Regulatory Updates

This update is in furtherance of our ERGO coverage on COVID-19 outbreak where attempt to bring forth latest regulatory developments, occasioned by the upsurge in the number of positive cases in the country. We have set out below an overview of regulatory updates for the period between 14 April 2020 to 23 April 2020.

Lockdown 2.0 – breather for some, continued restrictions for others

On 15 April 2020, the Home Secretary, Government of India, issued a notification extending the duration of lockdown (Extended Lockdown Order) till 3 May 2020 (Extended Lockdown Period). Pursuant to the Extended Lockdown Order, revised consolidated guidelines and exemptions applicable during the Extended Lockdown Period have also been issued subsequently. Set out below are some important provisions of the guidelines.

Ø  Exemptions granted to establishments effective 20 April 2020:

Additional exemptions granted to establishments with effect from 20 April 2020, include, inter alia, ‘production units, which require continuous process, and their supply chain’, ‘manufacturing units of essential goods, including drugs, pharmaceuticals, medical devices, their raw material and intermediaries’ as well as ‘all facilities in the supply chain of essential goods, including cold storages and warehouses’ and exemption to industries operating in rural areas, i.e. outside the limits of municipal corporation and municipalities.

Ø  Permitted activities during the Extended Lockdown Period:

Apart from health services, agricultural and related activities, fisheries, plantations, animal husbandry, financial sector, public utilities, social sector, supply of essential activities, etc., the following establishments and industries have been permitted to operate during the Extended Lockdown Period:

a)    Commercial and private establishments: (i) Print and electronic media including broadcasting; (ii) DTH and cable services; (iii) IT and IT enabled Services, with up to 50% strength; (iv) data and call centres for government activities only; (v) government approved Common Service Centres (CSCs) at gram panchayat level (v) courier services; (vi) cold storage and warehousing services, including at ports, airports, railway stations, container depots, individual units and other links in the logistics chain; (vii) private security services and facilities management services for maintenance and upkeep of office and residential complexes; (viii) hotels, homestays, lodges and motels, which are accommodating tourists and persons stranded due to lockdown, medical and emergency staff, air and sea crew; (ix) establishments used/ earmarked for quarantine facilities; and (x) services provided by self-employed persons, e.g., electrician, IT repairs, plumbers, motor mechanics, and carpenters.

b)    Industries / Industrial establishments: (i) Industries operating in rural areas, i.e., outside the limits of municipal corporations and municipalities; (ii) manufacturing and other industrial establishments with access control in Special Economic Zones (SEZs) and Export Oriented Units (EOUs), industrial estates, and industrial townships. These establishments shall make arrangements for stay of workers within their premises as far as possible and/ or adjacent buildings and the transportation of workers to work place shall be arranged by the employers in dedicated transport by ensuring social distancing); (iii) manufacturing units of essential goods, including drugs, pharmaceuticals, medical devices, their raw material and intermediates; (iv) food processing industries in rural areas; (v) production units, which require continuous process, and their supply chain; (vi) manufacturing of IT hardware; (vii) coal production, mines and mineral production, their transportation, supply of explosives and activities incidental to mining operations; (viii) manufacturing units of packaging material; (ix) jute industries with staggered shifts and social distancing; (x) oil and gas exploration/ refinery; and (xi) brick kilns in rural areas.

For a detailed analysis of ‘what has changed’ as far as Extended Lockdown Order is concerned, please see our ERGO dated 16 April 2020.

Ø  Exemptions not available in containment zones

The exemptions / permitted activities do not apply to districts demarcated as ‘containment zones’, except for activities which may be specifically permitted under any guidelines issued by the Union Ministry of Health and Welfare in this regard.

Ø  Measures to be enforced

Annexure I to the Extended Lockdown Order requires the district magistrates to enforce the listed measures at workspaces and manufacturing establishments that are permitted to operate. Some of such measures to be followed at workplace and manufacturing establishments include (i) arrangement for temperature screening; (ii) gap of one hour between shifts with staggered lunch breaks; (iii) sanitization of workplace between shifts’ (iv) frequent cleaning of common surfaces; and (v) prohibition on large meetings, etc.

Ø  Standard operating procedure for social distancing

Annexure II to the Extended Lockdown Order lists down the standard operating procedure for social distancing for offices, workplaces, factories, and establishments. These measures need to be implemented by all offices, factories, and other establishments permitted to operate. Some of such measures include (i) disinfecting of all areas; (ii) arrangement of special transportation facility for workers coming from outside without any dependency on public transport. These vehicles should be allowed to work only with 30% - 40% passenger capacity; (iii) mandatory thermal scanning of everyone; (iv) medical insurance for workers; and (v) total ban on non-essential visitors, etc.

In an important move, the Ministry of Home Affairs, Government of India, has issued a clarification dated 23 April 2020 assuring that no action will be taken against companies if a COVID-19 positive case is found in their establishments. However, establishments will be bound by the social distancing norms and the standard health protocols prescribed by the appropriate governments. This is after rumours were spread about the government contemplating action against companies in case of positive cases at their premises and sealing their premises in such situations.

Implementation of Extended Lockdown Order by state governments

The states of Maharashtra, Karnataka, Haryana, Telangana, Andhra Pradesh, Rajasthan, Tamil Nadu and West Bengal have adopted the Extended Lockdown Order through separate orders with suitable modifications (including more severe restrictions in certain cases). Notably:

Ø  some states such as Haryana, Tamil Nadu etc. have adopted the Extended Lockdown Order as is;

Ø  in Maharashtra, while the Extended Lockdown Order has been adopted, the Mumbai Metropolitan Region and the Pune Metropolitan Region would continue to be bound by the previous lockdown order dated 15 March 2020 (which permitted limited number of activities falling in the exception of ‘essential services’);

Ø  in Karnataka, the government has allowed IT / IT enabled services establishments to continue in non-containment zones with minimum essential staff;

Ø  the Government of West Bengal, through an order dated 17 April 2020, has clarified that with effect from 20 April 2020, operations in companies offering IT and IT enabled services are allowed with maximum strength equivalent to 25% of regular work force. The aforesaid order has also directed the employer / owners to ensure that norms of social distancing and health hygiene protocols are strictly enforced.

