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Corona Lockdown: Whose Liability To Pay Salary?

The outbreak of COVID-19 is a global pandemic and on March 14, 2020, the government of India declared COVID-19 as a notified disaster. Travel restrictions, event cancellations, and sick and self-isolating workforces due to the impact of COVID-19 are causing difficulties for businesses across the globe. But what if an employee who is working as a let's say production technician in a private factory. Due to National Lockdown, the factory remained closed completely for n number of months.

There have been notifications from the National Disaster Authority that no employee will be treated on leave and factory owners should pay full salary to their employees during the lockdown. But, the factory owner showed its inability to make the payment.

Legal issues arise/ discussed in this article:
  • The decree was issued by the government. Is it just an advisory or it is a mandatory direction.
  • What are the remedies that are available to the private employees in case their employer didn't pay their wages?

To get a better understanding of this focus needs to be put upon the Acts under which the Government has/can impose the lockdown.

Disaster management Act 2005

It defines a 'disaster' as a catastrophe, mishap, calamity, or grave occurrence in any area - arising from natural or man-made causes, or by accident or negligence - which results in substantial loss of life, human suffering, or damage to and destruction of property or the environment; and its nature or magnitude is beyond the coping capacity of the community in the affected area.

Disaster management is defined as a continuous and integrated process of planning, organizing, coordinating, and implementing measures necessary to prevent the danger or threat of a disaster; mitigating or reducing the risk of a disaster or its consequences; capacity-building; preparedness to deal with a disaster; prompt responses to a disaster; assessing the severity or magnitude of a disaster; evacuation, rescue or relief; and rehabilitation and reconstruction.

The Act includes the measures to be taken by the government for disaster management, the role of local authorities, and offenses and penalties. It also mandates the establishment of a National Institute of Disaster Management.

Aims And Object Of This Act:
  • Planning, Coordinating, And Implementing All Measures
  • To Prevent, Minimize, Overcome, Or To Stop The Spread Or A Disaster
  • All Stages From Rescue To Immediate Relief

Another law that can be enacted by the state government is the Epidemic Disease act,189

The Epidemic Diseases Act, 1897 is colonial-era legislation that is still used as the primary law to control a mass epidemic. The act, most recently, has been invoked by a number of Indian states to fight the COVID-19 pandemic. This article aims to understand the existing scheme under the act, its limitations, judicial scrutiny, and the need for a new holistic law from a public health perspective.

The Epidemic Diseases Act (hereafter referred to as the act) was enacted in 1897 to control the outbreak of the deadly bubonic plague in Bombay. As the plague assumed epidemic proportions, the colonial response was typical�one driven by panic, high-handedness, ill planning, and extreme measures. The Epidemic Diseases Act was a result of "stringent measures," which Queen Victoria had directed her government to take, in order to tackle the plague outbreak (Kumbhar 2020).

Legal frameworks are important during crisis situations as they augment a government's response to public health emergencies and also the rights and duties of citizens. It is thus important to review the act with reference to its current relevance, its adequacy to tackle deadly virus outbreaks, surveillance and privacy issues, and, most importantly, its limitations.
But this act doesn't contain any provision which gives the power to any government to give direction to any private in the market in order to not to take their jobs and give remuneration on proper timings.

Still, that doesn't mean the law doesn't have any provision to secure the private employees!!!

Industrial dispute act 1947:

Understanding the concept of lay-off under the Industrial Disputes Act, 1947

Section 2 (kkk) of the Industrial Disputes Act, 1947 defines the term Layoff' as the inability, failure, or refusal of the employer to provide employment to a workman whose name is mentioned in the muster roll of his industrial establishment and who is not retrenched due to the lack of power, coal, raw materials, accumulation of stocks, breakdown of machinery or natural calamity for any other relevant reason.

Conditions essential for a lay-off:
There must exist an inability, failure, or refusal from the employer's side to provide employment to the workmen.
Such inability, failure, or refusal must be due to lack of power, coal, raw materials, accumulation of stocks, breakdown of machinery or natural calamity for any other relevant reason.
The name of the workman must be mentioned in the muster roll of the employer's industrial establishment.
The workman must not have been subjected to retrenchment.

25C of industrial dispute act 1974:Right of workmen laid-off for compensation:

Whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid-off, whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid-off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty percent. of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid-off:
Provided that if during any period of twelve months, a workman is so laid-off for more than forty-five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty-five days, if there is an agreement to that effect between the workman and the employer.

