- Authored by Inian R

“Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”

-Richard Branson[1]

The outbreak of the COVID-19 pandemic and the imposition of lockdowns across the country has resulted in an unprecedented economic and financial crisis all over the world. In India, according to the reports by Centre for Monitoring Indian Economy (CMIE), 5 million employees lost their jobs in the month of July. Further, a total of 18.9 million employees have lost their jobs since the lockdown began. In light of these staggering statistics, the government has been making numerous efforts to address this problem.

An “Employee” and “Employer” in legal context:

1) Employer:

‘Employer’ means the owner or the director of any establishment or any organization which is not owned by the Central Government or a State Government or which is not the undertaking controlled by the Central Government or a State Government or funded by the Central Government or a State Government but includes the owner or director of a private establishment where not less than ten persons are employed[2]. Employers generally own the following two types of workplaces:

a) Establishments are the places where the works are encompasses by the employers. It is a place where works are mostly like assembling and output based on their product.[3]

b) Factories generally means a place where manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, and at any premises including ten or more workers are working permanently or working any day of the twelve months.[4]

2) Employees:

a) Workman, means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical.[5]

b) Employees are the person who undertakes all types of roles in both the establishments and factories. In some state legislation employees are classified into different categories, and it differs from states.

3) Terminated Employee:

An employee, who is appointed by an employer on the basis of temporary or permanent on the basis of mature or on contract is terminated by the same employer, then the employee is known as terminated employee.[6]

General process of termination of employees:

According to the analysis of termination practice in India, one reason is the employee’s act is beyond the policy of the establishment[7] and other main and frequent causes to terminate an employee according to The Workmen’s Compensation Act 1923 are,

1. Frequent cause:

If an employee is frequently observed and if the work is insufficient, dishonest, carelessness or indifference in working or performing the assigned duties then the decision is taken to fire an employee.[8]

2. Uncommon causes:

These reasons are unexpected and unavoidable circumstances like Accidents, insubordination, uncleanliness, destructive negligence, wastefulness and physical unfitness. These reasons can make an employee debilitate to do the job, so these reasons are unavoidable.[9]

3. Other reasons:

Carelessness, lack of cooperation, laziness, frequent absence without prior application of leave, dishonesty and adverse attitude towards the organization are the other reasons in which makes the employer to take the decision to terminate an employee.[10]

These are the common reasons for termination of employment and are informed to the employee in the employment agreement between the employer and employee.

However, owing to the increasing unemployment rate due to the outbreak of COVID-19 pandemic, the Ministry of Labour and Employment has introduced the Terminated Employees (Welfare) Bill, 2020 (the “Bill”) to address this imperative issue.

Termination during pandemic:

The government has introduced the following in the Bill:

1) An employee can be terminated if the organisation/establishment is wound off or shut down because,

a) The organisation or establishment is suffering from economic slowdown, or lack of projects and work available to the employer himself.

b) The modification of the change in technology.

c) the owner or director managing the affairs of the organisation/establishment becoming insolvent.

d) In case of any order by the court or the government.

e) In the case of the losses and difficulty in keeping the business afloat.

f) Or the change in the government policy.

2) If an employer and employee have not been able to agree to alternative working arrangements or breach of employment contract.[11] In this case, hiring an unloyalty employee is much difficult to work peacefully.

3) Consistency of work has been lowered relatively, or Frustration of contract grounds wherein the employer would be unable to determine with any certainty how they may be able to resume operations (Inefficiency). [12]

4) Violation of confidential provisions. [13]

However, the Bill does not apply to employees whose employments have been terminated on the following grounds:

a) Misconduct;

b) Cheating;

c) Fraud or misappropriation of money;

d) Found guilty by a criminal court of justice.

Remedies available for terminated employees:

Since there is less chance space in the employment options in the pandemic period, the Bill further provides the terminated employees with the following benefits:

1) The unemployment compensation/severance package shall be paid by the employer to the terminated employees for a period of nine (9) months. Further, the unemployment compensation will not be under sixty percent (60%) of the gross salary of the terminated employee or as per the provisions of the employee-employer agreement, whichever is higher.

