Illegal Termination of an Employee during COVID-19

The world is facing a catastrophic situation due to outbreak of COVID -19 pandemic and it has affected almost all sections of society. In India, central government had ordered nation wide lockdown for maintaining physical distance or to avoid forming group amongst people to protect and to eliminate spread of the deadly virus. The lockdown came into effect from 25 March 2020 with nationwide closing of the industries, private/public entities and other workplaces causing some serious consequences on the working class. Corporates due to interpreted business have led into financial difficulties resulting into layoffs of many employees, most of them were contractual in nature. Several business enterprises are being forced to take the step of reducing the wages/salaries of their workforces/employees. In extreme cases, companies’ employees on non-paid leaves and terminating their services.

Introduction

An illegal termination is an act by an employer who is laying off an employee without providing a fair arrangement for such a layoff or by not following the legal method while terminating them.

Illegal termination can be classified with majorly different categories such as: firstly, Discrimination and secondly, Breach of Contract. Though there are many other factors that are also categorized under the heads of illegal termination such as illicit order of the employer, personal grudge, dispute, etc.

Discrimination is an attitude or biases towards a particular personal traits and hatred for others. Such character traits also include age, race, sex, nationality, or any other discriminatory grounds.

Contractual Employment is a contract between an employer and an employee in which both the parties are entitled to perform the work adhering to certain rules and conditions regarding the employment. The employer cannot terminate any employee from the employment in violation of such condition. If any employer conducts such termination it will be termed as illegal and action can be taken against such employment. Many rules and regulation have provided under the various act such Workmen Compensation Act, 1923, Industrial Disputes Act, 1947 and states Shop and Establishment Act.

Reasons For Terminating an Employee During COVID-19 Pandemic

During this global pandemic, the employees have been laid off from the course of their employment without providing any rational reasons. Many employees have been laid off with reasons stating the poor performance of the employee, there is neither any proof provided nor any basis for such reason. Further, in some companies, there were provisions regarding the training period in case of poor performance which has not been complied pursuing to covid-19 nationwide lockdown which makes such termination illegal in nature, but no answer has been provided for relief of terminated employees. Due to nationwide lockdown, many employees have been laid off without paying any severance package which is an essential part of the termination process. Many employees who were working for more than a period of a decade were laid off without any warning or notice period, which is essential for termination.

Other reasons that employers are listing while terminating an employee during the pandemic are Work from home of remote work is not possible, an employer and employee are not able to agree to alternative working arrangements, Consistency of work has been lowered relatively, inefficiency, violation of confidential provisions and breach of the employment contract.

Discussions have been held with the cabinet secretaries for maintaining the peace and harmony in the state. The order has been passed by the Ministry of Labour & Employment that “No employer will terminate or retrench any employee from the course of employment for any reason not in violation of the code of conduct, with rationale provided by the lockdown, the word employee also includes casual and contractual employees.”[1]Many corporate employers have been terminating the employees from the jobs to cover the cost that has been lost due to interrupted businesses.

However, Employees have been looking forward and searching for new opportunities without participating in the battle against such wrongful termination. They might have lost faith in the stable economic situation and are in the state of turmoil.

Whereas government and people from the legal fraternity after taking due cognizance of the matter, as they have been enthusiastic in finding and accumulating help in fighting against such terminations. Various guidelines have been issued that revolves around the topic discussing the termination of the employees.

Disaster Management Act, 2005 During COVID-19

The Disaster Management Act, 2005 received the assent of The President of India on 23 December 2005. The Act provides for “the effective management of disasters and for matters connected there with or incidental thereto”.[2] The Act extends to the whole India. The Act provides for civil and criminal liabilities for those who violate the provision of the Act.

In India COVID-19 is first biological disaster being handled by the legal and constitutional institutions of the country. The lockdown during period 25 March 2020 to 31 May 2020 had been imposed under Disaster Management Act, 2005. Under the Act, the States and district authorities can frame their own rules on the basis of broad guidelines issued by the Ministry.

During start of the lockdown, National Executive Committee (NEC) under Section 10(2)(1) of the Disaster Management Act, 2005 had issued a circular and in some states under the Epidemic Diseases Act, 1897 dated 29th March 2020. This circular was applicable on all the entities in the country stated that “no entity will be allowed to terminate any employee of any nature unless a violation of the contract under which such employment was agreed”[3]. Under the said notification by the government read along with the Payment of Wages Act, it states that an employer is responsible for the payment of salaries to his employees in full without any unauthorized deduction.

