top of page
  • Writer's pictureOptimus Legal



The ongoing Covid-19 pandemic and resultant Government directions to employers to continue paying salaries/wages to employees/workmen and avoid termination, has created a huge financial and logistical burden, and confusion amongst the employers. The present FAQs therefore attempt to educate and explain the laws/notifications/circulars/orders applicable to workmen and employees and their effect during the ongoing period.

The below FAQs are for general information purpose only and nothing herein should be treated as legal advice. In case of specific queries, kindly contact us for applicable advice.


What are the notifications/circulars that have been issued by the Government (Central and State) and binding nature of the same?

Two Central Government notifications/circulars, namely, (i) Circular dated March 20, 2020 issued by Ministry of Labour & Employment, Government of India (“Circular dated March 20, 2020”); and (ii) Notification dated March 29, 2020 issued by Ministry of Home Affairs, have been referred to in this note (“Circular dated March 29, 2020") as most relevant, apart from various State specific circulars and notifications on similar lines.

The relevant content of the Circular dated March 20, 2020 is reproduced below.

…all the Employers of Public/Private Establisments are advised to extend their coordination by not terminating their employees, particularly casual or contractual workers from job or reduce their wages. If any worker takes leave, he should be deemed to be on duty without any consequential deduction in wages for this period. Further, if the place of employment is to be made non-operational due to Covid -19, the employees of such unit will be deemed to be on duty.”

The relevant content of Circular dated March 29, 2020 is reproduced below.

“..Whereas, in exercise of the powers, conferred under Section 10(2)(l) of the Disaster Management Act, the undersigned, in his capacity as Chairperson, National Executive Committee, has issued an Order of even number dated 24.03.2020, followed by Addendum Orders of even number dated 25.03.2020 and 27.03.2020 to the Ministries/ Departments of Government of India, State/Union Territory Governments and State/ Union Territory Authorities with the directions to implement Iockdown measures annexed to the said Orders for the containment of spread of COVID-19 in the country;

Whereas, movement of a large number of migrants have taken place in some parts of the country so as to reach their home towns. This is a violation of the Iockdown measures on maintaining social distance;

Whereas, to deal with the situation and for effective implementation of the Iockdown measures, and to mitigate the economic hardship of the migrant workers, in exercise of the powers, conferred under Section 10(2)(I) of the Disaster Management Act 2005, the undersigned, in the capacity as Chairperson, National Executive Committee hereby directs the State/Union Territory Governments and State/ Union Territory Authorities to take necessary action and to issue necessary orders to their District Magistrate/ Deputy Commissioner and Senior Superintendant of Police/ Superintendant of Police/ Deputy Commissioner of Police, to take following additional measures:

i. State/Union Territory Governments shall ensure adequate arrangements of temporary shelters, and provision of food etc. for the poor and needy people, including migrant labourers, stranded due to lockdown measures in their respective areas;

ii. The migrant people, who have moved out to reach their home states/home towns, must be kept in the nearest shelter by the respective State/Union Territory Government quarantine facilities after proper screening for a minimum period of 14 days as per standard health protocol;

iii. All the employers, be it in the Industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the Iockdown;

iv. Where ever the workers, including the migrants, are living in rented accommodation, the landlords of those properties shall not demand payment of rent for a period of one month.

v. if any landlord is forcing labourers and students to vacate their premises, they will be liable for action under the Act.

It is further directed that in case of violation of any of the above measures, the respective State/UT Government, shall take necessary action under the Act. The District Magistrate/ Deputy Commissioner and Senior Superintendant of Police/ Superintendant of Police/ Deputy Commissioner of Police will be personally liable for implementation of the above directions and Iockdown measures issued under the above mentioned Orders.”

Circular dated March 20, 2020 can be argued to be inter alia ‘advisory’ in nature and therefore not binding on any person. Circular dated March 20, 2020 neither specifies that it has been issued in pursuance of any law nor has it been published in the Official Gazette. Whereas, the Hon’ble Supreme Court has on various instances held that a policy cannot take the place of law and a document issued by the Government cannot become binding until and unless it is backed by law.

