Raj Ramachandran

Partner at JSA

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Dies non – No work, no pay

Dies non is commonly understood to mean a day on which no legal business can be done, or which does not count for legal purposes.

Dies non is commonly understood to mean a day on which no legal business can be done, or which does not count for legal purposes. In connection with employment matters, a dies non period does not constitute a break in service but, at the same time, it is not counted for service-related benefits. The Covid-19 crisis has certainly triggered interest in how the Dies non concept plays out, as several employers would prefer the pandemic period to be ruled as Dies non.   

Since the time COVID-19 was declared a ‘pandemic’ by the World Health Organization (WHO), and the lockdowns imposed in different forms by governments across the world began impacting businesses, discussion on “reduction of salary”, “furlough/lay-off’’, and “retrenchment” have become commonplace, particularly in relation to workmen. The term workman, as defined in the Industrial Disputes Act, 1947 (ID Act), includes any person (or apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward. Any person employed in a managerial or administrative capacity, or in a supervisory role, is not typically considered a workman, as per the ID Act. Therefore, the ID Act does not apply to such managerial/ supervisory personnel.    

Furlough and layoff are both temporary in nature, the distinguishing feature being that furlough is typically unpaid leave of absence whereas lay-off is provisional termination of employment during which time the employer is required to pay the employee an agreed reduced rate of wages. The 73-year old ID Act does not specifically recognize the principle of furlough as commonly understood.  

Establishments can, however, layoff employees while, at the same time, complying with the conditions stipulated in the ID Act, including payment of compensation to jobless employees.  Lay-off, therefore, given that the COVID-19 crisis has placed several employers in financial difficulty, has limited benefits, although the employee compensation does stand reduced to an extent that  provides temporary relief to employers.   

The alternatives being considered by other employers to reduce their financial burden, while still complying with the ID Act, is to seek revision in the terms of service (i.e., reduce the wages or allowances) without laying off or retrenching their employees. It is, however, relevant to bear in mind that any revision in the terms of employment requires, among other things, that the employer provide prior notice to the appropriate authority. The question that arises in such cases is whether the authorities will be forthcoming in granting approval to the employers to revise the terms of service. It would seem logical that the authorities provide the necessary approval so that the entity can use the relief provided to tide over the crisis and continue to provide gainful employment to its employees well beyond the crisis. Absent such approval, the entities may have no option other than liquidating/winding up their business, which would result not only in permanent loss of employment for the workmen, but also loss of revenue to the state due to closure of the business.  

While the ID Act governs workmen engaged directly in industrial establishments, the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA), governs workmen who are engaged as contract labour in establishments, and casts obligations on both the contractor who directly engages the contract labour and the principal employer for whom the contract labour is engaged. As per CLRA, in the event the contractor fails to pay the promised wages to the contract labour, the obligation to dispense the said wages  falls on the principal employer. In the current economic climate, several entities who have engaged contract labour are also examining their contracts to understand the termination options available in accordance with the terms of the contract such that no liability accrues to the employer post the contract termination date. Similarly, entities engaged in manpower supply are also looking for alternate options where such contracts could be terminated, enabling the placement of workmen with other employers whose business is stable.  

Some state governments, such as those of Gujarat, Himachal Pradesh, Madhya Pradesh, Rajasthan, and Uttar Pradesh, have implemented interim relief measures in the form of amendments to labour laws, including suspending the applicability of certain labour laws for a certain period, not only to ease the employers’ financial burden but  also to boost growth beyond the crisis. It is imperative that the Central Government steps in to support and provide relaxations in the applicability of the provisions of the ID Act, particularly relating to lay-off and change in regulations of service for workmen. 

In the case of non-workmen, most employers and employees are agreeing upon revised terms of employment such as deferment of/reduction in salaries for a defined period, followed by reinstatement of the said salaries when the company targets are achieved. Some employers and employees are also entering into consultancy agreements in place of employment agreements, with their being no exclusivity, and in certain cases, even entertaining fixed-term contracts. Certain other employers are expanding their stock option pool to include more employees and retain talent.  

Given that the current uncertain business climate, makes it difficult for employers to predict growth,  while employees struggle to find  alternate employment, the only viable solution seems to be to arrive at mutually beneficial terms to tide over these trying times.  

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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