salary cut during lockdown

The order dated 29.03.2020 has been criticized by some stating that this order cannot override any statutory provisions like ID Act. Another point to be noted here is that the order dated 29.03.2020 can be modified by the competent authority in times to come depending on several factors including inability/difficulty of employers in continuing to pay full wages if the lockdown is to be extended for longer period. This is not only unethical and immoral, but also directly violates Govt order on job security, during the lockdown phase. If the period of lay off is more than 45 days in preceding 12 months, employer and employee can enter into agreement for payment of compensation for beyond 45 days lay off. Affected employees can claim UIF money if an employer cut their hours (this is called the “reduced working time” claim). Larger organisations and startups with deep pockets may be better placed to ride through the current crisis. Understand your clients’ strategies and the most pressing issues they are facing. 40—3/2020-DM-1(A)) directing for mandatory payment of wages without deduction by employers of private/government establishments to their workers and making any violation of the order punishable under the DM Act. Such measures, it is being contended, are to be by government authorities on their own and cannot be passed on to private entities. It is true that the epidemic has affected both the employer and the employee equally i.e. The April to June quarter is likely to be extremely tough for businesses, with marginal sales across segments. Further, if the employment space is deemed as non-operational due to the COVID-19 lockdown, the workers of such units shall be deemed to be on duty. 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Questions? Accordingly, it can be said that order dated 29.03.2020 is based on a reasonable classification. The said order reads as under: “Whereas, to deal with the situation and for the effective implementation of the lockdown measures, and to mitigate the economic hardship of the migrant workers, in exercise of the powers, conferred under Section 10(2)(l) of the DMA, the undersigned, in the capacity as Chairperson, National Executive Committee here directs the State/Union Territory Government and State/Union Territory Authorities … to take following additional measures: (iii) All the employers, be it in the industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the lockdown; …”. All industries/businesses across the country have got adversely affected and one question which is pestering all is, “Whether the various orders and directions issued by the Government calling upon the private employers not to deduct the salaries of its employees and further advising them not to terminate their employment during this lockdown period, are mandatory in nature?”. However, as employees in organisations come to terms with the reality of the current lockdown, they are fully dependent on their employers not just for continued employment, but also for their financial well being during these difficult times. Central Government as well as several State Governments issued advisories/orders advising the employer to treat the workers “on duty” and not to take any coercive steps against them. In mail to employees, co-founder and CEO Amit Singh stated that he and co-founder Deepanshu Malviya were taking a 50 per cent salary cut, adding that the company would have to forgo bonuses in … The Order said that if any worker took any leaves, he should be deemed to be at work without any substantial wage cut during the time of the nationwide lockdown. However, in terms of financial impact, the employees are worst affected as their survival is totally dependent on their wages. Introducing PRO ComplianceThe essential resource for in-house professionals. Become your target audience’s go-to resource for today’s hottest topics. To take a pay cut Your employer may look at reducing your pay in an attempt to reduce their overheads if they're struggling to stay afloat. I’ve had a big salary cut. In case the situation improves by September 2020 considerably, the deducted part of salary may be paid along with salary of next six months. Almost nine in ten (89.5%) of those who were employed before the national lockdown, remained employed during the lockdown. The Ministry of Home Affairs, on March 29, 2020, passed an order under the Disaster Management Act (DMA), 2005, whereby it directed that all employers make payment of wages to their workers without any deductions for the duration that their establishments were under closure. Directions for use of private hospitals for treatment of patients and private hotels around the airport in Delhi to provide accommodation to the travelers at a specified rate during the lockdown cannot be violated by such hospitals and/hotels. 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. Employers are also not allowed to force workers to use their annual leave or unpaid leave during this period, as the movement restriction was made under the Prevention and Control of Infectious Disease … SpiceJet had announced a 30% salary cut for its employees for the month of March and had declared "leave without pay" during March 25-31 period. Even businesses that are back up and running faced losses during the first phase of the lockdown, which they are struggling to recover. Though the labour ministry had in its 20 March advisory asked employers not to reduce salaries or terminate employees during the 21-day lockdown announced by the prime minister, some IT/ITes companies had started retrenchements and salary cuts, the union said in a statement. If such interpretation is accepted, then the entire act would become a toothless legislation leaving the central government to be completely helpless and hapless. 