Coping with COVID-19 – FAQs for Indian Employers

Mar 27, 2020

Coping with COVID-19 – FAQs for Indian Employers

In a very significant move, the Prime Minister of India on March 24, 2020 announced a 21 day nation-wide lockdown with effect from 00:00 hours on March 25, 2020. The initial lockdown has now been extended up to May 03, 2020 by the Prime Minister and the Ministry of Home Affairs has directed that the lockdown measures stipulated earlier continue during this period. This lockdown of nearly one-fifth of the world’s population is to ensure effective social distancing to prevent the spread of COVID-19. While the lockdown is undoubtedly essential to contain the pandemic, the impact on businesses and the economy cannot be ignored. There have been several measures that the Central Government and the State Governments are putting in place, keeping in mind the interests of the people and the limitations and the restrictions on Indian establishments and employers are rapidly evolving.

For the benefit of Indian establishments, we have set out below a list of questions that we have been asked over the last few weeks by employers on managing business and coping with COVID-19.

1. What is a lockdown? Do all establishments need to close down, irrespective of the nature of industry?

In the current context the terms curfew, lockdown, and emergency, are being used by representatives of the government and their agencies as per common parlance. Therefore, it is important for us to understand the context in which these terms are being used in order to interpret them meaningfully.

The lockdown has been announced pursuant to the directions of the National Disaster Management Authority, under the Disaster Management Act, 2005[1].

Initially, all establishments, except those engaged in the manufacture of essential commodities or provision of essential services, as listed in the guidelines[2] issued by Ministry of Home Affairs on March 24, 2020 and the addendums[3] to the same were to be closed down[4]. Several State Governments have also issued notifications detailing and elaborating on the scope of ‘essential services’ and the permissions required to continue operations. However, as part of the Prime Minister's announcement that the lockdown would be extended to May 03, 2020, he also announced that certain relaxations would be granted to allow additional industries and commercial establishments to function from April 20, 2020, subject to them adhering to relevant social distancing measures.

To effectuate the Prime Minister's announcement, Ministry of Home Affairs issued order dated April 14, 2020, extending the lockdown up to May 03, 2020. The Ministry of Home Affairs, on April 15, 2020[5] further issued guidelines ("Consolidated Guidelines"), inter alia, setting out the activities that will continue to remain prohibited across the country and the establishments/industries that would be permitted to operate from April 20, 2020. The lockdown and any permissible relaxations are to be operationalized by the relevant State Government.

2. What do employers need to do to if they need to stay operational during the lockdown?

Initially, to stay operational during the lockdown, the employer's establishment had to be specifically exempted or excluded from the lockdown either by the Central or the State Government. Only establishments providing essential services were initially excluded from the lockdown and in most cases, employees working in such establishments were required to carry passes or letters that permitted them to travel to work during the lockdown in the manner prescribed by the State Governments. However, the Consolidated Guidelines have further expanded this scope, subject to State Governments operationalising these guidelines, to allow activities including health services, agricultural and related activities, activities in the financial and social sectors, social education, public utility, transport of goods/cargo, essential goods, activities in specified commercial and private establishments, activities in specified industrial establishments, construction activities, and operations by government offices, to operate from April 20, 2020. Such activities are required to be carried out in strict compliance with the standard operating procedures contained in the Consolidated Guidelines, which include social distancing measures.

3. What are standard operating procedures and are all establishments required to adhere to the same?

Annexure II of the Consolidated Guidelines prescribes the standard operating procedures that establishments/industries are required to adopt when reopening their establishments/industries. These standard operating procedures include:

a. Completely disinfecting the premises;

b. Providing specific transport facilities for employees who otherwise use public transport;

c. Disinfecting vehicles entering the premises;

d. Conducting thermal scans of employees;

e. Implementing social distancing; and

f. Banning non-essential visitors.

In this regard, the Government of India issued a clarification dated April 23, 2020[6], inter alia, stating that all establishments/industries would be required to adhere to the standard operating procedures contained in the Consolidated Guidelines and further clarified that the Consolidated Guidelines do not provide for the arrest or imprisonment of the employer if an employee is found to be infected with COVID ‑ 19.

