Mass layoffs are an impending consequence of this pandemic, which is likely to further rupture our already ailing economy. In response to the global and national economy taking a hit and financial difficulties brought on by the lockdowns necessitated by the need to curb the spread of the pandemic, employers have altered traditional working methods to limit contact between employees. They are embracing remote working methodologies, bonus/salary cuts while mass layoffs have become the order of the day. Even as we are oblivious to the depth of the virus’ impact on the economy, one thing is abundantly clear — the workplace will never be the same again.
With lockdown 2.0 in effect, the cash reserves will further plummet, creating additional strain on employers and will subsequently aggravate the problem of layoffs in a company’s pursuit to save depleting resources from the further drain. This is especially true for organizations that cannot function remotely owing to the nature of their business. In such a scenario, one can only imagine the plight of white-collar workers, the condition of blue-collar employees, contractual laborers, and those belonging to the unorganized sector.
Anticipating joblessness brought on by the pandemic, the Government on March 20 issued an advisory to all private and public companies, dissuading them from wage deduction and employment termination. It further stated that the salaries of workers shall not be deducted even if they were compelled to stay at home due to the pandemic. On March 29, the Government invoked the Disaster Management Act, 2005, and issued a notification under Section 10(2)(1) to State Governments and Union Territories requiring all industrial and commercial establishments to refrain from wage deduction, retrenchments and to ensure timely payment of wages.
However, mere announcements in the absence of Government Ordinances for payment of wages to employees are not legally binding in nature and lack effectiveness. Like in the case of Maharashtra, the notification is advisory in nature and should not be misconstrued as absolute or legally enforceable, by the employees. The rationale behind the order was to provide some financial respite to employees during a crisis. Unfortunately, State Governments have not issued any legally-binding Ordinances, therefore giving employers the liberty to lay their employees off.
In the interim, employers should take into account alternatives to outright termination — such as reduced schedules, furloughs, or salary cuts. To further mitigate the stress emanating from job losses, there is severance pay, which serves as a temporary cushion for employees while they look for another job. Severance packages are taxable in the hands of the employee as profit in lieu of salary under Section 17(3) of the Income Tax Act. However, it may be exempt by virtue of Section 10(10C) of the said Act if compensation is received under a Voluntary Retirement Scheme, subject to certain conditions. Unfortunately, there are no special relief packages for employees laid off on the pretext of the pandemic, though partial relief afforded under Section 89 may be claimed if s/he is liable to pay tax in respect of compensation received on termination of employment. So, what should you do if you get laid off by your firm?
Consult your Human Resource department: This could be done even before you receive a letter of termination, just to know about the company’s future plans. If and when you receive a termination letter, you must consult the HR and find out whether it is a temporary or permanent measure.
Get a written acknowledgment: Irrespective of the nature of your notice, it is your duty to secure a written acknowledgment of the same. It is advisable to ask for the reason for such termination in the letter or e-mail itself.
Consult your lawyer: You may approach your lawyer with the employment contract and letter of termination so that you are apprised of the potential remedies available to you. If in the future, the Government plans to give any relief package or implement a process of re-employing all those laid-off because of the lockdown, all the documentations will come in handy.
Look for opportunities: In these distressing times, many organizations are resorting to collaborative practices by hiring laid-off employees so that the talent pool is not lost. This is termed as “People + Work Connect”, which is an employer-to-employer partnership. Keep yourself abreast of changes in the economy, specifically industries that directly impact your nature of work.
Know your situation: The best way to start planning for the future is to see your present situation — as is. Make a note of your basic expenses and chalk out a plan to be financially independent in tough times.
Crashing economies, plummeting sales figures, coupled with the uncertainty of business redemption, are prompting many companies to terminate employment so as to save themselves from running out of business.
People scarred by unemployment are asking themselves, “What now?” Job loss can be a disturbing and difficult time, psychologically and financially, particularly with so many unknowns in our world right now. But professionals terminated by their employers must keep abreast of the key developments introduced by the Government and handle the forthcoming chapter in their career with confidence. The key to navigating the rough waters of COVID-19 is to remember that this is temporary and we are in this together.