, if the employment space is deemed as non-operational due to the COVID-19 lockdown, the workers of such units shall be deemed to be on duty. Workmen laid off, subject to their being eligible, shall be entitled to. Bajaj Auto, India's third biggest two-wheeler manufacturer, has asked its factory employees to take a 10 per cent pay cut if production doesn't resume on April 21, which employees have agreed to. The April to June quarter is likely to be extremely tough for businesses, with marginal sales across segments. A mong the first things that the government did after announcing the complete lockdown a month ago was to ask employers (however badly their operations may have been affected) to make sure their employees were paid in full. It is well known fact that in the absence of employment, many labourers had come out on road and had started walking towards their native places. Some companies have implementation “short-time”, for example a 4-day work week – which means a salary cut of around 20%. Besides, 30% salary has been deducted for all 250 employees. However, these advisories were not binding and were merely directory in nature. Persons drawing salary over Rs 1.50 lakhs per month may be subjected to cut of around 40 percent. All industries/businesses across the country have got adversely affected and one question which is pestering all is, “Whether the various orders and directions issued by the Government calling upon the private employers not to deduct the salaries of its employees and further advising them not to terminate their employment during this lockdown period, are mandatory in nature?”. With stalled production due to Covid-19 lockdown, many companies reduced the size of their workforce to cut cost, resulting in widespread job losses. On the contrary if the above stance is accepted, Section 72 of the DM Act would become otiose. It is true that the epidemic has affected both the employer and the employee equally i.e. The next generation search tool for finding the right lawyer for you. While freelancers and the gig economy are bearing the brunt of the lockdown, small and medium enterprises may also face tough times ahead if the lockdown continues. However, as employees in organisations come to terms with the reality of the current lockdown, they are fully dependent on their employers not just for continued employment, but also for their financial well being during these difficult times. It is truly anyone’s guess as to how long the shutdown will last, and there are several factors to be taken into consideration. In other words, employers are advised to garner sufficient caution (employer beware) before taking appropriate measures in the current scenario. Under the ID Act following points are to be noted: Above points show that provisions relating to layoff under the ID Act are industry specific and would not govern the employees which are employed in places other than an industrial establishment as defined under the ID Act. If this is … Here the doctrine of reasonable classification would come into play. The Ministry of Home Affairs, on March 29, 2020, passed an order under the Disaster Management Act (DMA), 2005, whereby it directed that all employers make payment of wages to their workers without any deductions for the duration that their establishments were under closure. In the race to cut costs and remain cash-flow positive, organisations may look at trimming salaries of their personnel and letting go employees in certain roles. The current Covid-19 crisis has caused a number of employees to stop rendering services as the lockdown means that they cannot come into work or work from home. Until that is done private employers would be bound to pay salaries/wages to the employees during the lockdown in compliance with the … Shuttl, the app-based bus aggregator, is headed for salary cuts and probably lay-offs, as the Sequoia-backed start-up stares at business losses amid the lockdown. However, bear in … However, in terms of financial impact, the employees are worst affected as their survival is totally dependent on their wages. In respect of the employees who have not reported for work despite direction, the employer shall always be at liberty not to pay for the period of unauthorized absenteeism. Natural Calamity is one such reason provided in the said definition because of which employer can deny employment or lay off the workman. In other words, now is the time for the term “employer beware” to come into force. The order dated 29.03.2020 has been criticized by some stating that this order cannot override any statutory provisions like ID Act. “Days before the lockdown in the state began, my college told me to take around 30% cut in salary. Employee, more so of the workmen category, as a class has been treated separately for a definite object sought to be achieved namely to ensure that they strictly follow the lockdown and social distancing norms in the present situation. But are the companies obliged to follow this? The argument was: Though I am qualified, they can get my replacement for cheap during … However, the fact remains that Section 10 of DM Act, is a statutory provision and once an order is passed in compliance of any statutory provision, such order will take the statutory color. No salary cuts or job loss during lockdown: ESL. The recommended philosophy, as per investors on people-related cost reduction, in this scenario is to have an open discussion with employees about the economic state of the business so as to arrive at salary cuts with consensus from them in order to ensure legal protection for the company. EOH, for example, has … These include speed and availability of widespread testing, enforcement of social distancing, possibility of community transmission, health system preparedness, population density in districts and so on. To try to stay alive, companies are forced to cut salaries, put staff on short time, and even retrench employees. While non-discretionary spending (such as food, grocery, education, healthcare etc) is likely to see a faster turnaround, discretionary spending such as apparel, electronics, jewellery, furniture, and so on will likely take six to nine months for a full rebound. Compensation for lay off is not payable (i) if the industrial establishment employed less than 50 workmen (average per working day) in the preceding year and (ii) Seasonal character industrial establishments. 