We are going through an
unexpected period, a period mandated by government not to function our
establishments and remain at homes, but still take care of the welfare of the
persons employed, by paying their salaries and other benefits.
It requires no
explanation as to why should we have a lockdown. Obviously, it aims at breaking
the chain, by staying away from each other, avoiding crowding, which probably,
is not possible when we function our establishments, even if we take all measures
to mitigate spreading of epidemics like, temperature checking, washing hands and face frequently and so.
As part of nation’s
efforts to mitigate spreading of virus, we are also forced to stay at homes,
and probably without any revenue to come, but with burden of paying salaries to
all, not only to those who are regularly employed on our rolls but to the
casual workers whose contract commences in the morning when he starts working
and ends in the evening when he completes 8 or 9 hours of working.
Today, this is a topic which is being discussed in large by HR groups,
why should the employer pay for the days not worked?
Accordingly a few cases
have also been filed in the Supreme Court challenging the government order
requiring the employers to pay wages in full.
The purpose of
lockdown, as we know, is social distancing so that spreading of virus to a certain
extent can be mitigated. This is possible if people stay at homes. In order to
make people stay at homes, directions have been issued following the provisions
of Epidemics Diseases Act, 1897 and Disaster Management Act, 2005.
The Epidemics Act,
provides for issuing any direction so that the disease is not spread.
The Government of
Kerala has promulgated an Ordinance, Kerala Epidemic Diseases Ordinance, 2020,
which replaces the very old Acts like, Cochin Epidemic Diseases Act, Travancore
Epidemic Diseases Act and the Epidemic Diseases Act. The ordinance also provides
for issuing any instructions which are necessary for mitigating and avoiding
spreading of a disease. It also provides for prohibiting the functioning of
shops and commercial establishments, factories, mines etc.
Similarly section 10 of
the Disaster Management Act provides for issuing such directions which are
necessary to mitigate the disaster.
Under both these Acts
provisions for penalizing those who violate the directions are available. Section
51(b) of the Disaster Management Act, 2005 provides for one year imprisonment
with or without fine. In case such violation of directions given by the
authorities under the Act to prevent a disaster results in loss of lives, then
the imprisonment shall extend to two years. The Kerala Ordinance also provides
for two years imprisonment with or without fine of Rupees Ten Thousand or both.
Why should Employer pay Full Salary during lockdown period?
It is true that nowhere
it is mentioned in any of these Acts that employer should pay full wages to
workers during a lockdown period like this.
When we invoke the lay
off provisions of Industrial Disputes Act, 1947, obviously, we can manage with
50 % salary as lay off compensation. But the directions issued following
section 10 of the Disaster Management Act is very clear that we should not
declare lay off. The ID Act also provides for payment of lay off compensation
to workers on roll (other than badly workers) and those who have completed one
year of service. But the instructions from the Disaster Management Committees
call for payment of full wages to all employees including contract workers and
casual workers.
In this circumstance,
we may go back to the objectives of lockdown, ie, making people stay at homes. It
is implied that they should not come out of homes in search of job, even though
the establishment where they use to go for work is closed, let it be some other
work, say, domestic work, at least, and if they come out of their homes the
very purpose of lockdown would be defeated. Therefore, the only possible way to
make the people stay at homes is compensating the loss of work by offering
salary.
In this context I would
also like to say that a similar was the objective to amend section 135 of the Peoples
Representation Act in 1996. The previous section called for ‘giving opportunity to employees to cast
their votes’, but when it was understood that people are not using it
properly and would like to go for work and earn that day’s wages rather than
going to polling station and queue up to cast vote, it was decided to make it a
holiday with wages. When they were assured of their wages, people would go for
casting their votes. Now section 135B provides for declaring holiday with wages
to all employees including casual workers. In the similar way, I would say that
the lockdown period is paid holidays so that people would stay at homes,
failing which they would get out of their homes in search of earnings. True, there may not be establishments opened
to offer employment, but they would find any suitable engagement and for that
they will move around. This cannot be allowed and this is the logic why the
government has issued a direction to pay wages in full.
Can’t we invoke provisions of Industrial Disputes Act?
Section 25 C and 25 M
say about lay off and compensation payable to workers laid off. Section 25C
applies to establishments wherein less than 100 workers are employed whereas
section 25M (under Chapter VB) applies only to establishments wherein more than
100 workers are employed. Obviously, small establishments wherein less than 50
workers are normally employed cannot lay off workers. If they lay off the workers shall be paid full wages. (Ref.
