Applibility Of "No Pay No Work" - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Nathrao
Insolvency N Gst Professional
Kartheka
Senior Manager - Hr

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Hi All

I just want to know the applicability of "No Work No Pay" at our company.

We were a small size medical billing company operating since 2003 working for US doctors. Last 3 years we were losing clients but we were able to run our company because of one major client's revenue (apart from that all others were very small clients with less revenue).

Now the situation is all of sudden we lost the client (Major client) by Sep' 15 (without any notice from the client & also pending payments). Since its the major client 40% of our manpower were working for this process and all of sudden from 1st Oct 15 on wards we don't have any work for them.

Since we expected the client to come back to us (which happened once 6 years before with the same client) within 2-3 months we asked the employees working for the process to not check in to office and the same will be considered as paid leave. Also we have paid them last 3 months (Oct 15, Nov 15, Dec 15) salary without the employees working.

But now we got confirmation that we are not going to get the process back and moreover for past 2 months the management is struggling to pay the salaries itself and they cant afford to pay anything to these employees (who were getting paid without working).

Now I want to call those employees and explain the situation & ask them to leave company without further issues. Our General notice period clause is 2 months and our total employee strength is 40 as of now (including all the employees). So seniors please suggest how to proceed further.

1) Whether i can inform them that we are not going to get the process back, so the management in not position to neither provide them work nor salary without working, and request them to leave the company without further compensation or paying till date alone. (Since we have paid them 3 months salary already)

2) Whether i can inform them that we are not going to get the process back, so the management in not position to neither provide them work nor salary without working, So the management has decided to apply "NO WORK NO PAY" under which the employees will be under the company rolls only but they will not be paid any salary till the management gets new client and assign them the work. If anyone doesn't want to accept the same they can get relieved from the company on their own will. (suggested by statutory consultant)

Seniors, Kindly guide me how to close this issue smoothly without paying anymore from the company side.

Thanks in advance

Regards

Kartheka R
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You can start the process for termination of employment for the employees.
Call all the employees and ask your senior management to interact with them and openly and honestly explain matters.
Seek their cooperation in the financial crisis being faced.
Give them an offer of unpaid leave till company can get the major client or other sources of income, without any preconditions.
Those who want to leave can be given exit at early date since they already have got pay without work.
All this should be done in amicable and friendly manner.
Dear Kartheka,

From academic perspective, the doctrine of " No work - No wages " implies proportionate deduction of wages or the overt denial of wages by the employer as a consequence of a corresponding wanton failure or refusal on the part of the employees to work in breach of the contract of employment. Therefore, in the first place it has no application to your establishment in the context mentioned in your initial post.

Second, it is the inability of your Management to provide work to the employees when they are ready to work. Of course, it has been necessitated by the compulsion of the circumstances beyond the control of the Management and the act of paying wages/pay for consecutive three months even without work in anticipation of improvement in the situation is a gesture of goodwill on the part of the employer. In such a precariousness, the only way-out is the termination or foreclosure of the contract of employment of the employees who can not be provided with employment anymore on terms either mutually agreed or statutorily prescribed. Hence, I am not able to appreciate the suggestions offered by your consultant either to keep the contract of employment under animated suspension indefinitely or to ask the affected employees to tender resignation.

The final option, therefore, to protect the interests of both is to resort to statutory retrenchment.
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