A full-blown global pandemic of COVID-19 has resulted in sharp economic slowdown across the globe. As the Government continues to raise awareness and promote precautionary measures to prevent the spread of COVID-19, employers find themselves between a rock and a hard place - continued expenses if they function and closure if they don’t. The typical industry response during such situations is downsizing or terminating employees to ensure sustainability. This approach is however neither ethical nor morally correct at such times. This article examines a few scenarios that are likely to arise in the coming days and provides possible outcomes in such cases.
The single largest operational expense for a company is obviously salaries. Companies are going to be faced with the task of paying employees even though the company has no production. In light of several queries being received from the industry, thoughts around a few situations that may arise are contemplated as follows:
1. The industry has dependency on COVID-19 hit countries for raw materials and hence is not able to produce finished goods.
This situation would have a permeating effect on the ability of the employer to operate business lines sustainably, at least till adverse impact of the epidemic substantially contains. In such cases, the industry may choose to invoke the provision of Lay-off contemplated under Section 2(kkk) of the Industrial Disputes Act. Lay-off is defined under Section 2(kkk) of the Industrial Disputes Act, 1947 as the temporary deprivation of employees of their employment by the employer. The grounds permissible under the law are shortage of coal, power, raw materials, or accumulation of stocks, breakdown of machinery, natural calamity or any reason similar or analogous to these reasons. For lay-off to be legally valid, the grounds resulting in lay-off of employees must be directly attributable to the spread of the epidemic. This will ensure that the employees get paid compensation while continuing to be on the rolls of the industry. The Industrial Disputes Act allows the employer to lay an employee off after paying 50% lay-off compensation and take him back on full wages after the issue is resolved. The employer may therefore be able to save 50% of wages in respect of workmen for the period of the lay-off.
2. The industry has a high dependency on a COVID-19 affected region as its sole market for export of goods.
In such a scenario, where the supply market has collapsed or the country has banned imports, the company can invoke the same provision of lay-off mentioned above on the ground that it has an accumulation of stock, as envisioned in Section 2(kkk) of the Industrial Disputes Act. Using this provision, the employer may be able to provide sustenance to its employees for the duration until which the markets that it supplies to are revived.
3. The IT industry and the work from home option.
While a majority of the IT industry may be able to survive a closure due to COVID-19 by virtue of allowing its employees to work from home, there may be several jobs that cannot be performed from home. Such people may be allowed to come into work after taking all due precautions as have been prescribed by the WHO. If the company does not have a work from home (WFH) policy, one should be created and published, especially given the fact that the employees working from home will be handling company assets and data that belongs to both the company and its clients. The focus has to be on preventing the spread of the virus and as such, the company may contemplate providing leave to non-essential employees who cannot work from home.
Overall, the employers must note that they are key stakeholders in the society and times such as these are when we must all come together in the interest of all to ensure a sustainable future that benefits the maximum number of people. Capital interest must take a back seat to social interest and benefit.
If you have any questions, please feel free to reach out to us at insights at bcpassociates.com