Important News

Important News

How to Deduct Salaries of employees during Lock-down?

Nowadays all we are reading, watching, discussing, and even dreaming is about the infamous Covid-19 and Lockdown. The huge scar of Covid-19 and Lockdown on our lives and the economy is something we can not overlook.

The Ministry of Home Affairs and the Ministry of Labour and Employment issued single-sided orders prohibiting employers from terminating their employees and to timely pay their salaries without any deduction. However, the Government failed to issue any order to ease the pain of Startups/Companies who are bleeding money, needless to say, how.

I’ll not make this article technical by adding laws, sections, and interpretation. This article will focus on the issues in a simple manner and possible solutions to the same.

Even before the LOCK-DOWN was announced many superhero companies opted WORK-FROM-HOME strategy for the safety of their employees, to cater their clients and not letting their business suffer.

But we can not rule out that as the month of May 2020 is approaching we all are thinking about salary payment, deduction, termination, and our office rent, and many questions arise. Can I deduct my employee salary? Can I terminate my employee? Do I have to pay my office rent during Lock-down?

The order issued by the government lacks clarity, balancing act and it is a clear blanket order in favor of the Employees and Employees only.

Let’s talk about salary payment, deduction, and termination of employees.

The Hon’ble Supreme court of India on 27.04.2020 refused to stay the government order asking private establishments, including MSMEs to pay full salaries to their employees during the Covid-19 lockdown.

However, the apex court directed the ministry of home affairs (MHA) “to put on record its policy decision and also asked it to explain as to why its order of March 29 directing private enterprises to pay off full wages without any deductions should not be stayed.”

We can rightly say that the government will place on record a detailed policy before the Hon’ble Supreme Court, and it is expected that ambiguities in the order will be rectified.

Thus, as of today you can not deduct or delay the salary of your employees, and neither an employee can be terminated or sent on compulsory leave without pay.

The Government of India Gives 4 Months’ Rental Waiver to the IT Companies Operating from Software Technology Parks of India (STPI) Centers. Honestly, I never heard about STPI before, I am sure neither did you. Now we are keeping our eyes on MSME and Startup India to issue some guidelines for the same.

Thus, as of today, no relief is granted to the companies from payment of office rent.

1. Firstly, for the purpose of deduction of salary, the company may send an email to the employee mentioned salary deduction and take approval from the employee <format available here>.

2. Secondly, an employee can be issued a warning notice clearly mentioning the Company’s intent to terminate post-COVID if the said employee is not working properly <format available here>.

3. Thirdly, the payment of office rent may be put on hold by writing a letter to the property owner to waive-off rent till the time lockdown is lifted <format available here>.

Thus as of today companies do not have the right to delay or deduct the salaries of its working or non-working employees. Also, no relief is provided from the payment of Rent. However, we should keep our eyes on 11.05.2020 on the upcoming government policy.

This article is written by Anudeep Singh, Associate advocate D&R Legal LLP

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