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(Shubham Gupta and Shrey Lodha are fourth year students of National Law University, Odisha) INTRODUCTION Stymieing the commercial activities and effacing the rotational flow of cash of the businesses across the globe and within the country, the lockdown, a countermeasure to the novel corona-virus has inadvertently compelled unemployment to show its teeth. Amidst the rising unemployment, it is the private sector employees who have been affected the most. During this pandemic, the employers of such employees can use and have used the law as a shield which is ‘almost’ impossible to penetrate. In this article, the authors shall examine these shields and have accordingly categorized them into three heads namely (a) economical shield; (b) legislative shield; and (c) contractual shield. Every shield is coupled with a penetrating sword which could be used to protect the interests of these private-sector employees. Besides, an attempt is made to put into perspective the procedural difference followed in dismissal or removal of employees in the public sector and private sector. A SWORD FOR EVERY SHIELD
The private sector employees have been subjected to a slew of layoffs,[i] retrenchments[ii] and salary cuts after the imposition of lockdown. This has occurred due to closure and slow functioning of industries, shops and other establishments due to lockdowns and fear of the virus. Consequently, the private sector employees are facing the brunt of such economic standstill to a similar extent that the migrant workers faced.[iii] For the purposes of this article, the private sector employees represent two distinct categories i.e. (a) the ones covered by the Industrial Disputes Act, 1947; and (b) the ones who are at par with the former in terms of their purchasing power but are governed exclusively by contractual norms regarding their removal. The authors have deliberately limited the scope of the stakeholders to aforementioned as they are neither beneficiaries to any stimulus package nor well-placed to use the law as a sword to pursue their fundamental rights. Government Subsidies – The Sword for Economical Shield Amidst lockdown, a large section of the population was part of the non-operational business entities These businesses can be divided into three categories namely (a) the ones having sufficient capital to sustain their overheads including payment of salaries; (b) the ones which are fast running out of capital: and (c) the ones which have exhausted their capital. Without an iota of doubt, it could be asserted that the businesses falling under categories (b) and (c) are compelled to retain and pay their employees for the period of their closure, then; it would violate the principle of ‘No Work No Pay’ derived by the Supreme Court in the case of Ficus Pax Private Limited v. Union of India. In this case, the court held that there must be a reasonable balance between the employer and employee in terms of payment of wages and while imposing the obligation on the employer to pay wages the financial capacity of the employer should be taken into consideration. Further, such a precarious situation would amount into pushing them in the pit of bankruptcy as their reserves would be more resourcefully utilised in sustaining themselves. The act of extending an arm for help to their employees would become a death-knell for themselves. Notwithstanding the foregoing, it can be argued that the government should resort to the following for allaying the fears of the employers:
Another limb of the same Act – The Sword for Legislative Shield Section 25M(1) of the Industrial Disputes Act, 1947 [hereinafter Act] mandates seeking permission of the respective government before retrenching or laying-off any employee save in times of natural calamity or shortage of power. Since COVID-19 has been declared a pandemic, thus, qualifies to be a natural calamity. The employers use this as a justification for their act of not retaining such employees. However, within the same numerical series in the Act, Section 25M(9) is a relief which such laid-off or retrenched employees could use to affirm the protection of their fundamental rights, Arts. 14 and 21 i.e. equal protection of laws and right to livelihood respectively, by invoking the jurisdiction of the respective High Courts under Art. 226(1) as has been asserted in the case of Zee Telefilms Limited v. Union of India. Section 25M (9) is a provision which both lays down duty and grants power to the government. The appropriate government – Centre or state - could pass such an order in the present case and by revoking all the layoffs and retrenchments, due to such exceptional circumstance of COVID’19 on the basis of ejusdem generis, which can be satisfied with the necessity of such actions. It is unequivocal that in the present circumstances the appropriate government has legally omitted to fulfil its obligations and therefore, the employees can demand rectification of such omission. The Progressive Approach – The Sword for Contractual Shield The employers have been persistent in invoking their knight en garde i.e. the ‘defence of contractual sanctity’. They reiterate the rule of ‘privity of contract’ which bars intrusion of any third party in substantially altering the relationship between the parties to such contract. And the courts of law have been on the qui vive in upholding this sanctity indicating that the fundamental rights are not enforceable in private arrangements barring a few exceptions. However, a case can be made out by examining the concepts of state action and horizontal application of fundamental rights which would establish that Part III rights in the present case should be applied to the private organizations. This mechanism could be resorted to by the employees who are governed by contractual terms. The fulcrum of the precariousness in which both private sector employers, as well as employees, are found is in the state’s action of lockdown. Receding capital and increasing unemployment is due to this state action. Thus, an order by the state to retain all the employees would on one hand violate Art. 19(1)(g) of the employers.