PHD Chamber organizes a webinar of “Law under Lockdown: Legal Consequences of COVID-19 on Employment Arrangements”


April 21, 2020

New Delhi

PHD Chamber organizes a webinar of “Law under Lockdown: Legal Consequences of COVID-19 on Employment Arrangements”

PHD Chamber of Commerce and Industry organized Zoom Interactive Session “Law under Lockdown: Legal Consequences of COVID-19 on Employment Arrangements” on Monday, 20th April 2020.

Dr. D K Aggarwal, President, PHD Chamber, welcomed Justice V.K. Rao, Hon’ble Judge, Delhi High Court; Justice Rekha Palli, Hon’ble Judge, Delhi High Court; Mr. Peter Bartlett, Vice Chair, Legal Practice Division (LPD) Council, International Bar Association; Former Presidents of PHD Chamber and the distinguished guests. In his brief discourse he put forward the major concerns that the Industry is facing in this unprecedented pandemic situation and showed his keenness to understand the various employment laws of India and their implications on the employer-employee relationship in the present crisis.

Dr. Aggarwal also expressed his concern regarding the slowdown of business activities due to lockdown which is affecting the liquidity of the businesses. He was happy to share that despite all these challenges, so far, the industries have managed to pay the salaries of their employees and extend support in every possible way, but was concerned about the scenario if the lockdown situation does not end soon. He also enquired on the issue of payment of wages which was mandated by the Circular of Ministry of Home Affairs and the legal position of the employer with respect to payment of employees in case of establishments falling under the essential service category and the one which are in the non-essential service category and the legal scenario of the industries which are covered in the Shop and Establishment Act.

Mr. Peter Bartlett, Vice Chair, Legal Practice Division (LPD) Council, International Bar Association also welcomed to all the delegates and participants in the session and thanked PHD Chamber for giving him this opportunity to be a part of this epoch-making discussion and briefly apprised about the measure Australia is taking to tackle this never seen before circumstances, as every part of the world including Australia is going through these extraordinary periods and is in a situation of downfall and crisis but in the future, the International Bar Association, Australia look forward to increasing its working with India and is hopeful that the IBA will participate and work more with the PHD Chamber in coming times.

Justice V.K. Rao, Hon’ble Judge, Delhi High Court appreciated the efforts of PHD Chamber of Commerce and Industry for organizing the Interactive Webinar Session on such significant topic in critical time. He further stated that in order to better understand the employment arrangements, it is important to understand the employment scenario in India which can be categorized into three types viz, Employment under Central and State Governments, Employment under PSUs, Urban Local Bodies and others, and Employment in Private Organizations. Each of this employment has a separate employment rule and regulations which need to followed and understood. Justice Rao also briefly touched the issue of legalities of the existence and non-existence of the Force Majeure Clause in the contract, and explained how in case of non-existence of the Force Majeure clause, the Frustration of Contract u/s 56 of the Indian Contract Act 1872 comes into picture. He also shared his views in case of contractual employees, the liability and onus sharing between the principal employer and the contractor. He also opined that employees are broadly categorized into two categories; the managerial / supervisory level whose terms of service is mainly guided by the offer / appointment letter and the employees below that pay band, more commonly referred as the workmen, their terms or service is guided by the Industrial Disputes Act 1947. He also stressed on the communication between employers-employee, principal employer-contractor and likewise should be encouraged as it will reduce the chances of dispute in due course. Answering to a question on the lay-off / retrenchment of contract labour, a Last Come First Go approach is usually seen adopted by the employers / contractors.

Justice Rekha Palli, Hon’ble Judge, Delhi High Court thanked PHD Chamber for organizing an informative session is these times of global crisis which is the worst crisis after the second world war. She opined that COVID-19 is affecting 80% of the workforce all across the world and in this kind of situation neither the employee nor the employer can be blamed. Speaking about the legality the various notifications issued by the Central Government especially the one by Ministry of Labour and Employment dated 20th March, and by Ministry of Home Affairs dated 29th March and 15th April, which is seen as a departure from its normal position, Justice Palli, clearly indicated that these are not mere advisories, but are similar to an Order as Section 51 of Disaster Management Act 2005, is deemed to be invoked in the current situation and non-compliance of which will attract penalties. She also opined that these are binding on everyone and all other legal provisions given in The Payment of Wages Act 1936, The Industrial Disputes Act 1947 and The Contract Labour (Regulation and Abolition) Act 1970, Shop and Establishment Act and other related Acts are overridden. Extending her views further she opined that these notifications / circulars indicate a moral and a statuary obligation on part of the employers to continue giving remunerations to its employees, but also indicated that in case of any dispute, the matter will be decided on a case to case basis by looking into all the aspects of such situation. On the future of the legality of these circulars / notifications she propounded that it is not yet clear and decided by the Indian courts, one such petition challenging the applicability of these circulars is already pending before the Hon’ble Supreme Court of India. While enumerating the different kinds of employees, she categorized the employees into four categories viz, Regular Employees, Contractual Employees, Outsourced Employees and Daily Wagers and highlighted the guidelines that might be followed by the courts of law to decide, in case of any dispute. She clearly stated that as far as the lockdown is concerned, the principal employer will remain liable for the wages of contract employees. Justice Palli assured that the courts will keep the balance between the interest of the employers as well as employees. On the issue of considering this lockdown period as a leave period, is not justified and such arguments cannot be accepted by the courts. On the issue of provisions related to part payments to the employees, she said there is no such legal provision either in the Payment of Wages Act 1936 or the Industrial Disputes Act 1947.
Shri Sanjay Aggarwal, Senior Vice President, PHD Chamber delivered the formal Vote of Thanks to the distinguished speakers and the participants for their valuable inputs in making the session, informative and successful and also raised the questions relating to the burden which the industry will be facing in the coming times, if the pandemic and its resultant lockdown continues for some time.

Mr. Amir Z Singh Pasrich, Chair Law and Justice Committee, PHD Chamber, while moderating the session, raised the issues and challenges faced by the industry while also suggesting relief measures and steps to ensure smooth working of the industry in the country and thanked Justice V.K. Rao, Hon’ble Judge, Delhi High Court, Justice Rekha Palli, Hon’ble Judge, Delhi High Court for giving their valuable time and associating with the Chamber via this webinar session addressing the issues of the members. Dr. Jatinder Singh, Director, initiated the session and said that on account of the MHA order, State-specific lockdown orders and the various labour department advisories, trimming headcounts or pay reductions during the lockdown period would be fraught with the risk of disputes, scrutiny and penal sanctions.

The webinar was well attended by over 1000 delegates from the Industry & Legal fraternities, Mr. Pradeep Multani, Vice President, PHD Chamber, Former Presidents, PHD Chamber, Managing Committee Members and Mr. Saurabh Sanyal, Secretary General, PHD Chamber.


Media Division

PHD Chamber of Commerce and Industry