The government circular was proposed to promote the safety of the worker and employees in the period of the lockdown. Section 78 of Disaster Management Act,2005 has an overriding effect over any other law that is any order of the Ministry of Home Affairs will override the state orders and municipal order if they are inconsistent.

These measures were necessary in light of the possibility and potential of misuse of the contractual relationship that employers share with their employees. Usually employers have a far greater say and power in the negotiations for deciding the terms and conditions of the contract that is agreed upon between the parties at the time.

Surveys and Statistics

Azim Premji University conducted a survey in collaboration with ten civil society organisations. According the survey, seven out of ten (72%) workers in Karnataka reported having lost their employment during the Covid-19’s lockdown. In a statement released, it stated that a detailed phone survey of 5,000 workers across 12 states in the country, to estimate and understand the impact of the pandemic on employment, globally. This survey covered self-employed, casual, salaried workers, and the ones who work as per the system of regular wages.

The survey findings stated that 76% of urban workers and 66% of rural workers lost their employment during the nationwide lockdown. Average weekly earnings witnessed a fall by two-third for those wage workers and non-agricultural self-employed workers who were still employed and doing their work. The findings also revealed that more than four in ten salaried workers (44%) saw either a reduction in their salary or received no salary during the lockdown.

As a reply to these findings of the survey, the team of the survey suggested the expansion of Public Distribution System to increase its reach and implementation of expanded rations for at least the next six months. It also suggested proactive steps like the introduction of urban employment guarantee, investment in universal basic services and expansion of MGNREGA. Cash transfers equal to at least Rs.7000 per month for two months was also suggested by the survey team for the employees.

Various Issues and Circulations During COVID-19

As the country entered the fourth phase of the lockdown, the Ministry of Home Affairs has withdrawn the order which stated that companies were entitled to pay full salaries to its employees and workman, through the period of nationwide lockdown. This move of the government was relief to a large number of companies and industries which were not in the capacity to pay full wages to their employees amid the lockdown. While issuing guidelines for this phase, Union Home Secretary Ajay Bhalla’s order on May 14 said, “Whereas, save as otherwise provided in the guidelines annexed to this order, all orders issued by National Executive Committee (NEC) under Section 10(2)(1) of the Disaster Management Act, 2005, shall cease to have effect from 18.05.2020.”[4]

The guidelines released for the fourth phase did not include the March 29 order issued by the Union Home Secretary though the commercial unit was closed during the lockdown period.[5]

Appeals in The Courts

  • On 4 June 2020, in the case “Ficus Pax Private Limited v. Union of India”[6], the supreme court stated that “no coercive action against firms for not paying full salary during lockdown”. The court in this regard was hearing a bunch of petitions that were filed by several private companies challenging the Ministry of Home Affairs (MHA) notification on payment of full salaries.

The Supreme Court further observed that some negotiations have to happen between employers and workers to iron out what has to be done for the salary for 54 days of lockdown. The bench concluded that both the industries and labourers need each other in these tough times. No Industry or establishment can survive without employees/labourers and vice versa. Therefore, efforts should be made to resolve the dispute over wage payments.

The Micro, medium and small enterprises (MSMEs) stated that the 29th March dated order issued by Ministry of Home Affairs (MHA) was not taken in keeping the situation these small businesses which have been impacted adversely due to the pandemic.

Senior advocate Jamshed Cama, appearing for the association, said the companies are going out of work as they do not have orders for production of goods, and they are being prosecuted due to the government circular. Therefore, it is necessary that the government supports the companies as well as industries in these tough times. Solicitor general Tushar Mehta, appearing for the Centre, said that he had a conference on the issue and needs to file a detailed response on the pleas. The Association of MSME further stated that such blanket decision of the government to provide full salaries to the employees is arbitrary, unconstitutional, and unsustainable.

  • Petition was filed by a Maharashtra-based IT union, National Information Technology Employees Senate (NITES) seeking protection of IT employees against termination and salary cuts in the wake of the Covid-19 pandemic.

