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Don't pay workers wages during calamities, says House panel

By Somesh Jha
April 25, 2020 10:23 IST
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Parliamentary standing committee on labour, led by Biju Janata Dal MP Bhartruhari Mahtab, has said in its report that it is unjustifiable for owners to pay workers’ wages during natural calamities. 

IMAGE: Migrant workers go back home following the imposition of the national lockdown to prevent the coronavirus pandemic from spreading. Photograph: Amit Dave / Reuters.

At a time when coronavirus has led to a big disruption in economic activity due to a national lockdown, a parliamentary standing committee has asked the government to revisit a clause in the labour laws. This clause allows workers to get layoff compensation in case businesses are disrupted by a ‘natural calamity’. 

The standing committee has suggested to the government to allow bigger companies retrench workers, without the need to seek official nod from the government. 

It asked the government to put a cap on the number of times firms can renew the contract of workers. 


It has further struck down a proposal from the government for workers to give a 14-day notice before going on a strike across all sectors of the economy. 

“…in case of natural calamities like earthquake, flood, super cyclone etc, which often result in closure of establishments for a considerably longer period without the employer’s fault, payment of wages to the workers (towards layoff compensation) until the re-establishment of the industry may be unjustifiable,” the Parliamentary Standing Committee on Labour, led by Biju Janata Dal MP Bhartruhari Mahtab, said in its report on the government’s proposed Code on Industrial Relations Bill, made public on Friday. 

This assumes significance, particularly in the current scenario where companies, which are struggling to meet their ends, cannot provide wages to its workers in many cases. 

After the national lockdown was enforced on March 25, businesses, except those involved in production or services of essential items, shut shop across the country. The National Democratic Alliance (NDA) government urged employers to not layoff or retrench workers during the lockdown.

This was led by a strict follow-up of the advisories from the labour commissioners. 

In fact, the government issued an order on March 29 directing companies not to reduce wages of workers during the lockdown period. This was challenged by some employers in the Supreme Court. 

Though the government hasn’t declared Covid-19 virus as a ‘natural calamity’, a labour law expert said the finance ministry’s order in February, permitting companies to revoke ‘force majeure’ clause for natural calamity, is a big signal that the pandemic can be treated as a ‘natural calamity’. 

In labour law parlance, there is a slight difference between layoff and retrenchment. Layoff is temporary in nature, when workers cannot be given work for a temporary period of time, as against retrenchment. 

Layoff can be for multiple reasons. For instance, shortage of coal, power or raw materials, breakdown of machinery or natural calamity -- factors usually beyond the control of workers -- under the present law. 

In India, the Industrial Disputes Act, 1947 governs the provisions for layoffs which itself is restricted to only registered plantation, mines and factories -- exempting services and construction sector, among others, from within its ambit. 

Further, the layoff compensation is given only in case the size of a firm is 50 or more in terms of workforce. A worker, who is on the muster roll of a company and has completed 240 days of ‘continuous service, is eligible to get 50 per cent of wages for 45 days as layoff compensation, under the present law. 

Though the Union labour and employment ministry defended the ‘natural calamity’ clause, the standing committee didn’t accept their contention.

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Somesh Jha in New Delhi
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