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. In doing so, however, firms must keep in mind the legal implications of their actions. 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. “Days before the lockdown in the state began, my college told me to take around 30% cut in salary. A mong the first things that the government did after announcing the complete lockdown a month ago was to ask employers (however badly their operations may have been affected) to make sure their employees were paid in full. It is well known fact that in the absence of employment, many labourers had come out on road and had started walking towards their native places. This implies that you have an emergency fund to sustain yourself during this period. As consumers, we may well be aware of the term “‘caveat emptor”, which translates roughly into “buyer beware”. The Government has appealed to companies to refrain from laying off employees during the lockdown period. With stalled production due to Covid-19 lockdown, many companies reduced the size of their workforce to cut cost, resulting in widespread job losses. Shuttl, the app-based bus aggregator, is headed for salary cuts and probably lay-offs, as the Sequoia-backed start-up stares at business losses amid the lockdown. However, your income has been reduced by 20 per cent for at least three months, starting with your salary due in May. My company told me that they can not cut salary during Lockdown but they cut our CL PL AND SL Leave in next year 2020/2021 and manage our next month’s salary means after Lockdown total 9 months we are going on duty compulsory without leave,how can … While the vehicle makers have protected their workforce from the financial shock of Covid-19, many component supplies and dealers have cut both salaries and jobs, with their cash flows drying up during the lockdown. Another argument to attack the order dated 29.03.2020 is that under the DM Act, the central government has no power to direct private entities to take actions for containment of the epidemic. The ID Act provides that in case of layoff, workman concerned would be entitled to 50% of the wages. Bajaj Auto, India's third biggest two-wheeler manufacturer, has asked its factory employees to take a 10 per cent pay cut if production doesn't resume on April 21, which employees have agreed to. However, these advisories were not binding and were merely directory in nature. But are the companies obliged to follow this? Unable to generate revenue, employers have been forced to cut salaries, limit billable hours, or even retrench workers. The Disaster Management Act, 2005 was enacted for setting up the National Disaster Management Authority and State Disaster Management Authority respectively and to have a unified command over disaster management. Besides, 30% salary has been deducted for all 250 employees. Such widespread movement of large number of human beings is definitely dangerous and contrary to the efforts of containment of the disaster. With stalled production, many companies reduced the size of their workforce to cut cost, resulting in widespread job … Where the account head- salaries constitutes the bulk of govt expenditure, it is only logical that this item be cut to meet other vital expenditures during these troubled times. At least when it's allover, they will still have secured jobs to go to. Should I look for a new job? In other words, employers are advised to garner sufficient caution (employer beware) before taking appropriate measures in the current scenario. However, on 29.03.2020, the Ministry of Home Affairs, Government of India, in exercise of powers contained in Section 10(2)(l) of the DMA, passes an order (No. Industrial establishment means factory, mine and plantation, (iii) to casual workman, (iv) to workman, who had his name in the muster-rolls but has not completed one year of continuous services. Workmen laid off, subject to their being eligible, shall be entitled to. "We have agreed for a 10 per cent pay cut because we want everyone's job to be safe. Keep a step ahead of your key competitors and benchmark against them. How frazzled parents are trying to solve the homeschooling dilemma With no end to the lockdown in sight, we talk to the parents who are grappling with times tables while trying to … ... pay cuts during lockdown income covid education job salary. ... to any job loss or pay cut during this lockdown period. Given their focus on the food and grocery segment, firms such as BigBasket sense an opportunity amid the crisis and have announced the acquisition of micro-delivery startup DailyNinja. It is further essential to determine the nature of employment - workmen v/s managerial cadre - while taking such decisions and these may get a wider buy-in if larger cuts are made at the top management level and minimal impact on employees on lower pay scales. The powers of the National Executive Committee and the State Executive Committee have been listed in the Act. It’s great!”, © Copyright 2006 - 2021 Law Business Research. Some like 91Springboard and Grofers have put a few of their employees on the bench. The government may be well advised to prepare suitable incentive packages for the sectors mentioned earlier. Unpaid leave or temporary layoffs 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. Please contact [email protected], Corona Virus has created an unprecedented situation having devastating impact on the finance of our country. 