The Lockdown also paralyzes economic life in India. Almost all companies have closed their doors and sent employees home. As much as possible, work will continue from the home office. Nevertheless, economic uncertainties are high everywhere. In Europe, the government is providing short-term relief through short-time work. But what measures are possible in India? until the economic situation eases again?
Is there the possibility of a wage reduction/short-time work??
The possibility of short-time work is not (so far) provided for in Indian law and is accordingly not available 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. Likewise, the employer cannot force its employees to bring forward annual leave.
The Indian Ministry of Home Affairs has (still) not issued any concrete measures. Rather, the request remains to a) maintain the status quo (comply with employment contracts) and b) not to make any wage cuts within the next 3 months. There is currently no verified information that major Indian companies are behaving differently.
Internal agreements are possible.
In the last few days, however, there has been an increasing number of inquiries to us about the conditions under which salary cuts can be made. We would therefore like to point out once again that the authorities have so far seen no reason to allow such cuts in an orderly manner. Rather, the urgent request remains to refrain from salary cuts and dismissals under the current conditions. The normal conditions of the employment contracts still apply.
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 already reported isolated examples of voluntary wage cuts by the Indian workforce (up to approx. 1/3 of wages). Such suggestions directly from the workforce naturally arise due to fears of layoffs.
We continue to receive reports in which top and middle management in some companies voluntarily forego salaries of up to 30%. At the same time, however, numerous companies are offering an extra bonus or temporarily increased salary, especially to low-wage employees and unskilled workers (INR 15.000 to 30.000 per month), as they are particularly at risk in their social life from the corona crisis.
Important note on the subject of salary cuts and layoffs
Due to numerous inquiries, we would like to reiterate that salary cuts and layoffs made by the employer are (for now) in India are currently not permitted by special decree. If, for example, employees are put under pressure by the employer or the employer directly or indirectly decides to cut their salaries or lay off employees on their own initiative, criminal proceedings will be initiated by the employer Labor Commissioner to be expected. We will clarify in the coming days whether these requirements “only” apply to workers/employees up to a certain salary level.
Of course, the situation is different when employees voluntarily forego their salary, as long as this is documented accordingly and none of the employees is forced to do so (e.g. by others). Likewise – in our experience – a voluntary salary waiver should only be accepted in the management sector, but should be avoided for “simple” employees.
However, these rules by special decree only apply for the duration of the lockdown (i.e. up to and including May 03rd; as of today). After that, according to Indian labor law experts, “everything” is possible, including cuts and layoffs.
Continued payment of wages for trainees
On March 31.3.2020, 6, the Ministry of Development decreed that all trainees or (paid) interns/trainees etc. who are unable to complete their education/training due to the lockdown or whose completion will be delayed accordingly will continue to have their wages paid in full by their employer should. This regulation applies until the lockdown is lifted and the education/training can continue, but for a maximum of XNUMX months from the start of the lockdown.
Further questions..?
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 telephone or by E-mail