4. Can employees be asked to work from home during this lockdown? Do they need to be paid in full for such work?

Yes, employees can be asked to work from home during the lockdown to the extent that the nature of their work allows for the same. Employees would have to be paid their full salaries during such time.

5. In industries where employees cannot work from home, do they need to be paid during the period of the lockdown?

Yes, employees would need to be paid during the period of the lockdown. The Central Government has issued a circular stating that if the place of employment is made non-operational due to COVID-19, the employees of such unit will be deemed to be on duty[7]. Similar directives have been issued by various State Governments including the Governments of Karnataka, Haryana, and Maharashtra[8]. Additionally, the Ministry of Home Affairs on March 29, 2020, issued a notification to all State Governments and Government ministries/departments, inter alia, requiring employers of all industries, shops and establishments to pay wages to all workers without deductions, during the period of the lockdown[9]. In certain States such as Telangana[10] and Uttar Pradesh, the government has also directed all shops and establishments (other than those exempted from the lockdown) to be closed during notified lock down period and declare such days as paid holidays for all categories of employees.

Private sectors employers in certain states have filed writ petitions against the Central Government notifications requiring employers not to reduce wages. These petitions have been clubbed together and heard by the Supreme Court of India and the Supreme Court has now required the Central Government to submit its plan in two weeks on how it will implement such notifications.

6. Can employees be asked to utilize their accrued annual leave for this lockdown? Once such leave has been exhausted, can they be placed on unpaid leave?

No. Employees are entitled to use their accrued annual leave at their discretion, subject to approvals from their managers. While employees may be encouraged to use their accrued annual leave, they cannot be mandated by the employer to do so. Further, employees are eligible to encash their accrued but un-availed annual/privileged leave at the time of cessation from employment.

As a general rule under the Indian law, employers cannot mandate employees to proceed on unpaid leave. Therefore, in the context of the lockdown, if an employer requires its employees to not come to work as a preventive measure or for the duration of the lockdown, employees will need to be paid for such days and therefore, they cannot be forced to utilise their annual leave at this time.

7. In industries that are exempt from the lockdown, can employees be forced to take sick/ annual leave if they have had recent travel history, or are exhibiting symptoms of COVID-19 or have been in close contact with persons who have been infected?

Most States have issued notifications/orders requiring that persons who have come in contact with persons who have been infected or have had recent travel history self-quarantine for 14 to 28 days.

In this regard, in the case where the employer is allowed to work during the lockdown under law, but the employee is unable to attend work due to the requirement to self-quarantine because of his personal travel or coming into contact with an infected person, the employer may possibly require the employee to take his/her annual leave or sick leave, subject to any specific Government notification in this respect. However, if the employee had to travel because of work or came in contact with a sick person due to this work, the employer may not be able to force the employee to utilize his/her sick or annual leave.

In this context, the Government of Karnataka has issued a notification mandating the grant of 28 days paid leave for employees who are infected with COVID-19. Also, the Government of Uttar Pradesh has required that employees who are infected by COVID -19 or who are suspected to be infected and are kept in isolation be provided 28 days paid leave by their employer.

8. Can employees be asked to share their medical test reports with the employer? Are there any concerns here from a data privacy perspective?

While medical data in the electronic form is considered personal and sensitive data, employers can require employees to submit a fitness certificate/medical certificate from a registered medical practitioner stating that the employee is healthy and can work. Employers, in most cases, reserve the right to require employees to provide a medical certificate if they are on prolonged sick leave or if they are to return to work after sickness.

If the medical certificate or fitness certificate is being provided in the electronic form, the employer would be required to adhere to the requirements prescribed under the Information Technology Act, 2000 (IT Act) and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (Security Practices Rules). The Security Practices Rules require that consent of the information provider be obtained regarding the purpose of usage of the information that is collected, the intended recipients of the information, and the name and address of the entity storing the information.

As an aside, the standard operating procedures in Annexure II of the Consolidated Guidelines require that mandatory thermal scanning be conducted on every person who enters or leaves the workplace.

