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Day 69 – Q 1. Many private sector employees lost their jobs during the ongoing COVID-19 pandemic. Does it warrant a strict regulatory regime for the corporates to dissuade them from firing their employees during times of distress? Critically examine. 

  • IASbaba
  • August 28, 2020
  • 0
Ethics Theory, GS 4, TLP-UPSC Mains Answer Writing
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1. Many private sector employees lost their jobs during the ongoing COVID-19 pandemic. Does it warrant a strict regulatory regime for the corporates to dissuade them from firing their employees during times of distress? Critically examine.  

चल रहे COVID-19 महामारी के दौरान कई निजी क्षेत्र के कर्मचारियों ने अपनी नौकरी खो दी। क्या यह संकट के समय में अपने कर्मचारियों को नौकरी से निकालने के लिए कॉर्पोरेटों के लिए एक सख्त नियामक व्यवस्था की आवश्यकता को वारंट करता है? समालोचनात्मक जांच करें।

Demand of the question – Showcase the job losses due to ongoing COVID-19 pandemic and then examine whether a strict regulatory regime is necessary for corporates to dissuade them from firing employees during times of distress. Examine both sides of the argument with substantial points.

Introduction

The outbreak of the coronavirus disease 2019 (COVID-19) pandemic has caused widespread disruption of businesses and daily life. As governments across the world struggle to contain the pandemic, India has seen multiple measures such as mandatory social distancing through the imposition of a series of restrictions which has resulted in increased risk of loss of jobs in private sector.

Body

  • Job loss is the most severe immediate impact of COVID-19 crisis while lower economic growth and rise in inequality would be the long-term effects, according to a survey by the Indian Society of Labour Economics (ISLE).
  • In light of this situation, the Central government has asked all companies to ensure that workers, especially contract labour, who take leave as a precaution towards the coronavirus pandemic (Covid-19) should be treated to be ‘on duty’ and their salaries should not be deducted.
  • The advisory further stated that “if the place of employment is to be made non-operational due to the Covid-19, the employees of such unit will be deemed to be on duty.” This means that if any establishment is closed due to a positive case of Covid-19 virus in the premises then the employees will be considered to be ‘on duty’ and not on leave.
  • Although there are terms of employment defining the specific terms, the employees in the organized private sector are governed by various laws such as Payments of Bonus Act, Equal Remuneration Act, Payment of Gratuity Act, Employees Provident Fund and Miscellaneous Provisions Act, Employees’ State Insurance Act, Maternity Benefit Act, etc.
  • Employers are generally obligated to ensure a safe and healthy work environment for their workforce, and must do ‘everything reasonably possible’ to ensure prevention of COVID-19 outbreak at the workplace.
  • The Central Government as well as few State Governments such as Haryana, Uttar Pradesh, Maharashtra, and Karnataka have issued advisories/ orders asking employers to refrain from terminating or reducing wages of their employees pursuant to Covid-19. 
  • It is, therefore, advisable that before taking any action for the reduction of the workforce during the lockdown, the employer must check the advisories/orders/notifications issued by the respective State where its business establishment is situated. 
  • In a case no such advisories/orders are issued, reduction or downsizing can be done subject to the policies of the employer, terms and conditions of the employment agreement/contract and complying with the due process of law.
  • The Employees Provident Fund Organization (EPFO) has announced – employees who contribute to EPF can withdraw up to 75 percent of the account balance or 3 months’ basic salary and dearness allowance, whichever is lower.
  • EPFO issued the circular which states that no proceedings should be initiated on establishments covered under the EPF Act for levy of penal damages on account of any delay in the payment of any contributions or administrative charges due for any period during the lockdown.
  • In view of the government’s decision declaring COVID-19 as a pandemic, the Pension Fund Regulatory and Development Authority (PFRDA) allowed partial withdrawals from the NPS to fulfil financial needs towards treatment of the COVID-19 illness.
  • These above given points clearly show the measures by government to dissuade corporates from firing their employees during these times of distress where the survival of people has become difficult.
  • But at the same time, it is clear that these measures are also advisory in nature where there is no strict supervisory mechanism of government to ensure implementation of these suggestions/advices.
  • Such a situation clearly demands the setting up of a strict regulatory regime for corporates to avoid such mass laying offs during times of distress like a pandemic. 
  • In this regard, a collaborative approach and a strong social security system become pre requisites for development of such a regime.

Conclusion

Covid-19 pandemic has brought out the deep rooted fault lines in global and national economic models where an intensely capitalistic economic pursuit is leaving the survival of large sections of population at stake during times of distress, which is clearly against India’s constitutional and civilizational ethos and needs strong safeguards.

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