Rules of employment in the times of crisis

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Rules of employment in the times of crisis

By Samheeta Rao, Satyam Vyas & Mridula Kashyap

The coronavirus pandemic came without a warning and altered our world in many ways – from our social life (or the lack of it) to the ways in which we work. Social organisations, not untouched by the impact, made swift changes. Programs were halted or delayed, and in some cases, the entire focus of the organisation shifted to providing relief against the impact of COVID-19. These changes were also directed towards employees, as a survey conducted by Arthan with 130+ social organisations revealed that 64% of respondents had frozen hiring completely due to the unforeseeable future/lack of funding/unawareness of the strategy for 2020. As a follow-up, we conducted another detailed, in-depth survey with ~70 organisations, and we found that 1,084 jobs that were planned during pre-COVID era had to be scrapped, while 65% of the organisations faced a reduction in funding. 

While the initial shock seems to have passed, we are still a long way from being ‘back to work’ as usual. And as questions arise around the future of work, workplaces, organisations, financial viability, employment engagements and opportunities, there are uncertainties and questions in the minds of employers and employees, all trying to make the best out of this situation.

Here, we attempt to clarify and answer some of these questions.

PART I: Hiring and Onboarding During COVID-19: Nullifying Pre-COVID Offer Letters

In the wake of the pandemic, many organisations decided to freeze their hiring plans. And many others decided to nullify/withdraw offer letters already issued and accepted by candidates. Whether it was done due to a lack of foreseeable demand or to maintain the financial viability of the organisation given the overall uncertainty, an organisation’s hiring decision is certainly its own prerogative. As such, an organization may choose to withdraw offers that were already accepted, and where candidates have not yet joined. In the past, we have seen large scale offer withdrawals during recessionary periods, and it is likely we are going to see the same again. A few points that should be considered prior to rolling back accepted offers:

  • Be open and vocal about changes in hiring decisions – through announcements on websites/pages – this can help those looking to join understand the organisation’s position.
  • If possible, offering monetary compensation (complete or partial monthly salary) to those whose offers have been rescinded, especially if the joining date was imminent, would be a great goodwill gesture, and a humane one, given the current unprecedented situation we are faced with.
  • Communicate offer withdrawals as soon as possible, and well in advance of the expected joining dates, wherever possible. 

PART II: Letting Go of Employees

A hard decision to make, sometimes organisations have no choice. In this case, ‘Always follow procedure’ is the golden rule to be remembered. In making this hard decision, consider the following:

  • Determine the business case: which businesses and teams need to be laid off? Be prepared to answer questions around “Why was I chosen to be laid-off”?
  • Are all of the staff employees or consultants?
  • Consider the employee and his/her context: if possible, avoid laying off an employee under a protected category, on maternity leave or someone who has recently raised a grievance relating to workplace harassment so as to not create unnecessary legal risks of claims of discrimination or retaliation.

Laying off an employee is never easy, and especially now when the times are tough. If there are ways to retain employees, do consider alternative and creative options (some of these are mentioned in PART IV and V). However, if an employee needs to be laid off:

  • Carefully consider employment contracts and termination clauses: typical notice periods are for 30 days which must be honoured; full & final settlement (including salary, gratuity, accrued but unused leaves, etc) must be done in a timely fashion; and, if possible, give a severance package, even though in many cases it is not a statutory requirement.
  • Follow the due procedure for employment terminations based on misconduct or performance: avoid verbal-only communication, accurately record instances of non-performance. In case of misconduct related terminations, issue a show-cause notice, conduct a fair hearing and keep a true record of the investigation.

In case of contractual consultants, review the termination clauses to determine any notice periods. However, there might be some penalties (that would be defined in the contract) for early termination. Do honour these, to avoid any claims for monetary damages at a future date.

As mentioned previously, it is important and imperative to follow the rule book (in this case the contract, employment terms and applicable labour law) in case of all terminations undertaken as part of the workforce restructuring. Failure to do so increases legal risks of a disgruntled employee/consultant challenging the termination for non-adherence to the legal requirements. Particularly for a non-profit organisation, being a litigant in court (as a defendant) could affect future background checks done by funders prior to giving donations or grant money.  Hence, it is prudent to consider all legalities prior to implementing such terminations.