9. Do employers have any obligation to report employees who have had recent travel history, or are exhibiting symptoms of COVID-19 or have been in close contact with persons who have been infected?

Currently, there are no obligations that have been placed on an employer to report employees. However, as a best practice, it is recommended that employers advise such employees to seek medical help and/or inform the local authorities of their condition. Employers would also need to co-operate with the local authorities for contact mapping and such other measures for containing the spread of the virus. It is recommended that all employers comply with the standard operating procedures prescribed under the Consolidated Guidelines and keep record of the same.

10. In industries that are exempt from the lockdown, can employees refuse to report to work fearing possible contraction of COVID-19?

No, an employee cannot refuse to report to work where the employer is permitted to carry on operations, unless the minimum standards of health, safety, and hygiene as provided under the standard operating procedures set out under the Consolidated Guidelines are not being followed by the employer.

11. Can hours of work and wages be reduced to absorb the impact on the business, during the lockdown and thereafter? Is it possible for employers to pause benefits and incentives till the business situation is normalized?

No. The Ministry of Home Affairs on March 29, 2020, issued a notification to all State Governments and Government ministries/departments, inter alia, requiring employers of all industries, shops and establishments to pay wages to all workers without deductions, during the period of the lockdown[11]. That being said, it may be possible to implement a reduction in hours of work, in accordance with the process prescribed under law.

As an aside, please note that in view of the lockdown and the Consolidated Guidelines, certain states such as Gujarat, Punjab, and Himachal Pradesh, have issued notifications allowing employers to extend the working hours in factories beyond their current limits (i.e., work up to 12 hours in a day and 72 hours in a week), for a temporary period once the factories are allowed to operate.

12. Can an employer implement a reduction in force because of the business impact of COVID-19?

As stated above, the Central Government has issued a circular stating that if the place of employment is made non-operational due to COVID-19, the employees of such unit will be deemed to be on duty[12]. Similar circulars advising/requiring employers to not reduce or stop salary payments or to terminate employment have been issued by State Governments including Karnataka, Haryana, Maharashtra[13], and Telangana[14].

To the extent that the establishment is in a State that hasn’t as yet prohibited the termination of employment, a reduction in work force could be implemented by following the due process set out in law as well as the employment agreement/ contract and the company’s employment policies. That said, in light of the current circumstances, it is possible that employees may challenge the termination in labour courts as wrongful termination, and given that the termination was during the COVID ‑ 19 outbreak, it is possible that courts may take an approach that is sympathetic to employees.

13. Is there any duty for the employer to compensate employees who have contracted the virus?

Currently, there is no requirement for an employer to compensate employees who have contracted the virus. However, certain State Governments have issued notifications/orders requiring employers to grant 28 days of paid leave to employees who have been infected with COVID - 19. If an employee gets infected due to coming to work, it may be possible for the employee to file a tortious claim for damages against the employer.

14. Have there been any relaxations provided to employers in relation to social security contributions on behalf of their employees' or compliances under employment laws?

Please note that the following relaxations have been provided to employers:

(a) Amendment to the EPF Scheme

The Employees’ Provident Fund Scheme, 1952 has been amended to include pandemic as a reason to allow withdrawal of 75% of the non-refundable advance standing to the credit of the employees in the provident fund accounts or 3 months wages, whichever is lower.

(b) Relaxation by the EPFO

The Employees’ Provident Fund Organization has extended the time limit for filing and making provident fund contributions for the month of March 2020, which can now be filed and paid by May 15, 2020.[15]

(c) Relaxation by the ESIC

The Employees’ State Insurance Corporation has extended the time limit for filing and making employee state insurance contributions for the months of February and March. The employee state insurance contributions for the months of February, 2020 and March, 2020, can now be filed and paid up to May 15, 2020.[16]

(d) Extension of filing of labour annual returns

The Ministry of Labour & Employment has extended the last date for filing of Unified Annual Return under 8 labour laws for the year 2019. Establishments have now been allowed to file their annual returns for the year 2019 up to April 30, 2020.