The Act permits payment
of 50% of wages to workers who are laid off and the maximum period of lay off
shall be 45 days. Only employees who have completed one year of service shall
be eligible for lay off wages.
In respect of
establishments employing 100 or more workers, the layoff requires permission
from the government (though lay off due to natural calamities does not require prior approval)
Again, nothing in any
labour law will protect supervisory and managerial persons and as such lay off
is not applicable to them.
Since the directions
issued by the authorities under the Disaster Management Act following the clauses
of section 10 of the Act do not permit the employers to declare lay off,
declaring lay of will become violation of the directions punishable under
section 51(b) of the Act.
Now can the employees
invoke ID Act or provisions of Payment of Wages Act, if salary is not paid?
Certainly yes, because
the lockdown days are to be treated as holidays with pay and if not paid, they
can invoke section 15 of Payment of Wages Act or 32C(2) of ID Act.
What is the status of casual workers?
Legally they are
workers with whom we do not have any formal agreement or contract of
employment. They are not even recruited by your HR Managers nor do they undergo
the formal induction program. The Standing Orders of the company may not be
applicable to them. Their agreement with the establishment commences in the
morning when they are hired at the factory gate and will extend till evening
when they complete that day’s work. They will be hired only when we need
additional manpower to handle excess production and similar scenario.
They are not hired on holidays and paid for that holiday. They do not get regularized
in service also. In their case, the direction to pay wages is not convincing,
because in respect of them there does not exist any formal legal relationship.
What is the status of contract workers?
The contract workers
are employees engaged through a contractor. The contract workers are paid
through the contractor and the total pay they receive would normally include
the wages for the days on which the establishment did not function due to
holidays. Though there exists no legal relationship with individual workers of the contractor, the Principal Employer should have a contract with the
contractor. If it is not sham or camouflage, the Principal Employer is expected
to reimburse the costs incurred by the Contractor in paying the wages of the
workers during lockdown period.
What happens if full salary is not paid?
Obviously, section
51(b) of the Disaster Management Act provides for penal provision for
noncompliance of directions given by the appropriate authority.
It is true that these Acts
or Ordinance do not empower the government to require the employers to pay
salaries for the days the workers did not work. At the same time, if the
objective of the direction is to make the people stay at homes against a
compensation in the form of full salary, the employers are ought to comply with
it.
It is a fact that while
issuing such a direction, the government
has not considered the hardships which the employers will face or are facing
due to economic slowdown which they are facing even before COVID 19 issues. In
this scenario asking to pay full salary even to casual workers is unethical. In
the case of workers on the rolls and those engaged through contractors under a
specific service contracts it is okay but in respect of workers with whom we do
not have any formal contract of employment, it cannot be justified. I do not
say that the casual workers should be kept away from this direction but there
should be a logical thinking about this class of employees.
It will be okay if the employers are asked to pay an amount required
for the subsistence of the casual workers which may come around 50% of the
normal wages, roughly.
The theory that the
cost of losing lives is more than what we cost to pay for the workers should be
remembered and as a moral responsibility, payment of a remuneration equal to
their subsistence shall be ensured by us.
Initiatives of Employees Provident Fund Organisation, ESI
Corporation etc
The EPF Organisation,
ESI Corporation and various Labour Welfare Fund Boards have come up with
various schemes to help the workers who have lost wages due to lockdown. The
EPFO has decided to bear the contributions payable by the employees as well as
employers subject to certain conditions. ESIC has a proposal to extend its
unemployment allowance to the workers who do not get wages due to lockdown also.
Various Welfare Funds have started paying a fixed amounts considering the loss of
job and subsequent loss of revenue to the workers.
The Government has
directed the employers to pay full salaries to all employees during lockdown
period. That means the employees will get their remuneration in the same rate
as they were getting prior to lockdown period. Then why should the EPF Organisation
bear the ‘employees’ share’ of provident fund contribution?
I am okay with EPFO bearing
the ‘employers’ share’ which is an additional burden to the employers who pay
salary when they do not have any revenue to come, but why should they bear
employees’ share which they contribute from their salary received in full
without working?
If the workers are to
be paid full salary, why should the ESIC pay unemployment benefits?
This is contradictory,
one side the government directing the employers to pay salary in full and the
other side, government agencies themselves assuming that the employees would
lose their wages, and on the basis of that, announcing measures to compensate it.
Madhu T K
24-04-2020
