May 6, 2021

Impact of Covid-19 On the Welfare Mechanism of IDA, 1947: Rights of Employer And Workmen

The Industrial Dispute Act, 1947 (IDA) is known to be the central law for employers, their workmen and also industrial establishments. It also provides the option of retrenchment and lay-off of the workmen. To achieve the objective of this Act, a purposive approach has been followed by the court to interpret the term workmen and industrial dispute. This article mainly focuses on the rights of employers and the workmen as under IDA and also discusses how Covid-19 situation has effected both employer and workmen by all means. The pandemic has raised several legal issues on worker’s rights and all the countries are obligated to take steps to remove such difficulties. According to the law and regulation passed by the central government industries are requested not to terminate any of their employees, or involve them in any kind of wage cut and should also grant leave without any deduction in wages. The paper further discusses about the measures being advisory in nature that asks the employers not to cut-off its labour strength. Also, the government issued measures does not support lay-off as it is done in IDA. The measures are more of knee-jerk measures than being a sign of a good economic policy.

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The Industrial Dispute Act (IDA), 1947 was passed with an objective of regulating the employer-employee relation along with maintaining peace and harmony between them and there relation subsequently. Along with that the act also contains provisions relating to investigation of the industrial dispute and it’s settlement. In light of the growing cases in the Supreme Court of India, the growth and development of the workers has been huge. The economic development of a country which is considered to be an integral part of country’s growth is mostly dependent upon various industries. Thus, peaceful and harmonious relations between the two i.e. employer and the employee (workmen as defined in the Act) can only ensure smooth functioning of the industry. In certain cases IDA, 1947 also provides option of retrenchment and lay-off of the workmen. Lay-off refers to the denial, inability or the failure on the part of employer to grant employment to the workmen because of various reasons, one of them being natural calamity. Whereas retrenchment signifies terminating services of the workmen for any reason. In a country like India where workmen employed are more than 50 in number, they are entitled to receive compensation for the laid-off period which equals to approximately 50% of the dearness allowance and basic wages. However if both the employer and workmen agrees, then the compensation may be ignored after completion of the 1st 45 days of lay-off and if it continues even after that, then the employer may opt for retrenchment of the workmen, provided other criterion are fulfilled. Whereas when the case is about 100 or more workmen, prior permission must be taken by the concerned authority before conducting any lay-off or retrenchment procedure. Along with that, The Industrial Act, 1947 gives an overriding effect and status to such provisions upon all the inconsistencies present in other laws.

During the period of employment both employee and employer have specific rights and duties towards one another. A legal dispute may arise if any of the rights or duties are violated or fails at the part of it’s commitment. Employers in India are provided with legal rights such as right to hire or fire, right to confidentiality, right to implement a work policy and many more[1]. Similarly, the workers have certain rights like right to strike, right of compensation during lay-off and right of individual workmen to raise industrial dispute through Grievance settlement authority, Trade union and Labour court. Right to Strike is given to the workmen in order to get their demands fulfilled from the employer and also to help them to negotiate.[2] IDA, 1947 also provides the employer with the right to initiate a legal action against an employee if any violation of rights is done.

The present scenario is such that the countries all over the world are taking steps to counter the difficulties arising due to COVID-19 Pandemic. Lay-offs and Retrenchments are open up to question under IDA,1947 and also earlier court proceedings. Covid-19 has raised legal issues on worker’s rights. The Labour Ministry on 20th March issued an advisory by requesting industries to make wages to their employees during this pandemic situation. They are requested not to terminate any of their employees, or involve themselves in any kind of wage cut and should also grant leave without any deduction in wages. Even the Director of Industries of Commerce in Haryana on March 27, 2020 gave an advice to all Industries and Commercial to transfer wages to all employees employed under them. According to the order of MHA the deadlines are fixed, the wages have to be paid to the workers on the due date without any deduction for establishments with less than 1000 employees 7th day of the month and 10th day for establishments with more than 1000 employees with regard to Payment of Wages Act.