[vii] However, if this order is not effectuated then it would, on the other hand, violate Art. 21 i.e. right to livelihood of the laid-off and retrenched employees as held in Olga Tellis. According to Central Public Information Officer, Supreme Court of India v. Subhash Chandra Agarwal, when two fundamental rights are in a collision with each other, then, the ‘doctrine of proportionality’ shall be applied to decrease the friction between the two and ensure that one right does not trump the other. Therefore, if an order for revocation of such layoffs and retrenchment is not passed by the executive then it would certainly arrest the right to livelihood of the private sector employees thereby completely obliterating it which would be contrary to the proportionality test. The reason for not including the private parties under ‘state’ is because the rights provided in Part III of the constitution are negative rights guaranteed to citizens and to some extent to the non-citizens. Further, these rights exist to ensure that there is no arbitrariness on the part of the state. Also, a dispute between private parties could be well-settled by ordinary law.[viii] However, in the present case, there is no such ordinary law which would alleviate the hardships of the private sector employees governed exclusively by contractual conditions. Therefore, the horizontal application of fundamental rights is the only elixir which could protect the survival of the said employees. Such horizontality can be established in a three-pronged manner. Firstly, the Indian government being a welfare state, as was envisioned by the framers of the Constitution, is the ‘donee’ of limited power to ensure protection as well as the fulfillment of socio-economic goals for protection of the rights of the citizens. In doing so it can not shy away from holding even the private parties responsible. The private party might denote those parties who are either centres of economic power or have the power to control something which could affect the lives and fortunes of an ordinary individual. On similar grounds, the private sector employers, in the present instance, by exercising control over the employment of their employees, have changed the lives and fortunes of the latter and their families by altering their status to ‘unemployed’.[ix] Secondly, a governmental nexus, the crux of the evolved jurisprudence in this regard, of these private parties can be derived by purporting them as a recipient to certain governmental assistance. Such assistance can be in form of either tax concessions, grants, or any other financial assistance which is directed from the government as a relief for the brunt that these businesses might have been subjected to due to lockdown.[x] Lastly, the Indian Constitution has certain provisions in Part III which are applicable against private parties, howsoever to a limited extent. Arts. 15(2), 17, 23, 24, 28(3) are the provisions which reflect this wisdom. Further, the Hon’ble Supreme Court has also asserted the same in cases against non-state actors at various instances[xi]. The Supreme Court in Navtej Johar summed it up succinctly: “Constitution is an organic charter of progressive growth. The Expansive growth of constitutional idealism is embedded in the theory of progress, abandonment of status quo attitude, expansion of the concept of inclusiveness and constant remembrance of the principle of fitting into the norm of change with a constitutional philosophy.” PROCEDURE FOR DISMISSAL OR REMOVAL: NEED OF EQUALITY Despite facing a salary cut, the public sector employees have not been devoid of their right to livelihood because of the protection provided to them under Article 311 of the constitution and other service regulations. The provided article and regulations require a mandatory process only under which such employee could be dismissed or removed when followed could finalise the dismissal or removal of such employee. Further, by being employed in a public sector organization, they are well-equipped with the remedy of Art. 32 to quash such termination order asymmetrical to the procedure as laid down by the law. The hardship of such procedure established by law for private-sector employees governed by contractual terms is yet another disadvantage which has exacerbated their endeavor of meeting basic subsistence. By engaging in a thought experiment, this disadvantage can be further brought to clarity. Two accountants or clerks who are similarly situated in terms of their duties and economic status but are distinguished by their workplace i.e. public sector