Illegal Termination of an Employee during Covid-19

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 eliminatethe 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. Corporates due to interrupted business have led into financial difficulties resulting in the layoffs from the workforce to reduce the cost, in turn,immersingthe 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:

1. Discrimination.
2. Breach of Contract.

Though there are many other factors that are also categorized under the heads of illegal termination that are:

1. illicit order of the employer.
2. personal grudge.
3. dispute

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 for termination.

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 state. 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 employershave 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 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”. 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 government circulars. 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. Also 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-19’s 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.

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.

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:

1. 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.
2. The above-mentioned relief is also made applicable on those establishments which were not functioning in their full capacity.
3. 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.
4. 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 Chennai’s 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 there’s 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 nation’s interest. In a simultaneous effort by the government, it is important for the business sector to maintain the hold of nation’s 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 money’s 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.