Due to the current lockdown being exercised by order of the Government of
India for maintaining physical distance or to avoid forming group amongst people
to protect and to eliminate the spread of the deadly virus. The lockdown came
into effect from 25.03.2020 with nationwide closing of the industries,
private/public entities, and other workplaces have led to some serious
consequences on the working class. Corporate due to interrupted business have
led into financial difficulties resulting in the layoffs from the workforce to
reduce the cost, in turn, immersing the numbers in the balance sheet. In the time
of covid-19, employers have laid off many employees, most of them were
contractual in nature.
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:
Though there are many other factors that are also categorized under the heads of
illegal termination that are:
- Breach of Contract.
- illicit order of the employer.
- personal grudge.
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.
As employer and employee are parties to the contract of employment, such
contract has laid down rules and condition regarding the employment and the
employer cannot terminate any person 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. There many rules and
regulation provided under the various act such Workmen Compensation Act, 1923,
Industrial Disputes Act, 1947 and states Shop and Establishment Act.
During this global pandemic, the employees have been laid off from the course of
their employment without providing any rationale, in turn, proving to violate
the code of conduct of the contract of the employment. 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 (HR)
departments personnel have been engaged in the process of termination such
termination has led many illegalities as such personnel 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
Though discussions have been held with the cabinet secretaries for maintaining
the peace and harmony in the state that also includes the employment as an
aspect to be considered for the eventual objectivity, i.e. stability of the
Though order has been passed by the Ministry of Human Resources and
development that states 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.
Many corporate employers have been
terminating the employee from the jobs to cover the cost that has been lost due
to interrupted businesses. Employees though have been looking forward and
searching for new opportunities without participating in the battle against such
wrongful termination, 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 in this current circumstance.
Start of the lockdown
During the start of the lockdown, the Government circular tdated 29th March
2020was issued in accordance with the National Disaster Management Act, 2005 and
in some states under the Epidemic Diseases Act, 1897 that is applicable on all
the entities in the country stated thatno entity will be allowed to terminate
any employee of any nature unless a violation of the contract under which such
employment was agreed.
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
even in the time of nationwide lockdown such proviso makes compulsory for any
employer to comply with the employment rules and not terminate the employee that
might be treated loss of wages which is in violation of the act read with
Though there was some scope in the dispute regarding
reduction in salary but the same dispute has been settled in contrary stating
that any reduction will result in the violation of section 7 of the Payment of
Wages Act including the lockdown pursuing to covid-19.
Any reduction by the consent of the employee, if at all has been mandated, will
not be allowed, though the employment contract may have the proviso that can
allow any employee to voluntarily or by consent agree to reduce the salary but
such decision will not be allowed as long as the provisosof Disaster Management
Act are applicable.
The government circular is proposed to promote the safety of
the worker and employees in the period of the pandemic and this will also
include non-retrenchment and layoffs. Further issuing guidelines, it is also
important to take the cognizance of the operational aspect of industries
pursuing to the lockdown the business may have interrupted with their offline
activities such organizations are expected to implement work from home culture
to future date as determined so to protect the interest of the employees.
Disaster Management Act, 2005 allows the Central Government to form the national
Disaster Management Authority that will be playing a major role in framing
policies to mitigate the loss and protect the objective of the welfare state,
and section 38 of the Act also makes it compulsory for all the states to follow
the direction provided by the authority. Moreover, section 78 of the said Act
has an overriding effect over any other law, to the extent, it is inconsistent
which concludes that any order of the Ministry of Home Affairs will override the
state orders and municipal order to the extent they are inconsistent.
Surveys and Statistics
According to the survey conducted by the Azim Premji University, seven out of
ten (72 per cent) workers in Karnataka reported having lost their employment
during the Covid-19ís lockdown. This survey was conducted in collaboration with
ten civil society organizations.
In a statement released by the university, 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. It will also gauge the impact on government relief schemes. Talking
about the survey, it covered self-employed, casual, salaried workers, and the
ones who work as per the system of regular wages.
The survey findings stated that seventy-six percent of urban workers and
sixty-six percent of rural workers lost their employment amid the nationwide
lockdown. For wage workers and the non-agricultural self-employed workers, who
were still employed and doing their work, however, the findings said that their
average weekly earnings witnessed a fall by two-third. The findings also
revealed that more than four in ten salaried workers (44 per cent) 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 which conducted 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. With these,
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.
Various Issues and Circulations
As the country entered the next 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 will bring much 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 Sunday 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."
The guidelines released for the fourth phase did not include the March 29 order
issued by the Union Home Secretary, that directed all the employers to pay wages
to workers on due date without any deductions, though the commercial unit was
closed during the lockdown period.
Appeals in the Courts
The Supreme Court of India, in its recent hearing, in the case Ficus Pax Private
Limited v. Union of India 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 that could not
pay full salaries to their employees and therefore challenged the order released
by the Ministry of Home Affairs to pay full salaries to employees during the 54
days of Lockdown. The Supreme Court further asked the private companies to reach
to a settlement between them and the employees over the wage payment. It had
also asked for a report to be submitted before the commissioners. The court also
asked the Centre to file an affidavit within the time period of 4 weeks,
challenging the Ministry of Home Affairs, ordered to pay full salaries to
employees in the 54-day lockdown, that was implemented by in view of the
pandemic. The bench consisted of Justices L N Rao, S K Kaul and B R Gavai,
concluded that both the industries and labourers need each other in these tough
times and efforts should be made to resolve the dispute over wage payments.