and private sector are afforded different treatments in terms of their removal. Despite contributing equally to the GDP growth and payment of taxes, the two accountants’ termination criterion is poles apart. This disparity in the treatment is also unjustified on humanitarian grounds especially in the exceptional times of Covid-19 in which each penny is contributing to the longevity of an individual. Thus, the government shall take cognizance of this matter and order to set up a committee for formulating guidelines to be adopted by every organization to terminate the employment of a private sector employee. THE WAY FORWARD International Human Rights Law mandates to respect the non-interference of the State in the enjoyment of fundamental rights, to protect the intervention of any act in the enjoyment of fundamental rights and fulfil the socio-economic duties to enable enjoyment of fundamental rights.[xii] Similarly, the Supreme Court of India in the case of Kesavananda Bharati v. State of Kerala referred to Granville Austin’s The Indian Constitution: The Cornerstone of a Nation and opined that Directive Principle of State Policies, mirror the fundamental principles which were the warp and woof of the Indian social revolution. Article 41 in Part IV is one such provision which reflects the wisdom that the Constituent Assembly included from the inspiration of the Indian social revolution and lays upon the State a duty to fulfil its obligations including securing the right to work which circumscribes the right to livelihood. Therefore, the authors submit that the State must proactively devise measures as aforementioned to curb the menace of unemployment, an objective which also finds its place in Entry 23 List III of the Seventh Schedule to the Constitution. This could be done by invoking the provisions of Disaster Management (DM) Act which has its reach over the private entities and individuals as established by the imposition of pan India lockdown. Further, the DM Act would not be affected by any other legislation by virtue of its Section 72 which empowers an overriding effect to statute over other existing enactments. [i] Industrial Disputes Act, 1947, §2(kkk). [ii] Industrial Disputes Act, 1947, §2(oo). [iii] See India Today Web Desk, India’s IT sector may see mass layoffs as demand outlook remains weak, July 8, 2020, available at https://www.indiatoday.in/business/story/global-it-industry-india-mass-layoffs-weak-demand-coronavirus-1698199-2020-07-08; Aishwarya Paliwal, 70% of Indian startups reeling under pandemic aftermath, reveals FICCI's nationwide survey, July 5, 2020, available at https://www.indiatoday.in/india/story/70-of-indian-startups-reeling-under-pandemic-aftermath-reveals-ficci-s-nationwide-survey-1697331-2020-07-05; Vishnu Som, 10% Layoffs At IndiGo, India's Biggest Private Airline, July 20, 2020, available at https://www.ndtv.com/business/indigo-indias-biggest-private-airline-to-lay-off-10-staff-2265928; Bismah Malik, Layoffs at Cognizant: 18,000 employees benched; Karnataka union to approach govt against IT major, July 2, 2020, available at https://www.newindianexpress.com/business/2020/jul/02/layoffs-at-cognizant-18000-employees-benched-karnataka-union-to-approach-govt-against-it-major-2164543.html; Scroll Staff, Coronavirus lockdown: Here is a list of firms that have laid off employees or enforced pay cuts, May 20, 2020, available at https://scroll.in/latest/962452/coronavirus-lockdown-ola-to-layoff-1400-employees-says-ceo; Scroll Staff, Covid-19: Layoffs, salary cuts by media houses ‘serious issue’, says SC, asks Centre to respond, April 27, 2020, available at https://scroll.in/latest/960387/covid-19-layoffs-salary-cuts-by-media-houses-serious-issue-says-sc-asks-centre-to-respond. [iv] Gunjan Paharia, Double Standards? If Governments Can, Why Can't Private Companies Slash Or Defer Salaries?, April 27, 2020, available at https://www.outlookindia.com/magazine/story/business-news-double-standards-if-governments-can-why-cant-private-companies-slash-or-defer-salaries/303096. [v] Id. [vi] Id. [vii] See Ficus Pax Private Limited & Others v. Union of India & Others, (2020) SCC OnLine SC 503; Gautam Bhatia, Coronavirus and the Constitution – XXXI: The Payment of Wages Order, June 10, 2020, available at https://indconlawphil.wordpress.com/2020/06/10/coronavirus-and-the-constitution-xxi-the-payment-of-wages-order/. [viii] Gautam Bhatia, Horizontality under the Indian Constitution: A Schema, May 24, 2015, available at https://indconlawphil.wordpress.com/2015/05/24/horizontality-under-the-indian-constitution-a-schema/. [ix] Udai Raj Rai, The Reach of Fundamental Rights, 36 JN. IND. L. INST. 293, 296 (1994). [x] Udai Raj Rai, The Reach of Fundamental Rights, 36 JN. IND. L. INST. 296, 297 (1994). [xi] See PUDR v. Union of India, (1982) 3 SCC 235; R. Rajagopal v. State of Tamil Nadu, (1994) 6 SCC 632; Vishaka v. State of Rajasthan(1997) 6 SCC 241; Pradeep Kumar Biswas v. Indian Institute of Chemical Engineering, (2002) 5 SCC 111; Indian Medical Association v. Union of India, (2011) 7 SCC 179. [xii] United Nations Human Rights Office of the High Commissioner, International Human Rights Law, available at https://www.ohchr.org/en/professionalinterest/pages/internationallaw.aspx#:~:text=By%20becoming%20parties%20to%20international,the%20enjoyment%20of%20human%20rights.
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