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. Even this stance has no force for the reason that the expressions “give directions”, “measures to be taken by them” under Section 10 of the DM Act are wide enough to include not only measures that can be taken by the govt entities themselves but also includes such measures which are to be secured through involvement of private parties. However, as far as the broader startup ecosystem is concerned, investors have been advising startup founders to err on the side of caution when it comes to choices to be considered for cost reduction. 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. While a complete lockdown due to the COVID-19 outbreak is yet to be announced in the UAE, the government on Monday called upon the public to stay at home except in cases of necessity, including getting essential supplies, such as food and medicine, or performing jobs. A BCG report recently claimed that the lockdown may well extend anywhere from June until September, depending on how different scenarios play out. Here the doctrine of reasonable classification would come into play. Others such as Bounce, Livspace, AgroStar, BookMyShow and Droom have cut salaries, according to data shared by Big.Jobs. The argument was: Though I am qualified, they can get my replacement for cheap during … With the economic activities gathering steam, many companies may start hiring again.Due to the nationwide lockdown imposed to contain the spread of highly-infectious Novel Coronavirus Covid-19, the economy came to a near standstill. EOH, for example, has … However, bear in … The current Covid-19 crisis has caused a number of employees to stop rendering services as the lockdown means that they cannot come into work or work from home. Until that is done private employers would be bound to pay salaries/wages to the employees during the lockdown in compliance with the … A PIL has also been filed before the Supreme Court of India challenging the validity of the aforementioned order dated 29.03.2020, though no order has been passed in that petition till date. Persons drawing salary over Rs 1.50 lakhs per month may be subjected to cut of around 40 percent. On what conditions can an employer ask the employees to quit or force a salary cut? Order dated 29th of March 2020 is aimed at containment of disaster (a contagious disease) whereas ID Act is general law of the land governing employer employee relationship in normal circumstance. Until that is done private employers would be bound to pay salaries/wages to the employees during the lockdown in compliance with the direction contained in the order dated 29.03.2020. (l) lay down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of India, the State Governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster: We are of the view that the order dated 29.03.2020 will have the effect of law. Q1. Extraordinary situations, created by Corona Virus, require extra-ordinary measures for containment, there being no cure in sight. 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. Irrespective of how companies choose to proceed during these tenuous times, it would be prudent to seek legal advice before taking such actions given that the legal landscape around this situation is evolving each day. Being an order passed under the DMA, this is a binding order and not a directive, and the DMA provides for criminal action against those who refuse to comply. If you would like to learn how Lexology can drive your content marketing strategy forward, please email [email protected]. No salary cuts or job loss during lockdown: ESL. On the contrary if the above stance is accepted, Section 72 of the DM Act would become otiose. Big corporate houses too are not immune to job loss and salary cuts. The salary cuts range from 15% to as much as 50-70%. In the race to cut costs and remain cash-flow positive, organisations may look at trimming salaries of their personnel and letting go employees in certain roles. 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. In so far as employees other than workmen are concerned, employer will be at liberty to exercise it’s right under the respective employment contracts including a mutual settlement between the two parties for lesser payment or no payment of salaries during the lockdown, as the case may be. These are pertinent questions to which all small or medium employers seek answers. BigBasket also announced plans to hire 10,000 people for their warehouses and delivery. HRKatha speaks […] It is truly anyone’s guess as to how long the shutdown will last, and there are several factors to be taken into consideration. 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. Lay off has been defined to mean failure, refusal or inability of the employer to give employment to the workmen whose name is borne on the muster rolls of his industrial establishment. The aim is to prevent violation of lock down and social distancing norms by the labourers, who had started or could have started, migrating to their native places in the absence of livelihood and to ensure that they are not deprived of food and other basic amenities. While non-discretionary spending (such as food, grocery, education, healthcare etc) is likely to see a faster turnaround, discretionary spending such as apparel, electronics, jewellery, furniture, and so on will likely take six to nine months for a full rebound. In order to examine the issue at hand, provisions of the Industrial Disputes Act 1947(ID Act), Disaster Management Act, 2005 (DM Act) and Epidemic Disease Act, 1897 are to be considered. However, if the situation doesn’t change, look for a new job. Cut staff hours. 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