Impact of Covid-19 on India and Employment

How has employment law in India reacted to Covid-19? In this feature, we speak to Nohid Nooreyezdan about the measures the India Government has taken and what employment laws protect employees and employers, alike.

What are the measures that the Indian Government has proposed to protect workers/ employees in the light of the COVID-19 pandemic?

In a very significant move, the Prime Minister of India on 24 March 2020 announced a 21-day nation-wide lockdown with effect from 00:00 hours on 25 March 2020. The initial lockdown has now been extended up to 3 May 2020 by the Prime Minister, and the Ministry of Home Affairs has directed that the lockdown measures stipulated earlier continue during this period. This lockdown of nearly one-fifth of the world’s population is to ensure effective social distancing to prevent the spread of Covid-19. While the lockdown is undoubtedly essential to contain the pandemic, the impact on businesses and the economy cannot be ignored. In this regard, the Finance Minister, Ms Nirmala Sitharaman, on 26 March 2020 announced a relief package of INR 1.70 Lac Crore, under the Pradhan Mantri Garib Kalyan Yojana, especially for the underprivileged and poor population of the country. This includes the Government contributing both the employer’s and employee’s share of the provident fund contributions for the next three months in respect of the establishments/organisations with up to 100 workers, where a majority of the employees draw a monthly salary of INR 15,000 or less.

Further, the Employees’ Provident Fund Scheme, 1952 has been amended to include pandemic as a reason to allow withdrawal up to 75% of the non-refundable advance standing to the credit of the employees in the provident fund accounts or three months basic wages and dearness allowance, whichever is lower. Medical insurance cover of INR 50 Lacs (per person) has also been provided for every medical professional, health worker including inter alia nurses, doctors, technicians, paramedics, cleaning staff, ASHA workers, sanitation workers etc. State governments have been instructed to utilise the amounts accumulated in the building and other construction workers welfare fund for providing relief and economic support to the workers in light of the Covid-19 crisis.


Are there any employment law issues that should be kept in mind while implementing work from home models?

Given the lockdown, most employers have been asked to have their employees work from home where possible. The key employment law considerations that employers should keep in mind when implementing work from home are:

Hours of Work, Productivity and Performance Testing

The concept of working from home is not specifically regulated or governed by statute. Therefore, in the absence of a specific statute, the employment laws that would otherwise apply to an employee when they are working from the employer’s establishment would continue to apply and an employer would have to be mindful that employees do not work beyond their regular working hours and adhere to relevant overtime requirements. In relation to performance tracking and productivity, the employer will now have to adapt the usual methods to work from home. This will include using applications to monitor their employees working remotely and requiring the employees to periodically provide summaries to their managers of the work that they are doing.

Confidentiality and Data Security

One of the primary considerations when it comes to allowing employees to work from home is confidentiality and data security. Therefore, it is recommended that employers take additional data security measures to ensure that their IT infrastructure and resources are protected. Certain employers have resorted to geo-tagging of their devices to ensure that their data security and confidentiality is not breached.

OSP Licences

To facilitate employers to allow employees to work from home, the Department of Telecommunications has, through circular dated 13 March 2020[1], issued certain relaxations in the terms and conditions prescribed for Other Service Providers (OSPs), with respect to the ability of their employees to work from home. The exemptions/relaxations were available until 30 April 2020. This circular inter alia exempts OSPs from the requirement to pay a security deposit and have an agreement to enable work-from-home options or seek prior permission to allow work from home. Further, OSPs have been exempted from the requirement of having a secured VPN from an authorised service provider. OSPs may now use secured VPNs configured using ‘static IP’ addresses by themselves to enable interconnection between the home agent position and the OSP centre with pre-defined locations.

Is India doing enough for the employment sector? What more could be done?

Given the lockdown and the general economic distress globally and in India, employers across various sectors are facing a significant cash crunch due to the lack of production and/or consumption by customers, and the ability to collect payments. This has lead many businesses to examine various cost-cutting measures to ensure that they are able to sustain their business once the lockdown is lifted. These measures would include reduction in their overheads, which includes employee salaries. In this regard, the Central Government and various State Governments have issued directives and advisories encouraging/requiring employers not to terminate their employees and pay full wages to them. While this is a commendable step and would ensure job security during the lockdown, it would have an adverse impact in the long term. Due to these directions and advisories, employers may not be able to undertake any cost-cutting measures in the short term and will have no option but to exhaust their reserves, potentially resulting in drastic steps such as winding-up businesses or looking at major restructuring in the long term.  This is hazardous for the economy and employment. Therefore, it would be important for the Central and state governments to provide clarity and uniformity with regard to the directions/ advisories to employers and to allow employers, in a regulated manner, to negotiate and arrive at an understanding with their employees to allow for some short term measures such as a temporary reduction in wages or providing for employees to go on leave to reduce the liability of the company with a longer term view of retaining jobs.

Ms  Nohid Nooreyezdan

Senior Partner

AZB House | Peninsula Corporate Park | Ganpatrao Kadam Marg | Lower Parel | Mumbai 400 013
Tel: + 91 22 6639 6880 | Fax: + 91 22 6639 6888 |

As a Senior Partner based out of Mumbai, I have been with the Firm since its inception and head up the Employment Law practice. Being in the profession for over 24 years, I have advised clients from various sectors on the rapidly evolving nuances of Indian employment law.

AZB & Partners is one of few firms in the country with a dedicated Employment Law practice, with a focus on the same for more than two decades.  Having witnessed and experienced the impact of globalisation and technological advancement on workforce engagement and workplace dynamics, the Firm has provided pragmatic advice and solutions to clients on the application of India’s complex employment law regime, bearing in mind the organisation’s practices, objectives and culture. In addition to our robust Employment Law practice, our industry-specific experts ensure that our advice is holistic, taking into account the nuances of various sectors. The Firm has strong Litigation, Tax and Intellectual Property practices, which provide the required support to ensure that our advice is thorough and complete.  The Firm also has excellent working relations with specialized labour counsels and a Compliance and Investigation practice, bolstering the Employment Law practice, especially with respect to investigations around misconduct by senior management and workplace sexual harassment.



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