The Supreme Court dismissed the petition stating “We are not inclined to entertain this petition under Article 32 of the Constitution of India. The writ petition is accordingly dismissed.” Article 32 of the Indian Constitution provides the citizen with remedies which means that a person has the right to move to the Supreme Court and high court also, for securing his fundamental rights. Aim of the Petition was to ensure that employees working in private companies are protected. They should not get legally sacked against their rights mentioned under Articles 14, 19(1)(g) and 21.

The petition was filed after a lot of IT companies in the country had initiated illegal mass termination of the employees, refusing the salaries of the employees and illegal pay cuts by the employers.[7]

Conclusion

In the COVID-19 pandemic implementation of policies provided by government is necessary for a stable economy in coming years. In a simultaneous effort by the government, it is important for the business sector to maintain the hold of nation’s interest. Business sector should comply with humanitarian policies beyond mere business strategies and valuation of the business in terms of money’s worth. Following the direction provided by the legislature it is important that every person should put efforts in protecting his/her interest with the societies interest by following directions provided by government.

Legal professional should put maximum efforts in providing legal help to people who suffered in this pandemic for promoting the righteous nature and object of the legislature. Employees should seek for legal remedies provided by the government in case of illegal termination. If efforts are taken by every sector of society then it will help the nation to build a stable economy in coming years.

However, the decision taken by the supreme court regarding the settlement between employers and employees would help to reach a decision of payment of salaries. In view of the current pandemic, bunch of petitions which were filed, have dismissed by the supreme court. These, in turn, is just messing up the situation in the country regarding the scenario of an employee and employer relationship.

FAQs

How Did COVID-19 Pandemic Affected Employees?

Due to outbreak of COVID-19 the Government of India had imposed lockdown of 54 days closing of the industries, private/public entities, and other workplaces. This caused corporates’ financial difficulties resulting into layoffs of many employees, most of them were contractual in nature. Several being forced to take the step of reducing the wages/salaries of their workforces/employees. In extreme cases, companies’ employees on non-paid leaves and terminating their services.

What Is Illegal Termination of An Employee?

An illegal termination is an act by an employer who is laying off an employee without providing a fair arrangement for such a layoff or by not following the legal method while terminating them.

What Are the Reasons That Employers Are Listing While Terminating an Employee During The COVID-19 Pandemic?

Work from home of remote work is not possible, an employer and employee have not been able to agree to alternative working arrangements, Consistency of work has been lowered relatively, “Frustration of contract’ grounds wherein the employer would be unable to determine with any certainty how they may be able to resume operations, Inefficiency, Violation of confidential provisions and Breach of the employment contract.

How Disaster Management Act, 2005 Operated During COVID-19 Pandemic?

National Executive Committee (NEC) under Section 10(2)(1) of the Disaster Management Act, 2005 had issued a circular guideline for ….  Under section 78 of Disaster Management Act,2005 has an overriding effect over any other law that is any order of the Ministry of Home Affairs will override the state orders and municipal order if they are inconsistent.

What Was the Decision of Supreme Court Regarding Bunch Petitions Filed Seeking Protection to Employees?

Supreme court in the case stated that “Ficus Pax Private Limited v. Union of India”[8], the supreme court stated that “no coercive action against firms for not paying full salary during lockdown”. It further observed that some negotiations have to happen between employers and workers to iron out what has to be done for the salary for 54 days of lockdown.

References


[1] DO No. M-11011/08/2020-Media dated 20 March 2020, Ministry of Labour and Employment

[2]https://web.archive.org/web/20160129071454/http://mha.nic.in/sites/upload_files/mha/files/pdf/DM_Act2005.pdf

[3]https://www.mha.gov.in/sites/default/files/MHA%20Order%20restricting%20movement%20of%20migrants%20and%20strict%20enforement%20of%20lockdown%20measures%20-%2029.03.2020_0.pdf

[4] https://m.timesofindia.com/india/mha-order-directing-companies-to-pay-full-wages-to-employees-during-lockdown-withdrawn/articleshow/75813365.cms

[5] Supra

[6] Ficus Pax Private Limited vs. Union of India & Ors., W.P. (C) Diary No. 10983/2020

[7]https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.livelaw.in/pdf_upload/pdf_upload-373685.pdf&ved=2ahUKEwjhz83lrdzrAhXQ7HMBHWpICj4QFjAAegQIARAB&usg=AOvVaw1VTqUFg3mKVfdlQFVy-oBb

[8] Ficus Pax Private Limited vs. Union of India & Ors., W.P. (C) Diary No. 10983/2020

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