The Disaster Management Act overrides the Industrial Disputes Act, 1947 sections by allowing employer to pay only 50% of wages as per Sec 25C & 25M. But, it is not necessary if natural calamity has caused the said lay-off. Even the trade unions cannot raise dispute under Industrial Disputes Act,1947 leaving workers helpless without a redressal mechanism. The measures taken by the government to deal with the situation raises a few questions. The very first question is can the employer’s right under IDA be superseded by ‘advisory’ given by Labour & Employment Ministry? It is believed that the Central government may seek only co-operation as it is in the form of an “advisory” and is not enforceable. Furthermore, the provision of the IDA does not support the advisory as IDA supports lay-off in specific cases which includes natural calamity as well. Another important question arising in the present situation is whether employment matters can be dealt by the ‘orders’ which has been issued by law for containment of the epidemic and disaster management? Section 10(1)(1) of the Disaster Management Act only states the measures to be taken as to the response to the disaster with no specification. Thus, a proper consideration has to be made so as to decide whether payment of the wages of workmen in the middle of pandemic is necessary and required as an action towards disaster response. The very objective of Covid-19 regulation is containment and prevention of the pandemic with no other priorities. Its regulation does not provide the power to order full payment to the employees of private formation. Along with that it is to be noted that the orders are mainly concerned with payment of the wages only till the lockdown persists and not thereafter. The lay-off issue is not at all considered or addressed. The Central government’s guidelines are basically advisory in nature that asks the employers not to cut-off its labour strength. Thus one can say that the only thing restricting the employers and their choice of laying off is a mere ‘advisory’ which dearth’s the force of law.

The measures taken by the government have created a huge legal doubt as though it has provided relief to the workmen, but are only temporary in nature. The measures are more of a knee-jerk measure than being a sign of a good economic policy.[3] The secured businesses may default on it’s lenders if the employers are forced to keep paying to the employees. And if by any chance the business fails, the employees whom the government is trying to protect from the very beginning will be left unemployed. An economy can only recover if the businesses are kept safe and in existence. The directions of the government cover almost all the employers, employees and also establishments. All such questions raises a basic doubt i.e. whether the aim of the measures was protection of the migrant labourers or protection of those who was in terrible need of money. The measures shouldn’t have stretched to all the class of employees, as it has reached even to those who have high level of income.

It is of the view that the government measures are inappropriate and burdensome. It is well known that draconian regulations and laws have done no good to anyone and is not fruitful. A perfect example is the case of complete liquor ban in the states of Bihar and Gujarat which subsequently came back as rapid increase in illegal trade of alcohol. In spite of government’s insistence to not to lay-off, there is a huge increase in the cases of lay-offs. Maybe, the only solution to this problem is complete stoppage of this blanket restriction, and instead transparency should be brought up and measures should be implemented accordingly keeping in mind the plight of both employers and workmen.

Conclusion

Usage of two governmental arms to deal with the problem of lay-offs and salary-cuts of the workmen has raised more questions than giving answers. The first step towards bringing certainty is formulation of practical and reasonable policy which is legally valid. Announcement of large businesses to pay cuts of the top management solely won’t suffice. Firms must be encouraged to communicate with the trade unions to accept voluntary pay cuts. Renegotiating and examining the contractual deals of both labour class and the employees in authoritative capacity might be clumsy but is the need of the hour. Government can also consider to relax the unwanted restrictions by choosing industries and those class of workers where regulations are most needed. If feasible, fresh fiscal encouragement from the government’s side which can subsidize the workmen wages just like other countries are doing must also be considered. Along with that the central government’s decision to fund employee provident fund contribution of employee and employer for businesses having approximately 100 employees can turn out to be a encouraging move in this area.

[1] Swati Shalini, Top 5 rights of employers in India, MY ADVO, Published on Sept. 24, 2018 https://www.myadvo.in/blog/top-5-rights-of-employers-in-india/

[2] Vijay M Gawas, Analysis the provision for right to strike of workers under the industrial dispute act 1947 and other provisions of laws, Volume 4 Issue 5 International Journal of Law, 25-30 (Sept. 2018)

[3] Rohan Batra, Are Lay-offs and Salary cuts are the only way forward?, INC42, 20 Apr. 20 https://inc42.com/resources/is-lay-offs-and-salary-cuts-the-only-way-forward/

Author Details: Spardha Jayswal and Khyati Kumari (KIIT School of Law, Bhubaneswar, Odisha)

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