In light of the advisories issued by the Ministry of Labour and Employment that clearly request employers to refrain from terminating employees or reducing their wages, the question arises as to whether the same would constitute illegal/wrongful termination of employment.Generally speaking, wrongful termination is when an employee is terminated without sufficient cause and it is one of the most common types of employment disputes.
There exist several remedies for an employee who has been laid off in this manner in the form of provisions under the Industrial Disputes Act, 1947, the Workmen’s Compensation Act, 1923 and relevant state Shops and Establishments Acts. Additionally, the avenue of tortious action is also available where the employee incurs any personal injury due to the termination.
This might raise the question of whether termination of employment during the COVID-19 outbreak period or as a consequence of the same, constitutes unlawful termination? There exist arguments on both sides with regards to the above question, and we aim to explore these through this article.
There is the argument that any termination due to downsizing prompted by cash flow problems for example or other governance-related issues can be justified on the grounds of COVID-19 being a force majeure event. The contention is that the outbreak of the virus is an unforeseen event, similar to an act of God under the Indian Contract Act, 1872 and thus any action taken as a consequence of the same is unintentional and prompted by circumstantial necessities. There is also a great deal of doubt as to the nature of the Ministry’s advisory, more specifically as to whether the same is binding on private establishments?
The intention seems to be to provide flexibility to companies so they are able to formulate their own policies to deal with the challenges posed by the economic side-effects of this crisis.However, the same is being misused by several establishments that are terminating employment en masse.
The counterargument to the above stems from the notion that any termination of employment without cause is wrongful irrespective of the factual circumstances surrounding the same. Downsizing is often a reactive action that is implemented during drastic economic downturns, but whether it constitutes a legitimate cause for termination depends on certain conditions.Those being whether the procedural requirements such as notice and compensation have been complied with. Another argument for considering termination to be illegal is more economic in nature than legal. That is, if termination in light of downsizing becomes the norm it could lead to a ripple effect that creates large scale unemployment, which is why there exists the argument that the government should confine termination during this period to specific causes.
Thus, from the above, we can see that there exist a multitude of questions with regards to termination as a consequence or during the coronavirus crisis.If you as an employer/employee have any inputs, comments or queries with regards to the same, please drop a comment in the box below.
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