As for Circular dated March 29, 2020, it requires employers of all industries and shops and commercial establishments to pay wages to all workers without deductions, during the period of the lockdown. Whereas, inter alia the scope of Disaster Management Act, 2005 (“DM Act”) does not extend to labour issues. Therefore, till the time a clarification on the validity and scope of this circular is issued, it can be assumed that this circular issued under the DM Act may attract penal consequences, if not complied with.

In addition to the above, certain State Governments have issued state specific advisory/directions such as Delhi, Maharashtra, Karnataka etc. Therefore, any specific advisory should be sought keeping view, not only the Central Government circulars/orders/notifications but also the notifications/circulars/orders issued by the concerned State Government, if any.

Nonetheless, in the circumstance, it is possible that the enforceability of the above two circulars could eventually be challenged on the basis that Circular dated March 20, 2020 inter alia is only an advisory and hence not legally enforceable, and Circular dated March 29, 2020 inter alia is not legally sound as DM Act does not extend to labour issues and also that this circular only applies to workmen and not employees. However, considering the sensitive and sympathetic situation prevailing due to the Covid-19 pandemic and associated lockdown, it is suggested that these circulars (be it advisory or directory) be followed. There is a possibility that the event of termination of employment during the lockdown period or non-payment/reduction of salaries during the lockdown period etc. may be challenged by workmen/employees in court and the court may take a view in the favour of the workmen/employees. In addition to the same, there is a possibility of reputation loss being caused if such workmen/employees were to raise an issue regarding action taken by the company during this period.

Are all establishments supposed to be closed due to Covid-19 and resultant circulars/notifications by the Central and State Governments?

As per the Government notifications, apart from those establishments which have specifically been exempted by the Central and State Governments, all other establishments are to be shut down, where, if possible, the employers could explore ‘work from home’ policy. The first list of exempted establishments were issued by the Ministry of Home Affairs, Government of India on March 24, 2020 which was followed by amendments dated March 25, 2020, March 27, 2020 etc. Subsequently, on April 14, 2020, the lockdown was extended up to May 3, 2020. Pursuant thereto, the Ministry of Home Affairs, Government of India issued another set of guidelines vide its order bearing No. 40-3/2020-DM-I(A) dated April 15, 2020 capturing a revised list of establishments that would be allowed to continue their activities from April 20, 2020 in the manner prescribed subject to applicable limitations and restrictions.

Who is a workman and who is an employee?

The term ‘workman” has been defined under Section 2(s) of the Industrial Disputes Act, 1947 (“Act”), while the term ‘employee’ has not been defined under any law. As such the demarcation between workman and employee is on the basis of employees to who the provisions of the Act apply, which are only those employees who fall within the definition of ‘workman’, and those employees to who the Act does not apply and are therefore governed by the provisions of their contracts with the employer.

The Act defines a ‘workman’ as;

“any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person - (i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or (ii) who is employed in the police service or as an officer or other employee of a prison; or (iii) who is employed mainly in a managerial or administrative capacity; or (iv) who being employed in a supervisory capacity draws wages exceeding Rs. 10,000 per mensem, or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions which are mainly of a managerial nature.

An indicative list of conditions required for a person to be deemed a ‘workman’ for the purposes of the Act are as follows.

a. There must be the fact of employment, express or implied.

b. There should be the existence of control of the person’s work by the employer for him to be considered as a ‘workman’ (not necessarily exercise of such control.

c. Where a person is doing more than one type of work, his main work will determine whether he is a ‘workman’.

d. Every person employed by an employer and doing the kind of work as mentioned in the Act, irrespective of whether he is temporary, permanent or a probationer, is a ‘workman’.

e. Test of independent decision making – In discharge of his duties, if a person is expected to follow instructions without taking any independent decisions of his own, then he/she will be considered a “workman”.

Can employees and workmen be asked to take leave without pay and especially during the lockdown period?

