Effective from March 25, 2020, a national lock-down has been imposed in India across the country for a period of 21 days. For the duration of the lock-down, all commercial and industrial establishments across sectors are to be closed except some exceptions as imposed by the Government of India. 5ive Legal is mandated to provide our clients who do not fall under these exceptions to promote awareness of legal implications of carrying on their business during this period.

The national lock-down is mandatory for all commercial establishments. If an employer desires to continue to operate, then work-from-home (WFH) is the most feasible solution. The Ministry of Health and Family Welfare has issued an Advisory on Social Distancing, wherein it strongly encourages employers to opt for WFH wherever feasible. The Ministry of Corporate Affairs (MCA) has also issued an advisory note on 20th March, 2020 for all the Companies and Limited Liability Partnerships, as part of the preventive measure to contain the spread of COVID 19 and has introduced a simple web form, CAR (Company Affirmation of Readiness towards Covid 19)–2020 for Companies and LLPs to confirm their readiness to deal with the Covid -19 threat and provide their WFH policy, if any.

However, it may be noted that WFH is not mandatory, neither is the requirement to file CAR-2020. However, in order to comply with both the restrictions of the national lock-down as well as keeping in line with the need for social distancing, employees are advised to move to WFH for all employees able to do so, for the next few months to (i) continue its business operations without limiting the productivity; and (ii) reduce and mitigate the spread of Covid-19.

On 29th March, 2020, the Ministry of Home Affairs has passed an order stipulating that all employees are to be paid full wages for the duration of the lock-down. Further there are various Central and State Government advisories requesting that employees are not to be terminated during such period. If they are unable to come to work on account of operations being closed, then it is requested that the same be treated as paid leave. Based on the government order it is recommended that for the time being, employers continue to pay employees their full salaries regardless of operations being closed.

In a scenario wherein due to a calamity such as this, where employer is contemplating Layoff which means termination of employment (with or without notice) by the employer or management with no cause of any fault of the employees but by reasons such as lack of work, cash, or material, they have two choices. One being permanent layoff which is called retrenchment and secondly temporary Layoff of employees where such employees could be reinstated if the situation improves. Lay off applies to workmen and suspension applies to all other employees of the company, including managerial employees, but if an employee is laidoff, then the employer must continue to pay 50% of the salary for the period of lay-off.

Due Legal recourse should be undertaken by Lawyers in ascertaining your contractual situation with the employees, keeping in mind the trade unions and other organisation while undertaking any changes in employment terms by your organisation. 

Currently, Karnataka and Uttar Pradesh are the only two States which have specifically passed Orders stating that all Covid-19 infected employees are required to be provided 28 days of additional paid sick leave over and above their existing leave entitlement. Employers may potentially be additionally liable for medical expenses if the employee contracted the infection specifically while in the course of employment, though there are no specific guidelines on the same.

The Insurance Regulatory and Development Authority of India (IRDA) has clarified that medical expenses pertaining to Covid-19 are to be covered under Health / Medical Insurance policies. Hence, if an Employer has provided its employees with insurance, then employees may claim any applicable expenses from the same.

Employers may require employees who are coming into work or even working from home to undergo medical tests or temperature screenings with consent of the employee. Employers may also require employees to report any medical symptoms to the Employer. If an employee is found to be infected with Covid-19, then the Employer may make it mandatory to disclose to all the people within the organization who may have encountered the infected employee. These potential employees would also need to be intimated. The name of the infected employee is to be disclosed only with consent of the said employee. Employers need to be aware that medical information of an employee is covered under the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 and Employers shall maintain adequate security of the information and take consents for any dissemination. 

Force Majeure meaning "superior force" refers to such situations which obstruct the continuation or lawful existence of a contract amidst the parties. The inclusion of a force majeure clause in a contract allows a party to suspend or terminate its duties and obligations in case of occurrence of an act which may be classified as force majeure

Prior to terminating a contract by invoking force majeure event, the below mentioned points need to be considered:

▪ The definition of force majeure event in the contract need to be examined to confirm which events (for instance any slowdown due to COVID-19) to be considered as a force majeure event for the purposes of the contract.

▪ The force majeure clause have to be examined to determine if the party has the right to terminate the contract or merely suspend the contract temporarily in the event of force majeure event.

▪ In the absence of contractual right to terminate the contract invoking force majeure event, a party may need to evaluate invoking doctrine of frustration, in the event that the circumstances render it impossible for a party to fulfil its obligations under the contract (for instance, that if there is ban on certain goods due to COVID-19). However, loss of business, loss in revenue or any such similar reasons cannot be considered a valid ground for invoking the doctrine of frustration.

Government of India has provided relief wherein payment of ESI contribution for February and March 2020 has been deferred by an additional 30 days and can be paid within 45 days of the end of the month. The Finance Minister has announced that the 24% PF contribution (both Employer and Employee) shall be borne by the Government for a period of 3 months for those establishments with less than 100 employees and whose workforce comprises 90% of persons earning INR 15,000 or less per month.

It is our endeavor, that your team is safe during this troubled period. 5IVE Legal we are focused on providing the best services to our clients, and bouquet of services reflects this prime focus. We are have chosen only those areas that we are experts in, and these are:

1. Real Estate

2. Technology Media and Telecommunications and Intellectual Property Rights (TMT & IPR)

3. International Law and Private Equity Funding

4. Corporate Advisory, Insolvency and Litigation Practice

5. Mergers and Acquisitions and Employment Laws

We will be delighted to meet you and take you through our areas of practice, our expertise and to meet with our talented team. Email us for your queries - prashanth@5ivelegal.com