Provided further that it shall be lawful for the employer in any case falling within the foregoing proviso to retrench the workman in accordance with the provisions contained in section 25F at any time after the expiry of the first forty-five days of the lay-off and when he does so, any compensation paid to the workman for having been laid- off during the preceding twelve months may be set off against the compensation payable for retrenchment.

25M. Prohibition of lay-off

  1. No workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment to which this Chapter applies shall be laid-off by his employer except 1*[with the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereinafter in this section referred to as the specified authority), obtained on an application made in this behalf, unless such lay-off is due to shortage of power or to natural calamity, and in the case of a mine, such lay-off is due also to fire, flood, excess of inflammable gas or explosion].
     
  2. An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended lay-off and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner.
     
  3. Where the workman (other than badli workmen or casual workmen) of an industrial establishment, being a mine, have been laid- off under sub-section (1) for reasons of fire, flood, or excess of inflammable gas or explosion, the employer, in relation to such establishment, shall, within a period of thirty days from the date of commencement of such lay-off, apply, in the prescribed manner, to the appropriate Government or the specified authority for permission to continue the lay-off.
     
  4. Where an application for permission under sub-section (1) or sub-section (3) has been made, the appropriate Government or the specified authority, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such lay-off, may, having regard to the genuineness and adequacy of the reasons for such lay-off, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.
     
  5. Where an application for permission under sub-section (1) or sub-section (3) has been made and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
     
  6. An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub-section (7), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order.
     
  7. The appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (4) or refer the matter or, as the case may be, cause it to be referred, to a Tribunal for adjudication: Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
     
  8. Where no application for permission under sub-section (1) is made, or where no application for permission under sub-section (3) is made within the period specified therein, or where the permission for any lay-off has been refused, such lay-off shall be deemed to be illegal from the date on which the workmen had been laid-off and the workmen shall be entitled to all the benefits under any law for the time being in force as if they had not been laid-off.
     
  9. Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as the accident in the establishment or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub-section (1), or, as the case may be, sub-section (3) shall not apply in relation to such establishment for such period as may be specified in the order.]

Steps that can be taken by the government:

The government needs to be a bit more vigilant by which the industrial burden gets eased out by which there can be any humanitarian way out.

Global examples
Considering the burden of lockdown would have on industries, governments across the globe have taken measures to aid the employers. Denmark has announced that it will cover 75 percent of wage bills. Canada has implemented a wage subsidy scheme. England has provided for 80 percent of average earnings to be subsidized. Malaysia is providing a wage subsidy of RM 600/month for three months for employees earning less than RM 4,000.

Australia has framed a Jobkeeper wage subsidy plan. An employer will be able to claim a fortnightly payment of $1,500 (before tax) per eligible employee from March 30, 2020, for a maxim. Ireland has announced a Wage Subsidy scheme, which refunds employers up to 70 percent of an employee's wages - up to a level of �410 to allow employers to pay their employees during the current pandemic.

The Netherlands allocated a package covering compensation of up to 90 percent of labor costs for companies expecting a reduction in revenues of 20 percent or more, while New Zealand is to pay a lumpsum 12-week wage subsidy to support employers severely affected by the impact of Covid-19 (NZ$9.3 billion)/

The Indian government can create a profit link scheme which will help the small-scale industries to survive in the competitive market even after lockdown.

The Atal Beemit Vyakti Kalyan Yojana (ABVKY) scheme was introduced by the Employees' State Insurance Corporation (ESIC) on a pilot basis for a period of 2 years w.e.f. 01.07.2018 for providing relief to the Insured Persons (IPs) who have become unemployed. However, to provide benefits to the IPs who have become unemployed during the COVID-19 pandemic, the scheme can be extended for another year.

The scheme now provides relief to the extent of 50% of the average per day earning during the last employment. Since its inception till 18.03.2021, a total of 43299 beneficiaries have availed relief under the scheme and an amount of Rs 57.18 crore has been disbursed.

Benefits under the ABVKY Scheme

The rate of relief under the extended ABVKY scheme has been enhanced and the eligibility conditions have been relaxed as listed for the IPs who became unemployed from 24.03.2020 onwards.

