In the last few days we have received numerous questions from companies about the current situation in India. One of the most common questions was related to the topic short-time working, and whether this is also possible in Indian companies (subsidiaries).
Regulatory
The possibility of short-time work is not (so far) provided for in Indian law and therefore does not exist as an instrument. The Ministry of Labor & Employment published a letter on March 20th in which employers are explicitly recommended not to make any wage cuts or layoffs at this time in order not to worsen the crisis and not to demoralize employees through financial weakening.
In the current aid package the government announced support for organized sector workers (or their employers). However, only companies that employ up to 100 employees are eligible. The salary of at least 90% of the employees must not be higher than INR 15,000 per month. This means that this state support is NOT an option for the majority of companies.
Internal agreements
Likewise, the employer cannot force its employees to bring forward annual leave. If it is already foreseeable that the financial resources will not be sufficient for much longer, it is of course an option to seek an open conversation with the Indian workforce and, with mutual agreement - in the interest of the company's continued existence - to agree to wage cuts (for all positions). to agree.
Our network has now reported isolated examples of voluntary wage sacrifices by the Indian workforce (up to approx. 1/3 of wages). Such suggestions directly from the workforce naturally arise due to fears of layoffs.
Update from May 19th
The Ministry of Home Affairs (MHA) regulation passed on March 29 that prohibited employers from reducing wages during the Covid-19 pandemic has been revoked and is no longer valid from today. However, this notification does not mean a “free pass”: the conditions of the employment contract remain valid and only the mutual signing of a corresponding amendment contract can justify the payment of a reduced wage.
If you have any questions about this (e.g. how best to calculate and document such a wage waiver in the most socially acceptable way), please contact us by phone or email.