PART III – Employment Contracts and Salaries during COVID-19

Many organisations have been wondering if they would need to alter their employment contracts to include clauses for similar future occurrences of crisis situations and/or to protect their employees. While minimum wages can be regulated, an organisation cannot guarantee never laying off an employee – for benefits of such kind, the government will need to step in either through wage subsidies or direct financial support to employers. 

In an employment relationship, unfortunately, there is an unequal bargaining power – the organisation typically has more power. Specifically for the social sector, there is no industry body, akin to NASSCOM or FICCI or an equivalent of a trade union who could play the role of employee representation to collectively bargain and correct the unequal power relationship in employment negotiations. Hence, uncertainty and lack of job security are likely to remain long term shadows in this arrangement.

However, one of the key asks by many employees going forward would be the provision of medical insurance in employment contracts – something that organisations might do well to consider, given the fear of illness looming large today. While there is medical coverage offered in the form of the Employees’ State Insurance, this coverage may be limited, and voluntary corporate medical insurance policies may be needed to cover a majority of the workforce. Contractual consultants are also unlikely to be covered by the benefit of any medical coverage. The Government’s amended labour laws are awaited to determine medical and social security coverage for gig workers, which might address this need. 

From an employer’s perspective, policies around information technology, code of conduct, workplace environment, etc will need to be reviewed to ensure that it is sufficient to cover the changed working dynamic of remote working arrangements. Particularly concerning would be where an employee accesses highly confidential or sensitive information, in which case organisations may need to consider additional IT infrastructure (screen surveillance software) to ensure that such information is protected adequately. 

PART IV: Job Share Arrangements

With the slowing down of global economic activity, a reduction in demand is obvious for many organisations. However, instead of laying off an employee, creating an arrangement where the work (as well as the salary) of one person may be shared by two could be considered. While it gives both the employees continuity of employment, it also allows the organisation to benefit from the skill sets of two, at the cost of one. This is a fairly common and well-tested arrangement globally, which can be adapted as needed to the Indian context.

Organisations may also look at introducing a voluntary pay cut program (on the lines of voluntary retirement schemes). These, however, will need to be culturally driven and require individual consent.

PART V: Salary restructuring 

Organisations can avoid laying off employees by restructuring salaries and its components.

  • Altering the variable component where the fixed monthly component is reduced in lieu of a higher bonus when things get better. This would work where the teams are small and family-like, where all employees feel equally invested in the risk and reward of an organization.
  • Reducing a certain percentage of the salary, starting at the senior level.

PART VI: Workplaces during COVID-19 – Reopening the workplace

Every organisation planning to reopen their offices should exercise extreme caution. The Government issues standard operating procedures from time to time in relation to the workplace, which will have to be followed strictly by all employers. This includes, amongst others:

  • Sanitisation, social distancing, space between desks, office layouts, etc.
  • Installing surveillance devices to monitor and ensure physical distancing
  • Appointment of nodal officers, who will also be responsible to review CCTV footage and enforce social distancing norms
  • Appointing POCs to coordinate with government authorities

Ensuring proper safety and sanitisation of the workplace is paramount. 

  • If employees are able to maintain their efficiencies from home, consider whether reopening workplaces is really necessary. Liability for workplace injuries and illness continues to remain with the employer.
  • Keep in mind the mode of transport used by employees before demanding their presence in the offices – they may not travel by personal transport.
  • Only after ensuring that all safety measures are taken, and in cases where it is absolutely necessary, should an organisation demand the employees’ presence.

In case an employee in the organisation tests positive for the virus, patient privacy should be maintained, though disclosures as necessary to the government health officials or healthcare workers would be required. 

There is only so much we can speculate about the time to come – what it would mean for organisations and employees; how the relationship between them would evolve. What we can do is take each new challenge as it comes, and of course, always follow the procedure!

Samheeta and Satyam will be in conversation for a Masterclass: The ‘HOW’ towards Restructuring NGOs, on Friday, June 26, 2020.
Register here.
Or sign up for Future of Talent, an initiative under Building Civil Society Organisations of the Future – June 25&26, 2020 here: www.arthanevents.com/tickets

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