The rate of relief has been doubled from 25 percent to 50 percent average per day earning of employees.
The Insured Person should have been in insurable employment for a minimum period of two years immediately before his/ her unemployment and should have contributed for not less than 78 days in the contribution period immediately preceding the unemployment and minimum 78 days in one of the remaining three contribution periods in two years prior to unemployment. Earlier this condition was a minimum contribution of 78 days in four contribution periods prior to unemployment with a minimum of two years insurable employment.
The claim shall become due 30 days after the date of unemployment. Earlier this period was 90 days.

The claim of the IP need not be forwarded by the employer. The claim may be submitted by an IP in the prescribed claim form duly completed online or directly to the branch office.

What if the government doesn't increase the timeline:
Still, there is a way out under The Employees' State Insurance Act, 1948
An Act to provide for certain benefits to employees in case of sickness, maternity, and ' employment injury ' and to make provision for certain other matters in relation thereto. WHEREAS it is expedient to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto

The promulgation of the Employees' State Insurance Act, 1948 (ESI Act), by the Parliament was the first major legislation on social Security for workers in independent India.
The ESI Act 1948, encompasses certain health-related eventualities that the workers are generally exposed to; such as sickness, maternity, temporary or permanent disablement, Occupational disease or death due to employment injury, resulting in loss of wages or earning capacity-total or partial. Social security provisions made in the Act to counterbalance or negate the resulting physical or financial distress in such contingencies are thus, aimed at upholding human dignity in times of crises through protection from deprivation, destitution, and social degradation while enabling the society the retention and continuity of socially useful and productive manpower.

Section 2(8) of The Employees State Insurance Act mentions employment injury " means a personal injury to an employee caused by accident or an occupational disease arising out of and in the course of his employment, being insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India ;]

Benefits:
  1. Subject to the provisions of this Act, the insured persons, [their dependants or the persons hereinafter mentioned, as the case may be,] shall be entitled to the following benefits, namely:
    1. periodical payments to any insured person in case of his sickness certified by a duly appointed medical practitioner [or by any other person possessing such qualifications and experience as the Corporation may, by regulations, specify in this behalf] (hereinafter referred to as sickness benefit);
    2. periodical payments to an insured woman in case of confinement or miscarriage or sickness arising out of pregnancy, confinement, premature birth of child or miscarriage, such woman being certified to be eligible for such payments by an authority specified in this behalf by the regulations (hereinafter referred to as maternity benefit) ;
    3. periodical payments to an insured person suffering from disablement as a result of an employment injury sustained as an employee under this Act and certified to be eligible for such payments by an authority specified in this behalf by the regulations (hereinafter referred to as disablement benefit);
    4. periodical payments to such dependants of an insured person who dies as a result of an employment injury sustained as an employee under this Act, as are entitled to compensation under this Act (hereinafter referred to as dependants' benefit);
    5. medical treatment for and attendance on insured persons (hereinafter referred to as medical benefit);
    6.  payment to the eldest surviving member of the family of an insured person who has died, towards the expenditure on the funeral of the deceased insured person, or, where the insured person did not have a family or was not living with his family at the time of his death, to the person who actually incurs the expenditure on the funeral of the deceased insured person (to be known as 4 [funeral expenses].
    Provided that the amount of such payment shall not exceed 5 [such amount as may be prescribed by the Central Government] and the claim for such payment shall be made within three months of the death of the insured person or within such extended period as the Corporation or any officer or authority authorized by it in this behalf may allow.]
     
  2. The Corporation may, at the request of the appropriate Government, and subject to such conditions as may be laid down in the regulations, extend the medical benefits to the family of an insured person.

What is Accident:

In layman terms accident means collusion between two vehicles on the road and incurred loss due to which person couldn't even attend the office. And got the employment injury for which he will get the benefit.

But in legal terms accident means:
an unfortunate incident that happens unexpectedly and unintentionally, typically resulting in damage or injury. Or
an event that happens by chance or that is without apparent or deliberate cause.

As per my understanding, if the workman is not able to go to his work, the employer is not able to call the employees to the office. The business market is totally shattered up. When no production or any work has taken place employer is not bound to pay the employee and even the employee cant demand it.

In this situation social security scheme for consideration is being introduced, insurance policy is introduced that's why the whole liability as per policy needs to be of ESI. (Employee state insurance)

Another benefit that can be claimed by the workman is under section 2 (20)

Sickness means a condition which requires medical treatment and attendance and necessitates abstention from work on medical grounds;
In the present scenario, the corona is considered a disease, and the exact treatment for it is not available worldwide. The only solution that is there is lockdown, keep social distancing and staying in our own houses until and unless required to move out. That is why benefit needs to be given to the workman.

