In light of the increasing spread of COVID-19 in India, on March 24th, 2020, the Prime Minister of India, Mr. Narendra Modi, announced a nationwide lockdown for a period of 21 days starting from 00:00 March 25th, 2020. In a country of 1.3 billion, where hundreds of millions of citizens are impoverished and countless millions live in packed urban areas with poor sanitation and weak public health care, this step was necessary. However, the impact of this lockdown on the businesses and economy of India cannot be ignored.

Over the last few days we have received some important questions from our clients globally regarding managing their enterprises in India during the COVID-19 lockdown which we have listed below for our readers.

 

  1. Shall all Enterprises in India be mandatorily closed during this lockdown?

Yes, all enterprises in India, other than those engaged in the manufacturing of certain essential commodities (such as petroleum, LPG, power generation, medical equipment) or those engaged in providing certain essential services (such as hospitals, grocery stores, ATM’s) shall remain closed.  All health and safety directions prescribed by the government will have to be strictly adhered to by the employers of enterprises operating during the period of lockdown.

 

  1. Do employees need to be paid during the period of lockdown when they work from home?

Yes, employees would have to be paid during the period of lockdown when working from home. The Central Government of India and the Ministries of States of India (such as Maharashtra and Karnataka) have issued orders stating that during this period of lockdown, employees shall be deemed to be on duty. The Ministry of Home Affairs in India on March 29th, 2020 issued a notification requiring employers of all industries, shops and enterprises to pay wages to all workers without deductions, during the period of lockdown. Similar circulars have been issued by State Governments (such as Maharashtra and Karnataka) to not reduce or stop salary payments or terminate employments during this period of lockdown.

 

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

No, employees are entitled to utilize their annual leave at their own discretion, subject to approval from their managers (such leave approval/refusal/regulations are set out in the HR Manual of a company and need to be in due compliance with the respective state’s applicable labour regulations). While employees can be encouraged to use their accrued annual leave, they cannot be forced by an employer to do so.  Furthermore, under Indian law, employees cannot be forced to go on unpaid leave. Therefore, on account of the lockdown, if an employee cannot come to work, employees shall have to be paid during that period and cannot be forced to utilize their annual leave at this time.

 

  1. If an employee has contracted COVID-19, is the employer under a legal obligation to mandatorily report to the local authorities?

No, the employer is not under any legal obligation to do so. However, as a matter of good practice, the employer should take appropriate measures to ensure the safety of other co-workers and report such a case to the local authorities.

 

We understand that this period of lockdown can be financially challenging for most employers. Therefore, our advice to you is to amicably discuss and negotiate with your employees in India if they shall agree to adjust their annual leave towards the leave granted during this period of lockdown or if they would agree to reduced pay for this period of time. Please bear in mind that an employee dispute related to this epidemic period, if taken up by the employee in a labour court in India, shall in all probabilities be ruled in favour of the employee.

We at D’ Andrea and Partners Legal Counsel, have a team of experts to answer all of your queries. Do get in touch with us at info@dandreapartners.com for any questions or assistance.