The court on 4th June had observed that some negotiations need to take place
between the employers and workers to iron out what has to be done for the salary
of these 54 days. The Micro, medium and small enterprises (MSMEs) stated that
the 29th March dated order issued by 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.
The Supreme Court passed a set of interim orders and stated that a settlement
process is necessary to be carried out between the employer and the employee to
safeguard the interest of both the parties.
Accordingly, the supreme court has passed the following interim directions:
The private establishments, industries, employers, are now allowed to initiate
the process for negotiation and settlement with their employees, workmen to
reach to a conclusion regarding the non-payment of wages in this nationwide
lockdown. If the settlement cannot be carried out between both the parties, the
establishments can approach the labour authorities for such settlement. Once the
settlement is done, the same can be applied without taking in consideration of
the MHA order dated March 2019, 2020.
The above-mentioned relief is also made applicable on those establishments which
were not functioning in their full capacity.
The settlement shall be without prejudice to the rights of the employers and
employees which is pending in the writ petitions already made by them. The
private establishments shall permit the workers who are willing to work without
prejudice to their rights regarding unpaid wages of above 50 days.
The government shall take all the necessary measures to publicise and circulate
this order so that it benefits both the employees and employers. The said
circulation has to be carried out through the Ministry of labour.
The above case will now be taken up at the end of July, and till then no
coercive action can be taken against the employees as instructed by the Supreme
Court of India.
Another plea was filed by the National Information Technology Employees Senate (NITES),
a Maharashtra-based IT union, seeking protection of IT employees against
termination and salary cuts in the wake of the Covid-19 pandemic. The bench
which was headed by Justice L Nageswara Rao, Sanjay Kishan Kaul and BR Gavai,
turned down the plea.
The Supreme Court, dismissing the petition read, 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. The petition was filed with an aim to ensure that employees working in
private companies are protected and not 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 initiated a
drive of illegal mass termination of the employees, withholding the salaries of
the employees and illegal pay cuts by the employers. Experts report that close
to 1.5 lakh IT/ITeS employees could lose jobs due to the ongoing pandemic.
In a statement, a spokesperson of Cognizant, an IT company who has been accused
of illegal termination, said that Performance management is a normal process
across all companies in the IT industry, including Cognizant.
However, Vinod AJ, General Secretary of FITE (Forum for IT Employees) stated
that We plan to file such petitions in Bengaluru and Kolkata as well. We want to
expose to the government as well as the society the mass terminations that are
going on. Because of this, not just thousands of employees but also their
families are getting affected. The government should intervene immediately
He further added:
They cannot terminate workers by just branding their performance as poor.
Cognizant Chennaiís policy itself says that when an employee gets poor
performance ratings, they will be put in a performance improvement programme.
After three to six months of training, their performances are evaluated, and the
company can then take a decision whether to retain them or not
As in his own words, Dr Kislay Pandey, an eminent lawyer of the Supreme Court,
has submitted that if at all any person who has been wrongfully terminated by
his/her employer, it becomes a stronger case against the employer. Further, he
mentions that Indian Contract Act, 1872 which deals with the contract of
employments silent against the term force majeure (Act of God) that benefitted
the employees, if at all such argument has been filed on such rationale thereís
no case has there is no legal value to that term, or it can be said that it has
mere theoretical existence. Though any term Act of God has been used or if
mentioned in the contract does not include pandemic as such, which still leaves
no scopes to use against any complaint filed.
It is advisable to take measures to help the country and eliminate the crisis by
implementing different policies, but every policy should be implemented in the
nationís interest. In a simultaneous effort by the government, it is important
for the business sector to maintain the hold of nationís interest paramount to
any other interest, a sector which contributes to major part of not just the
country but the world at large. Business sector should comply with humanitarian
policies beyond mere business strategies and valuation of the business in terms
of moneyís worth.
Following the direction provided by the legislature every person should put
efforts in protecting his/her interest with the societies interest, the further
legal professional should maximize their efforts in providing legal help to
people who suffered in this pandemic for promoting the righteous nature and
object of the legislature. Any situation resulting termination of the employees
should resort to the legal remedies provided by the government. Any situation
resulting termination of the employees should resort to the legal remedies
provided by the government. Business sector should consider the government's
effort to protect and promote national interest to defeat the grave consequences
of the pandemic, this effort, in turn, will help the nation to build a stable
economy in coming years. This act is contrary to policies of government for any
reason whatsoever,willfurther lead the economy.
The recent decision taken by the Ministry of Home Affairs will, however, help
both the companies and the employees to reach a decision of payment or
non-payment. The country is in a situation where lockdown restrictions are yet
not lifted up, and therefore, there are many companies which have not started
their operations still. A bunch of petitions in the Supreme Court were filed,
which is now dismissed taking in view of the current pandemic. These, in turn,
is just messing up the situation in the country regarding the scenario of an
employee and employer relationship.
The author of this blog/Article is Kishan Dutt Kalaskar, a Retired Judge and
practising advocate having an experience of 35+ years in handling different
legal matters. He has prepared and got published Head Notes for more than 10,000
Judgments of the Supreme Court and High Courts in different Law Journals. From
his experience, he wants to share this beneficial information for the
individuals having any issues with respect to their related matters.