Navigating WFH Pay Cuts and COVID-19 Leave: What's Fair and Legal for HR?

Hi everyone, I am working in a health tech startup company as the HR admin. We have provided a work-from-home option for all employees. Is it mandatory to provide full salary for the employees during WFH, or can we deduct 25% from their salary due to a perceived lack of efficiency while working from home?

Leave policy for employees affected by Covid-19

Additionally, I would like to seek advice on the leave policy for employees affected by Covid-19. Should we offer full salary for 14 days without deducting from their leave balance, or can we adjust this with the leaves they have already taken?

Thank you for your guidance.

Payment of full salary during the WFH period

Payment of full salary during the WFH period is the best option and would keep your employees happy and motivated. By all means, if you can manage it, that is the best. However, if your financials are not permitting, then you can stop payment of conveyance allowance, uniform allowance, attendance bonus, entertainment allowance, etc., which are linked to the employees' presence at the work spot. The drop in effectiveness on account of WFH is not due to employee-related matters but is a work system issue, and the employee cannot be held responsible or made to lose salary on this account.

Quarantine period and leave policy

Whether the quarantine period is to be adjusted against the leave to the credit of the employee is reflective of the approach the organization has towards its employees. If they are seen as only a pair of hands and are destined to work for you, then leave will be deducted. However, if the approach is that every employee is a human resource and this resource takes care of all others (say the Human Resource Approach), then the period of quarantine leave is not adjusted against any other leave.

Salary Deductions During COVID-19

In the first COVID-19 wave, there were instances where salaries were deducted. It is not fair for employers to deduct wages from employees for no fault of their own. Employers advised employees to work from home; hence, deducting wages is not advisable.

Allowances in the Industrial Development Area

In the IDA (Industrial Development Area), conveyance, washing, and hazardous allowances were not paid, stating the reason that employees were not advised to report for duty, and they are entitled to only Basic Pay and Dearness Allowance. Many complaints have been filed with the labor department.

Government Directive on Allowances During Lockdown

Last month, they declared a lockdown period. The State Government categorically stated in the G.O. that during the lockdown period, no allowances should be deducted from the salaries of the employees.

Paying Full Salary During Work From Home

Legally, you should pay the full salary when a person is working from home. All over the world, it is found that his/her output has increased. Secondly, the company is making a massive saving by not operating the office. Electricity and water savings themselves are significant amounts. The employee pays for electricity when working from home.

Benefits of a Positive Approach

Think of the situation positively to get better output from the employees. They would support more as they have less burden from traveling, etc. For Covid-19 quarantine cases, it is advisable to pay the full salary. Just study what Ratan Tata has done in the Tata Group. He has decided to pay the full salary to the family if an employee dies from Covid until his retirement age. Employment is a dual contract. Look after the employee, especially in difficult times, and they will look after the company.

Full Salary During Work From Home

Legally, you should pay the full salary when a person is working from home. All over the world, it is found that their output has increased. Secondly, the company is making significant savings by not operating the office. Electricity and water savings alone are substantial. The employee pays for electricity when working from home.

Positive Impact of Work From Home

Think of the situation positively to get better output from the employees. They would support more as they have less burden from traveling, etc.

Covid-19 Quarantine Cases

For Covid-19 quarantine cases, it is advisable to pay the full salary. Just study what Ratan Tata has done in the Tata group. He has decided to pay the full salary to the family if an employee dies from Covid until their retirement age.

Employment as a Dual Contract

Employment is a dual contract. Look after the employee, especially in difficult times, and they will look after the company.

Government Orders and Salary Deductions During Lockdown

The Central Government had ordered during the first lockdown that employers would be required to pay the full salary for the lockdown period. However, this was struck down by the courts and is no longer applicable.

Salary Entitlement and Allowances

If the person is working, they are entitled to their salary. Deduction of salary at an arbitrary rate or percentage is not allowed. However, allowances related to attending the office (travel allowances, washing allowance, lunch allowance, etc.) can be denied. On the other hand, employees may incur higher expenses on power bills, AC, internet connections, etc. The courts have not given any verdict on this yet, as most employees have accepted that certain cuts would occur during a crisis at this time.

Legal Restrictions on Wage Reduction

Under various laws, including the Industrial Dispute Act, the employer cannot unilaterally reduce wages or change the terms of employment. It must be agreed upon by the employees as well. So, you may have a problem under that also.

Productivity and Labor Relations

From a productivity and long-term labor relations point of view, you should avoid such a deduction in any case.

Salary for Quarantine Period

Regarding salary for the quarantine period, Maharashtra has passed an order under the Disaster Management Act that any employee who contracts COVID while coming to work (meaning if they are not working from home) will be paid their salary for the full recovery and quarantine period by the employer. This also applies to those who were forced to travel due to work reasons and are quarantined on account of contact in the office or during travel for work.

I suggest you look at the orders issued by your state government.