Coronavirus Outbreak: Don’t Fire Workers Or Cut Wages, Maharashtra Advises Businesses
Maharashtra government has asked employers in public and private establishments to not retrench workers or reduce their wages.
India’s richest state has advised public and private establishments not to retrench workers or reduce wages as businesses take a hit during the novel coronavirus outbreak.
Maharashtra Labour Commissioner Mahendra Kalyankar has written to all labour department officers of the state to issue necessary advisories to employers and owners of all establishments in their respective jurisdictions, according to the letter reviewed by BloombergQuint. “In the backdrop of such a challenging situation all employers of public/private establishments may be advised to extend their coordination by not terminating their employees, particularly casual or contractual workers from job or reduce their wages,” the letter said.
If a worker takes leave, the person should be deemed to be on duty without any consequential deduction in wages, the letter said. Employees will be deemed to be on duty even if the place of employment becomes non-operational due to Covid-19, it said.
That came after Chief Minister Uddhav Thackeray, during his live address on Friday, urged businesses and shop owners to not stop paying their staff during the shutdown announced to contain the spread of Covid-19. His appeal came as businesses, big and small, are reeling under the combined impact of a slowing economy and the disruption due to the virus pandemic, hurting their financial position.
What Experts Say
The letter issued by the Labour Commissioner isn’t statutorily binding, Anshul Prakash, partner at the Mumbai-based law firm Khaitan & Co., told BloombergQuint. “It’s more more as an advisory to urge employers to bear with salary payments during the furlough at least till March 31,” he said.
Although without an immediate force of law, one would advise employers caution against any arbitrary decision to reduce headcount or non-payment or substantial reduction of salary during the period of lockdown.Anshul Prakash, Partner, Khaitan & Co
Atul Gupta, partner at law firm Trilegal, said existing labour laws allow state and central governments to issue notifications regarding employees during such situations. But they won’t override statutory provisions, unless the underlying laws are amended in the future.
“The Industrial Disputes Act expressly allows organisations to ‘lay off’, which means to temporarily suspend workmen during a ‘natural calamity’ with 50 percent wages up to 45 days,” he said. “The Model Standing Orders allows organisations to ask employees to go on a paid leave in case they are unable to employ them due to an epidemic.”
While the intention of the Maharashtra labour department is laudable, organisations, especially small and medium enterprises, may need to take employment decisions based on their financial wherewithal to cope with this crisis, Gupta said. But he cautioned that the crisis must not be used as an excuse to shed headcount.
He said the advisory must be applied in the right context. “Healthy employees who do not wish to work voluntarily even though their organisations are permitted to operate should rely on their paid leave balances, and not expect additional paid leaves,” Gupta said. “At the same time, organisations should implement adequate sanitisation and hygiene measures to protect employees.”
(Updates an earlier version with views from legal experts.)