Lawyers Move SC against Mass Termination of Workers during Lockdown

Living in a city far from his family with access to limited resources isn’t the only reason behind Rishikesh Singh’s nightmares. The company where he had recently completed his probation period suddenly terminated him. Unlike many other countries, he’s also still being forced to pay house rent.

Now, hunting for job opportunities on various websites is Singh’s only resort. It’s the same script for many other IT professionals across the nation.

S.K., an IT professional, says he was fired along with 70% of his team. Though his former employer is helping him find a new job, he says interviews are being scheduled very slowly and workers have little option to negotiate with the few companies that are hiring.

Unemployment has long been on the rise in India. Last year the National Sample Survey Organisation reported an unemployment rate of 6.1%, the highest recorded in the last 45 years.

According to the Centre for Monitoring the Indian Economy, the unemployment rate stood at 8.7% in March, a situation that has only worsened since the lockdown imposed by a central government unprepared for COVID19.

The unemployment rate soared to 23.8% in the last week of March and continues to maintain its upward trend.

Arjun Kumar, director of the Impact and Policy Research Institute, estimates that about 10 crore workers are going to be affected, and the 30% working jobs that require personal contact will be severely affected.

Reflecting on the steps being followed by welfare democracies in Europe and North America, he says “Companies are giving 60% or 75% of the salaries to their employees. Though layoffs are happening, companies are providing health insurance among other incentives. People in most western countries can also sign up for unemployment allowance, unlike in India.”

Kumar believes that an open dialogue between the central government and private businesses is the solution ahead. “The government should release all pending revenue to the companies to help them cut their losses. There is a sectoral impact in every case, and financial markets and institutions are in a mess. Trust is the main ingredient in any economy, especially a developing one like ours.”

The argument is echoed by Rajesh Inamdar and Amit Pai, advocates who recently filed a public interest litigation in the Supreme Court against the “unlawful” dismissal of workers in the formal and informal IT/ BPO/ KPO/ ITES sectors.

Inamdar and Pai say a balance needs to be struck wherein employees accept reasonable pay deductions, and employers adopt a pragmatic approach instead of abandoning their employees in these difficult times.

“This is an unprecedented situation. The [union] government is sensitive to the needs of companies/ establishments. Therefore, we feel that companies must explore dialogue with the government to bring resolution to the impasse,” they said.

“The government meanwhile ought to play a constructive role by providing some financial aid to employees who are adversely impacted by sudden terminations and the closure of companies,” they added.

According to Inamdar and Pai, laws exist to protect workers in both the formal and informal economies from sudden termination.

“The Industrial Dispute Act 1947 and the Indian Contract Act 1972 govern the conditions of service of an employee. An advisory issued by the Union Ministry of Labour and Employment on 20 March requested private and public companies to not lay off employees or deduct their salaries in the wake of the COVID-19 crisis.

“Although it is just a guideline and not binding on employers, state governments are empowered to issue directions in this regard under their respective Shops and Establishment legislations,” they explained.

Before moving the Supreme Court, which has been hearing a number of other PILs asking the Centre to provide relief to migrant workers and the economically poor, Inamdar and Pai had sent legal notices to a few IT and ITES firms based in Pune and Gurgaon urging them to reinstate their employees and pay full salaries.

They say only one such company acted upon their notice, offering to pay salaries to its employees. Its decision on revoking their termination is still awaited.

The government of India has invoked provisions of the National Disaster Management Act of 2005 to issue directions and orders which are legally binding on all establishments.

On March 29 the Centre issued under Section 10(2)(1) of the NDMA a direction to all state governments to issue orders requiring all employers in the industrial sector, as well as shops and commercial establishments, to pay their workers full wages at their workplace on the due date, regardless of the lockdown.

The direction further states that any termination without following due process would be illegal and amenable to judicial scrutiny.