Covid-19 Legal

The Impact Of Covid-19 On The Employer-Employee Rights And Liabilities

Covid-19 On Employer-Employee Rights

The COVID-19 (caused due to Novel Coronavirus), an acute respiratory disease, has been declared as a national calamity as it has shaken nearly every country in the world, and India is also no exception to it.Further, to ensure the protection and safety of people from employers to employees, the Government of India has been continuously taking several preventive, proactive, and mitigating measures. One such measure is Complete Lockdown.

Declaring Lockdown was although a significant step taken by the Indian government. However, it has also led to confusion regarding the rights that an employer has in this pandemic situation, especially the right to terminate his employees.

In this article, we would be dealing with the various steps taken by the government to minimize the large-scale unemployment, options that are available with an employer to deal with financial crises in this pandemic situation, and other various issues.

Who is an Employee According to the Industrial Dispute Act, 1947?

Before starting the issues mentioned above in detail, the first step is to determine what does the term “employee” includes. The term “Employee” is not defined under the ID Act, 1947. However, the said act talks about the term “Workman.”The term workman comprises of any person employed in of industry to do any manual, skilled, unskilled, operational, technical, clerical or supervisory work. Moreover, it also includes apprentices in the said definition.

However, some individuals are considered as an exception to the definition mentioned above. These individuals include the following listed –

  1. Anyone who is in abided by the Army Act, 1950 or the Navy Act, 1957 or the Air Force Act, 1950 or,
  2. Anyone who is serving either as a Police Officer or a Prison Employee or,
  3. Anyone who is engaged either as a Manager or is holding an administrative position or,
  4. Anyone who is being employed as a supervisor, draws wages more than Rs 10000 per month either by the nature of duties annexed to the office or because of the powers conferred in him, functions mainly of a managerial position.

Therefore, it is relevant to take into consideration that any person falling within the ambit of the categories mentioned aboveis not considered as a workman.



  • Can Employment Be Terminated?
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Further, if in case a person discharges both the supervisory as well as the other functions will be considered as a workman under the industrial dispute act only if the major portion of his work falls under deals with manual, skilled, technical, operational, unskilled,or clerical.

Furthermore, it is relevant to note that workers who have engaged by the contractors are although treated as employees under the provisions of the Employee State Insurance Act, 1948 but, the same isnot treated as a workman under the provisions of the Industrial Dispute Act, 1947.

Also, if we talk about the person who is although employed as an employee, but is not engaged in the managerial, administrative, or supervisory services, and is also earning more Rs 10000 will he or she be considered as a workman under the Industrial Disputes Act, 1947. In this case, the employee talked about are basically the doctors, teachers, etc., and they will be considered as a workman only if their work falls under either category of manual, unskilled, skilled, operational, technical, clerical or supervisory.

What are the steps taken by the Indian Government to minimize the concern of large-scale unemployment?

In order to curb or minimize the issue of large-scale unemployment during this pandemic situation, various notifications and circulars were issued by the government.

  • One such notification was issued by the Ministry of Labour and Employment on 20 March 2020.

According to this circular, all the employers of the Private and Public Establishment are informedto extend their cooperation and support by not terminating their employees, mainly, the contractual or casual workers from their jobs or not to lessen their wages. Further, if any worker takes leave, then he or she must be considered to be on-duty or job without any deduction in wages for this period. Furthermore, if any place of employment is to be made mot-operational or non-functional due to the COVID-19, the employees of the said unit will be considered to be on-duty.

  • Another notification was issued by the Ministry of Home Affairs on 29 March 2020. This notification was regarding section 10(2)(1) of the Disaster Management Act, 2005. As per this notification, all the employers whether dealing with the Private or a Public company for payment of wages to the employees without any deductions for the Covid-19 period. Penal provisions are also available in India for the same.

What are the options available to the employer to deal with the financial crisis?

According to the various precedents, notification or circulars, legal provisions, it is true that an employer does not have a right to terminate his employees. However, the same is subject to some conditions.The following listed are the options or the alternatives available to the employer –

  1. Settlement – Settlement means an agreementreached between the employers and employees after carrying out discussions and considerations so that the interests of both parties are taken into consideration.
  2. Lay off – As per the concept of Lay-off, the employer is allowed to pay 50% of the basic salary plus DA (Dearness Allowance),eligible workers,for the period a workman is laid-off.
  3. Retrenchment – Retrenchment refers to the termination of employment of an employee by the employer subject to certain prescribed conditions. However, in the case wherein the future employers decide to re-hire the people, then the first preference should always be given to the retrenched workmen instead of new professionals.
  4. Closure – If in case the financial crisis is to such an extent that the employer of the concerned business is no longer able to run it, then the employer is left with no other option than to opt for permanent closure.

Each of the options available with the employer has its own set of merits and demerits;hence, one should choose either of them only after taking into consideration both social and legal complications. However, it shall be relevant to take into consideration that these options apply only the said employee falls under the purview of “Workman.”

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COVID-19: Can Employment Be Terminated?

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Is an Employer allowed to opt for the option of Temporary Closure in this Pandemic Situation?

No, an employer is not allowed to go for the Temporary Closure in this epidemic situation as the term “Temporary closure” of an undertaking or organization has been defined to be a lockout. However, it is significant to take into consideration that this definition has a very specific and distinct application.

For Example – If in case an establishment or is shutdown or closed due to the lack of resources like the power or raw material, then, in that case, itwould not be considered as a lockout within the meaning of the Industrial Disputes Act, 1947.

Further, if an employer still decides to temporarily close his establishment, then he will be liable to pay 15 days average salary of every completed year of the continuous service or any part thereof in excess of the six months.


To conclude, COVID-19 has resulted in a nightmare for the entire world, and India is no exception to this. Further, to ensure the protection and safety of people from employers to employees, the Government of India has been continuously taking several preventives, proactive, and mitigating measures. The main reason behind the same is to protect the nation from the national calamity.

Further, it is also compulsory for employers to ensure that the rights of the employees are not violated in any manner. Hence, in these tough and pandemic times, we all need to join hands and stand together because no matter what, humanity must prevail.

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