As per sources, today ESI contributions accumulate to 84000 crore
The massive reserve fund of ESI has invested in fixed income instruments: `59,857 crores in bank fixed deposits and `14,491 crores in special deposits with the central government as of the end of March 2018. This fund could have been used for establishing modern hospitals, colleges, mohalla clinics nearby various industries etc.

It seems they have run like profit dealing institution which is clearly visible by the number of funds which is there with ESI. If they distribute the found it can solve many prevailing major problems.

By rough estimation, the liability that ESI is having to give employee benefit is 50% wages of 91 days which can even increase up to 70% under specific conditions.

However, these 91days could be increased to 6 months. Under the scheme, only those workmen are covered whose income is up to 21000 per month. If we take an average of 14000 per month which means the liability of ESI will be 50%.i.e 7000. And If we take a rough calculation of 3.5 crore workman. Insurance give can easily distribute 80000cr for 3 months which can give a big boost. Also, all those industries and organizations registered under ESI should not have any liability under the industrial disputes act.IT needs to be according to ESI.
  • What if all doors seem closed to workman i.e.ESI, GOVERNMENT, the owner don't provide the relief.

Remedy available even after then is as per the supreme court ruling in case of Kishore Lal vs Chairman, Employees State.

The court noted that the definition of 'consumer' in the Consumer Protection Act is apparently wide enough and encompasses within its fold not only the goods but also the services, bought or hired, for consideration. Such consideration may be paid or promised or partly paid or partly promised under any system of deferred payment and includes any beneficiary of such person other than the person who hires the service for consideration.

It was observed that as per the ESI Act 1948, it is apparent that the Corporation is required to maintain and establish the hospitals and dispensaries and to provide medical and surgical services. Service rendered in the hospital to the insured person or his family member for medical treatment is not free, in the sense that the expense incurred for the service rendered in the hospital would be borne from the contributions made to the insurance scheme by the employer and the employee.

Service provided by the ESI hospital/dispensary falls within the ambit of 'service' as defined in Section 2(1)(o) of the Consumer Protection Act.
The service rendered by the medical practitioners of hospitals/nursing homes run by the ESI Corporation cannot be regarded as a service rendered free of charge. The person availing of such service under an insurance scheme of medical care, whereunder the charges for consultation, diagnosis, and medical treatment are borne by the insurer, such service would fall within the ambit of `service' as defined in Section 2(1)(o) of the Consumer Protection Act.

Having considered all these aspects, we are of the view that the appellant is a consumer within the ambit of Section 2(1)(d) of the Consumer Protection Act, 1986 and the medical service rendered in the ESI hospital/dispensary by the respondent Corporation falls within the ambit of Section 2(1)(o) of the Consumer Protection Act and, therefore, the consumer forum has jurisdiction to adjudicate upon the case of the appellant. We further hold that the jurisdiction of the consumer forum is not ousted by virtue of sub-section (1) or (2) or (3) of Section 75 of the Employees' State Insurance Act, 1948.

Conclusion:
In the tough time, the fight need not to win the law but to fight with covid with unity. Both employer and the employee are under the stress and the government is well aware of it.
I believe whenever this matter reaches court. It will be treated as a public interest as when this act was passed in 2005 no one has ever thought of that there can be a day when every means of transport needs to be closed, malls, industries would be put to halt.

We need to remember what Bhishma Pitamah said in Mahabharat. Even after knowing that he was wrong, doesn't fulfill his promise and went along with Kauravas.
But when has lying on his death bed lord Krishna said to Arjun to go and learn the life lessons. He told that always PUBLIC INTEREST Comes first than the SELF INTEREST. That's why I believe if something is in favor of public interest it doesn't matter whether the law is in favor or not. What matters is in case of the national emergency employee shall pay the salary of their workman on regular basis on humanitarian grounds.

References:
  • https://indiankanoon.org/doc/205911/
  • https://labour.gov.in/sites/default/files/THEINDUSTRIALDISPUTES_ACT1947_0.pdf
  • https://legislative.gov.in/sites/default/files/A1897-03.pdf
  • https://indiankanoon.org/doc/1166740/
  • https://www.esic.nic.in/abvky
Written by: Naman kulshrestha, Law Center 1, Faculty Of Law, University of Delhi

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