15. Are there any employment law issues that should be kept in mind while implementing work from home models?

Key employment law considerations that employers should keep in mind when implementing work from home are:

Hours of Work

The concept of work from home is not specifically regulated or governed by statute. Therefore, in the absence of a specific statute, the employment laws that would otherwise be applicable to employee when they are working from the employer's establishment would continue to apply. In this regard, work hour and overtime laws would continue to apply to employees. Hence, an employer would have to be mindful that employees do not work beyond their regular working hours and adhere to relevant overtime requirements.

Confidentiality and Data Security

One of the primary considerations when it comes to allowing employees to work from home is confidentiality and data security. Therefore, it is recommended that employers take additional data security measures to ensure that their IT infrastructure and resources are protected. Certain employers have resorted to geo-tagging of their devices to ensure that their data security and confidentiality is not breached.

Productivity and Performance Tracking

Given that in most instances the standard processes for productivity and performance tracking have been developed for employees working out of the employer's establishment, employers would have to now adapt these methods to employees working from home. In this regard, there are a number of applications that are available for employers to monitor their employees work remotely. In certain circumstances, employers also require their employees to periodically provide summaries to their managers of the work that they are doing.

OSP Licences

To facilitate employers to allow employees to work from home, the Department of Telecommunications has through circular dated March 13, 2020[17], issued certain relaxations in the terms and conditions prescribed for Other Service Providers (OSPs), with respect to the ability of their employees to work from home. The exemptions/relaxations are available till April 30, 2020. This circular inter alia exempts OSPs from the requirement to pay a security deposit and have an agreement to enable work-from-home options or seek prior permission to allow work from home. Further, OSPs have been exempted from the requirement of having a secured VPN from an authorized service provider. OSPs may now use secured VPNs configured using ‘static IP’ addresses by themselves to enable interconnection between the home agent position and the OSP center with pre-defined locations.

The Central Government and various State Governments are issuing orders for implementing the lockdown and the directives are evolving rapidly based on the situation on ground. We will be reviewing and updating these FAQs accordingly. This version is updated as of April 27, 2020. AZB & Partners also has a dedicated resource page on COVID -19 updates here.

Please see our update on the Central Government’s order - https://www.azbpartners.com/covid-19-updates-march-23-2020/ [8] Please see our update on the Maharashtra Government’s order - https://www.azbpartners.com/covid-19-updates-2/ [9]https://mha.gov.in/sites/default/files/MHA%20Order%20restricting%20movement%20of%20migrants%20and%20strict%20enforement%20of%20lockdown%20measures%20-%2029.03.2020.pdf [10]https://covid19.telangana.gov.in/wp-content/uploads/2020/03/GO-45.pdf

Please see our update on the Telangana Government’s order - https://www.azbpartners.com/covid-19-updates-march-23-2020/ [11]https://mha.gov.in/sites/default/files/MHA%20Order%20restricting%20movement%20of%20migrants%20and%20strict%20enforement%20of%20lockdown%20measures%20-%2029.03.2020.pdf [12] https://labour.gov.in/sites/default/files/Central_Government_Update.pdf

Please see our update on the Central Government’s order - https://www.azbpartners.com/covid-19-updates-march-23-2020/ [13] Please see our update on the Maharashtra Government’s order - https://www.azbpartners.com/covid-19-updates-2/ [14] https://covid19.telangana.gov.in/wp-content/uploads/2020/03/GO-45.pdf

Please see our update on the Telangana Government’s order - https://www.azbpartners.com/covid-19-updates-march-23-2020/ [15] https://www.epfindia.gov.in/site_docs/PDFs/Circulars/Y2020-2021/GraceperiodMarch2020.pdf [16] https://www.esic.nic.in/attachments/circularfile/6eba125d86727a7a7dd5fb2dc1c5b6e5.pdf and https://www.esic.nic.in/attachments/circularfile/c5ffbad53f7e3b7134a72d9b2cf9d13c.pdf [17] https://dot.gov.in/sites/default/files/Relaxation%20inT%26C%20of%20OSP%2013.3.20.PDF

DISCLAIMER

These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.