2) The benefit of the health insurance and other benefits prescribed by the government, such as profident fund, gratuity, leave encashments etc., will also be continued for the period of 9 months with the same terms and conditions of the employee during the work.

3) The employer is under an obligation to create a corpus fund with a contribution of at least five percent (5%) of the net profits of the organisation/establishment. The fund must only be utilised for the welfare of the terminated employees and his/her family.

4) If the employer does not provide the benefits envisaged under the Bill to the terminated employee within 30 days of termination, then the employer shall be liable to pay an interest at the rate of twelve percent (12%) per month for each month of persisting delay.

Governments comfort steps on pandemic workers:

Government takes steps to make sure safety of the employees to those who are working in this pandemic without any social ostracism. Various steps have been taken by the governments to the workers like,

a) under conditions of service are governed in the Industrial Dispute Act, 1947 (Act') sec 2[14], the full salary must be provided to the workman by the employee. And prior to that, the employer must issue a circular regarding this.[15] After this various state government also issued a government order regarding the salaries.

b) it also ensures that the working hours cannot be reduced in minding the reduction of salary. Also ensures that the working hours are not extended.

c) Further considering the employees who can’t work due to the virus infection, they should be considered as working and marked present.[16]


The Terminated Employees (Welfare) Bill, 2020 is a very essential and useful bill for the employer and employee of the public and private sector. This bill benefits the employees by the unemployment compensation. The enforcement of the bill especially during this time is very much useful for the terminated employees and the employers both, because there is only a close space for the employment in the Indian society now. Although, at present there is no specific law is dedicated to provide benefits to the terminated employees and to their families who have been terminated, where this bill seeks to provide the benefits for both the parties parallelly. By which, the country is balanced by potential of the employment. So, treating the employers and employees is assured in this country.

[2] THE TERMINATED EMPLOYEES (WELFARE) BILL, 2020 (BILL NO. V OF 2020), Introduced in The Rajya Sabha On The 7th February, 2020. [3] Understanding Key Provisions, Challenges, Terminating an Employee in India, https://www.gpminstitute.com/publications-resources/Global-Payroll-Magazine/december-2017/terminating-an-employee-in-india-understanding-key-provisions-challenges (last visited Jun 19, 2020). [4] Section 2(m) in The Factories Act, 1948 [5] Industrial dispute act (1947), sec (2). Ins. clause (s) (w.e.f. 21.8.1984). [6] THE TERMINATED EMPLOYEES (WELFARE) BILL, 2020 BILL NO. V OF 2020 AS Introduced in The Rajya Sabha On The 7th February, 2020 [7] Myadvo Techserve Private Limited, How to Fire an Employee Legally in India? MyAdvo.in, https://www.myadvo.in/blog/how-to-fire-an-employee-legally/ (last visited Jun 21, 2020). [8] The workmen’s compensation act, 1923. Section 2(g).

[9] The workmen’s compensation act, 1923. Section 2 (k) 5*(1). [10] The workmen’s compensation act, 1923. Section 2 (n) 5*2.

[11] Mentioned in the judgement of Bhanwarlal And Ors. vs Rajasthan State Road Transport ... on (1985) ILLJ 111 Raj [12] Employee termination during Covid 19, Legal Service India - Law, Lawyers and Legal Resources, http://www.legalserviceindia.com/legal/article-2525-employee-termination-during-covid-19.html (last visited Jun 21, 2020). [13] Analysis of the Terminated Employees (Welfare) Bill, 2020- Good intentions but is it feasible? | India Corporate Law India Corporate Law, https://corporate.cyrilamarchandblogs.com/2020/03/analysis-of-the-terminated-employees-welfare-bill-2020-good-intentions-but-is-it-feasible/ (last visited Aug 22, 2020) [14] Section 2A of the Act provides that dismissal of an individual workman will be deemed to be an industrial dispute. [15] The Ministry of home affairs issued a circular on March 29, 2020, which informed the state governments and ministries to ensure that the employers of all the industries, shops, companies, etc. pay full wages to the employees without any deductions, during the lockdown. [16] the government on March 21, 2020, issued a circular which provides that even if a work unit is non-functional due to the virus, the employers are entitled to consider the employees as working.

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