Relaxation in compliances under labour laws

Ø  Extension of time for EPF, ESI contributions

Through a notice dated 13 April 2020, the Employees’ State Insurance Corporation has further extended the deadline for contribution by employers towards employees’ state insurance fund for the month of February 2020 until 15 May 2020.

The Employees’ Provident Fund Organisation, too, through a circular dated 15 April 2020, provided a grace period of 30 days (from 16 April 2020 to 15 May 2020) for filing electronic challan cum return in respect of the wages disbursed in the month of March 2020.

Ø  Gujarat, Rajasthan, and Punjab – relaxation in working hours in factories

a)    Gujarat: The Government of Gujarat has relaxed certain compliances under different labour laws.

                      i.        Through a notification dated 4 April 2020, the government has relaxed the requirement of renewal of license for contractors under the Contract Labour (Regulation and Abolition) Act 1970. In all cases wherein the licenses are expiring in March 2020, April 2020 or May 2020, the renewal requirement will not apply until 15 May 2020.

                     ii.        The Labour Department, Government of Gujarat, has extended the time limit for conducting various examinations and inspections in factories as per the Factories Act 1948 until 15 May 2020.

                    iii.        In a notable development, the state government has, through notification dated 17 April 2020, relaxed the requirements pertaining to weekly hours, daily hours, interval of rest etc. under the Factories Act 1948, until 19 July 2020. Till the said period, the daily and the weekly hours shall be 12 hours and 72 hours instead of 9 hours and 48 hours, respectively. However, wages shall be in proportion to the hours worked. Rest intervals can be provided after every 6 hours (instead of the statutorily prescribed 5 hours) of work. Restrictions relating to employment of women in night shifts, however, will continue to operate.

b)    Punjab: Similar to the state of Gujarat, Punjab too has relaxed certain provisions relating to working hours for a period of 3 months with effect from 20 April 2020. The daily hours of work have been increased to 12 hours, the spread-over in such cases not exceeding 13 hours in any day.

c)    Rajasthan: Punjab, has provided a relaxation of daily working hours and increased them to 12 hours for a period of 3 months effective 11 April 2020. However, unlike Gujarat for the additional hours worked by the workers, they shall be paid overtime at double the ordinary rate of wages, while limiting such additional hours to 24 hours per week.

Ø  Maharashtra – extension of time for annual return filings for S&Es

As regards establishments covered under the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act 2017, the Maharashtra government has allowed the online submission of annual return to be made by 31 July 2020.

Ø  Madhya Pradesh – extension of time for professional tax payments

Under the Madhya Pradesh Vritti Kar Adhiniyam 1995 (professional tax law), every employer registered under the state professional tax statute is required to furnish a return for each quarter, on or before, the 15th day of the month following the quarter in respect of which the return is relevant. By way of notification dated 30 March 2020, the state government has allowed professional tax to be paid by 30 April 2020 and the return to be filed by 5 May 2020.

Other important developments

Ø  Karnataka – promulgation of Karnataka Epidemic Diseases Ordinance 2020

In exercise of the powers under Article 213(1) of the Constitution of India, the Governor of Karnataka has promulgated the Karnataka Epidemic Diseases Ordinance 2020 to consolidate the law relating to regulation and prevention of epidemic diseases in the state. Among other aspects, the ordinance allows the state government and authorities to seal state or district borders for such period as they deem necessary, prescribe social distancing norms and impose prohibition / restriction on the functioning of industrial and commercial establishments.

Ø  Haryana – prosecution against companies not paying wages

As covered in our previous updates, state governments are taking a stance against employment terminations. Recently, the Labour Inspector, Rewadi (Haryana) published a list of companies against which prosecution will be initiated under the Disaster Management Act 2005. According to the notice, each of these companies have purportedly failed to disburse wages for the month of March 2020. It is yet to be seen how these prosecutions would proceed as several employer associations are writing to labour authorities for taking a sympathetic approach.

Ø  Telangana and Karnataka – appeal to not terminate wages but resort to pay cuts etc. if required

In Telangana, for example, the Minister of Information Technology, Electronics and Communications and Industries, appealed to employers to not terminate the services of their staff but manage the crisis using less severe cost-cutting measures such as salary cuts and deferment of increments.

Likewise, the Deputy Chief Minister of Karnataka, Shri C N Ashwath Narayan, held a video conference on 17 April 2020 with several employers from the IT industry and advised them to not resort to termination of employment but instead take measures such as salary reductions.

As Lockdown 2.0 continues, governments are diluting the hitherto prohibitory stance, paving way for certain categories of the private sector to commence activity, albeit with several compliances relating to social distancing, standard operating procedure, maximum staff strength, medical insurance etc.

Regulatory Developments on COVID-19 are being tracked by Anshul Prakash (Partner), Deepak Kumar (Principal Associate), Prachi Vijay (Associate) and Deeksha Malik (Associate), authors of this update and members of the Employment, Labour and Benefits (ELB) practice group. For any legal assistance pertaining to workplace management in the context of COVID-19 outbreak, please reach out to the ELB practice group at elbebulletin@khaitanco.com.