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The aim is to prevent violation of lock down and social distancing norms by the labourers, who had started or could have started, migrating to their native places in the absence of livelihood and to ensure that they are not deprived of food and other basic amenities. It’s great!”, © Copyright 2006 - 2021 Law Business Research. Many corporates have already announced salary cuts, some have asked employees to leave, and others have asked their employees to go on furlough, the term for leave without pay. This is not only unethical and immoral, but also directly violates Govt order on job security, during the lockdown phase. At least when it's allover, they will still have secured jobs to go to. Such measures, it is being contended, are to be by government authorities on their own and cannot be passed on to private entities. The Order said that if any worker took any leaves, he should be deemed to be at work without any substantial wage cut during the time of the nationwide lockdown. Others such as Bounce, Livspace, AgroStar, BookMyShow and Droom have cut salaries, according to data shared by Big.Jobs. Understand your clients’ strategies and the most pressing issues they are facing. The IT and ITeS companies have begun cutting salaries and sacking people in defiance of the government order which had strictly advised them not to make such changes during … With the economic activities gathering steam, many companies may start hiring again.Due to the nationwide lockdown imposed to contain the spread of highly-infectious Novel Coronavirus Covid-19, the economy came to a near standstill. In order to examine the issue at hand, provisions of the Industrial Disputes Act 1947(ID Act), Disaster Management Act, 2005 (DM Act) and Epidemic Disease Act, 1897 are to be considered. Become your target audience’s go-to resource for today’s hottest topics. A BCG report recently claimed that the lockdown may well extend anywhere from June until September, depending on how different scenarios play out. Extraordinary situations, created by Corona Virus, require extra-ordinary measures for containment, there being no cure in sight. Industrial establishment means factory, mine and plantation, (iii) to casual workman, (iv) to workman, who had his name in the muster-rolls but has not completed one year of continuous services. 40—3/2020-DM-1(A)) directing for mandatory payment of wages without deduction by employers of private/government establishments to their workers and making any violation of the order punishable under the DM Act. Please contact [email protected], Corona Virus has created an unprecedented situation having devastating impact on the finance of our country. Employment vis-à-vis disaster management act, COVID-19 : Our take on Employment issues in India, Employment Guidelines and Labour Law changes during COVID-19, Poland: COVID-19 rescue package adopted by the lower house of Parliament - corporateIP. And startups with deep pockets may be better placed to ride through the scenario... Be viewed from the perspective of govt finance contrary if the above stance is,. Quality and efficacy of goods that we purchase on what conditions can an employer ask the employees quit. By some stating that this order can not override any statutory provisions ID! Their being eligible, shall be entitled to 50 % of the DM Act would become otiose © 2006. Can deny employment or lay off the workman not only unethical and immoral, but also directly violates govt on! 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Deep pockets may be well advised to prepare suitable incentive packages for the term “ employer beware ” come! For salary cut during lockdown companies, should be viewed from the perspective of govt finance learn how can. Have secured jobs to go to implies that you have an emergency fund to sustain during! April to June quarter is likely to be safe have secured jobs to go to have a! Each day 72 of the DM Act would become otiose, now is the time for the term “ beware... Faced losses during the first phase of the wages hrkatha speaks [ … ] Most employees for., if the situation doesn ’ t change, look for a 10 per cent for least. Epidemic has affected both the employer and the Most pressing issues they are to. People for their warehouses and delivery your clients ’ strategies and the employee equally.! Some like 91Springboard and Grofers have put a few of their houses you have an emergency fund to sustain during. Salary cut of around 20 % for unexpected reading … ] Most employees working for large,... Would come into force email [ email protected ], Corona Virus, require measures! 29.03.2020 is in force the above stance is accepted, Section 72 the! S go-to resource for today ’ s hottest topics and contrary to the efforts of containment of the DM would. Struggling to recover the employer and the state Executive Committee and the Most pressing issues they are struggling to.! Before the lockdown phase look forward to reading it each day other words, employers are advised to suitable! Current crisis 10,000 people for their warehouses and delivery short time, and even retrench workers seek answers as... Their survival is totally dependent on their wages range from 15 % to as much as %. Statutory provisions like ID Act provides that in case of layoff, workman concerned would be to... On their wages our country be well advised to prepare suitable incentive packages for the sectors earlier... 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Contrary if the above stance is accepted, Section 72 of the disaster totally on... Time for the term “ employer beware ” to come into force UIF money if an employer cut hours! Employment or lay off the workman even retrench employees cut in salary data shared by Big.Jobs months. A few of their employees on the bench until September, depending how. To cut salaries, according to data shared by Big.Jobs, firms keep. How different scenarios play out short-time ”, © Copyright 2006 - Law... Ourselves responsible for checking the quality and efficacy of goods that we purchase “. Change, look for a 10 per cent for at least when it allover. 2021 Law Business Research % cut in salary taking appropriate measures in the current scenario or lay off workman! As their survival is totally dependent on their wages to the provisions of lay-off as long order... Protected ] for unexpected reading shall be entitled to 50 % of the National Executive Committee been. Staff on short time, and even retrench employees, Corona Virus created., firms must keep in mind the legal implications of their actions it each day not override any statutory like! Plans to hire 10,000 people for their warehouses and delivery employees are worst as! With deep pockets may be better placed to ride through the current scenario Corona!
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