Leave without pay for Employees - An employee may be asked to go on “leave without pay” on the basis of the terms of the contract between the employee and employer. The same is a contractual understanding and subject to agreed terms between the parties. However, in the absence of the same being a part of the agreed terms, “leave without pay” cannot be forced upon an employee. An offer for “leave without pay” may be made to the employee to accept on certain terms and conditions. Once the employee accepts the terms and conditions, it would amount to an amendment of the employment agreement and would be binding upon both the parties. Having said that, in view of the advisories and directions in place by Central and State Governments with respect to non-termination of employees and payment of regular salaries without deduction, during the lockdown period, it is advisable to not proceed with such an action and if at all such an action is considered, appropriate legal advice be taken before proceeding with its implementation.

Leave without pay for Workman - The Act does not contain provisions for ‘leave without pay’ for ‘workmen’, however, the Act does provide for ‘lay-off’, which is referred to as the temporary failure, refusal or inability of an employer to employ a workman at his establishment but does not amount to retrenchment. Meaning, lay off does not put an end to the workman’s employment but he loses his employment for a temporary period of time. As per the Act, the employer is obligated to pay 50% of the wages to laid-off workmen throughout the period they remain laid off. One of the reasons for lay off recognized under the Act is “natural calamity’. Accordingly, it is possible that the current situation of Covid-19 be argued to fall within the scope of ‘natural calamity’ and workers be laid off, however, any action of this nature would not be advisable during the lockdown period, keeping in mind the Government advisories and directions that stand issued.

Can employees and workmen be forced to go on paid leave especially during the lockdown period?

Availing of leaves is the prerogative of the employee and workman, and as such, an employee and/or workman cannot be forced to go on paid leave. As explained in response to query no. 4 above, leave with pay can also not be forced upon an employee and/or workman, especially during the lockdown period. If in case, the employee and/or workman, voluntarily agrees to go on leave with pay, the employer could consider so, subject to appropriate legal advice in this regard being sought after evaluating the risks involved, keeping in mind the applicable laws, advisories/directions from the Government and facts of the situation, especially during the ongoing lockdown period.

Can salaries/wages be reduced especially during the lockdown period?

Reduction in salary of Employees – Salaries are governed by the terms of the employment contract and any variation in the terms of employment including salary, will be subject to an appropriate amendment of the employment contract. Such terms of variation/amendment of the terms of employment would be governed by the employment agreement. If the employment agreement does not contain any provision for the employer to alter the terms of the employment agreement such as the salary, the employer can only do so with the consent of the employee, thereby amending the terms of the employment agreement. Therefore, action may be taken in accordance with the terms of the contract and the company can exercise its right accordingly. Having said that, in view of the advisories and directions in place by Central and State Governments with respect to payment of regular salaries without deduction during the lockdown period, it is advisable to not proceed with such an action during the ongoing lockdown. If at all such an action is being considered, appropriate legal advice be taken before proceeding with its implementation. Also, if such an action is being considered/undertaken by the employers, it would be advisable that it be implemented across the board without any discrimination.

Reduction in wages of Workmen – Any alteration in wages of workmen has to be in terms of the Act. Alteration in wages of workmen amounts to a ‘change in the conditions of service’. Section 9A of the Act deals with ‘change in the conditions of service’ which mandates fulfilment of two conditions prior to changing the conditions of service. The conditions are as follows;

a. The employer must give a notice in the prescribed manner to the workmen who’s conditions of service are proposed to be changed by the employer, detailing the nature of the proposed change, and;

b. The proposed change can be put into effect only after 21 days from the date of above mentioned notice.

Having said that, in view of the advisories and directions in place from the Central and State Governments in place, we would not advise proceeding with such an action during the lockdown period.

Can working hours be increased to cover up for the hours lost during lockdown?

An employer can consider increasing the weekly working hours as a matter of company policy, however, such increase in weekly working hours will be subject to the maximum number of weekly hours prescribed under the applicable laws of the relevant state.

How can workmen and employees be terminated and is it advisable during the lockdown?

Termination of an Employee – Termination of an employee is governed by the contractual terms. Therefore, any termination has to be in terms of the contract executed between the employee and employer including but not limited to notice period, severance pay, handover of employer assets etc., which could pose practical and logistical issues during the ongoing lockdown. Having said that, for reasons enumerated above, we would not advise terminating any employee during the lockdown period.

