It is truly anyone’s guess as to how long the shutdown will last, and there are several factors to be taken into consideration. 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. 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-. 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. 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. 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. 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. 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. Almost nine in ten (89.5%) of those who were employed before the national lockdown, remained employed during the lockdown. 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. If such interpretation is accepted, then the entire act would become a toothless legislation leaving the central government to be completely helpless and hapless. both of them are not free to move out of their houses. In our view therefore, employer cannot resort to the provisions of lay-off as long as order dated 29.03.2020 is in force. Such measures, it is being contended, are to be by government authorities on their own and cannot be passed on to private entities. Q1. Besides, 30% salary has been deducted for all 250 employees. With stalled production due to Covid-19 lockdown, many companies reduced the size of their workforce to cut cost, resulting in widespread job losses. The salary cuts range from 15% to as much as 50-70%. 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. On what conditions can an employer ask the employees to quit or force a salary cut? Some companies have implementation “short-time”, for example a 4-day work week – which means a salary cut of around 20%. 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. Here the doctrine of reasonable classification would come into play. In other words, now is the time for the term “employer beware” to come into force. Others such as Bounce, Livspace, AgroStar, BookMyShow and Droom have cut salaries, according to data shared by Big.Jobs. Cut staff hours. On the contrary if the above stance is accepted, Section 72 of the DM Act would become otiose. A BCG report recently claimed that the lockdown may well extend anywhere from June until September, depending on how different scenarios play out. 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. Even businesses that are back up and running faced losses during the first phase of the lockdown, which they are struggling to recover. 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. 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. 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). 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