How Can Our Small Manufacturing Company Handle Salary Reductions During COVID-19?

Dear All,

We are a small manufacturing company in Mumbai. During the current COVID-19 scenario, our scheduled production has been stopped, and our client has postponed all future projects. As a result, there is no revenue, and the company is unable to pay salaries to employees.

Possibility of Reducing Salaries

In this situation, is there a possibility of reducing salaries for employees on leave or Leave Without Pay (LWP) until the situation returns to normal? Are there any directions from the government regarding this?

Advice on Handling the Situation

Alternatively, do you have any advice on how to handle this situation, such as laying off employees who are not active, or any other actions that would benefit both the company and the employees?

For betterment, please advise.

Thank you

The Predicament of SMEs During Lockdown

It is the predicament of all SMEs. The government directive is not to deduct any salary/wages during the lockdown period. Compared to workers' plight, the company has better strength to bear this brunt. Please don't take any steps that will hurt workers who have tied their destiny with the company.

Please bear with the hope that this too will pass and better days will return. I know it will appear sermonizing and will be difficult to digest in the present situation when the financial resources are drying up. But appreciate that you have something to give in this crisis whereas workers have nothing. For them, it is a question of survival.

Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

Dear Minal,

Whatever the communication from the government, there is nothing wrong per se in submitting an application to lay off the workers to the labor office. To understand the provisions of the layoff, please refer to the following sections of the Industrial Disputes Act, 1947:

a) The concept of "lay off" as defined under section 2(kkk)
b) Sections 25-C of Chapter V-A
c) Section 25-M of Chapter V-B

If the labor office denies your request, then there is nothing more that can be done in this regard.

Thanks,

Dinesh Divekar