Termination of a Workman – Termination of a workman is governed by the provisions of the Act, covered under ‘retrenchment’. Section 2(oo) of the Act defines the term "retrenchment" to mean;

“the termination by the employer of the service of a workman for any any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include—

(a) voluntary retirement of the workman; or

(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or

[(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or

(c) termination of the service of a workman on the ground of continued ill-health;”

Further, the employer is also required to follow the process of termination of a workman as specified under the Act including Section 25F and 25N, depending on whether it employs less or more than 100 workmen, which includes giving the applicable notice period or wages in lieu thereof, applicable compensation and where applicable, seeking permission from the Government. Nevertheless, for the period of lockdown, as explained above, we would not suggest terminating any workman as it could attract legal consequences, including those of penal nature under DM Act.

Are employers required to continue providing employment benefits such as Employees’ Provident Fund etc.?

Yes, employees are eligible to receive remuneration and permissible deductions towards employment benefits such as Employees’ Provident Fund, Payment of Gratuity and Employees’ State Insurance acts. However, in view of the ongoing situation, the Government has brought in relaxation for both employers and employees with regard to employment benefit compliances, such as the Government is to contribute employer and employee’s share of provident fund for the next three months in establishments with up to 100 employees, of which 90% earn below INR 15,000 per month. Similarly, Employees’ State Insurance Corporation has relaxed the timeline for contribution liability in February and March 2020, upto April 15 and May 15, 2020, respectively. It is therefore advisable that employers consider the relaxations, if any, under the relevant employment benefit laws, before proceeding to make the necessary contributions and compliances.

Do employees need to lay down policies for work from home?

It is advisable that establishments which are employing ‘work from home’ for their employees lay down guidelines with respect to working hours, work ethics, maintaining confidentiality, data privacy and security etc.

How will the position of work from home and lockdown impact the leaves available to employees and workmen?

Employees and Workmen who are on ‘work from home’ shall be considered to be in the normal course of employment and thus, would have to be paid their monthly salary along with benefits including standard leave benefits. In fact, in view of the Circular dated March 20, 2020 and Circular dated March 29, 2020 along with State specific circulars/notifications, even if an establishment is made non operational, the employees and workmen of such establishment are to be considered ‘on duty’ and would have to be paid salaries and wages, without any deduction. Please also refer to our response to query no. 4 and 5. Having said that and in view of the State specific circulars/notifications, we would advise that specific State wise legal advise be sought with regard to specific query in this regard.

Can employees of establishments which fall in the exempted category refuse to come for work?

Considering the exemptions have been issued by the Government under the DM Act, the employees of exempted establishments shall be obligated to attend to work if required by the employer, unless the requisite health, safety and social distancing arrangements are not made by the employer as per directions issued by the Central and/or relevant State Governments.


The actions on part of the employers, be it in the nature of forced leave with pay or without pay or reduction in salaries/wages or termination of employment, in view of the numerous advisories and directions in place from both Central and various State Governments, are generally not advisable, as it could lead to legal troubles. However, there could be situations where employers are left with no option but to undertaken some of the above mentioned actions in order to inter alia save the business or avoid financial turmoil.

In such unfortunate circumstances, it is advisable that employers take specific legal advise with regard to possible actions that can be taken by them to overcome the troubles being caused by the ongoing lockdown, if any, and understand the factors for mitigating (to the extent possible) the possibility of legal action against them by considering the facts of the case in hand, the Central and State advisories/directions that are applicable to the employer, the general laws that are applicable and status of the worker i.e. workman/employee.

Kindly treat this as an information update and the same shall not constitute as an advisory by the firm.

Optimus Legal

Copyright of Optimus Legal

Contact us:

Delhi Office: P-26, Lower Ground Floor,

Green Park Extension, New Delhi - 110016,

Ph: 011-49072831

Mumbai Office: 4th floor, Cambatta Building, East Wing,

42, M.K. Marg, Churchgate, Mumbai – 400020

Ph: 022-22801182

6 views0 comments

Recent Posts

See All

Software Protection and Open Source Software

In India, software is essentially protected under Copyright Act, 1957 (“Copyright Act”) and Patents Act, 1970 (“Patents Act”). Copyright Act protects the expression of an idea of the author who has de


bottom of page