As part of our ongoing series of webinars related to the developments of COVID-19 in India, Sannam S4 welcomes you to join us for this week’s edition which will focus on HR and employment-specific matters. On March 20, we delved into some of the most recent updates from the Centre and State Governments and implications for moving staff to work-from-home setups. On March 25, we focused a webinar on tax, finance and compliance considerations particularly considering the end of the Indian FY on March 31.
Since our initial call on the 20th, the Government of India announced a nation-wide lockdown for 21 days ending on April 14, 2020, requiring all organizations not determined to be “essential services” to close their offices. We have been working with our clients to navigate the implications of these decisions and how they impact the employees in India.
On the call we will address:
- Latest headlines from the Government of India impacting employers;
- Work-from-home best practices;
- Pay and staff reductions; and
- Benefits management
- Susmita Sen, Head of HR Advisory, Sannam S4
- Michael Green, Director of Government Relations & Strategic Development, Sannam S4
MISSED THE WEBINAR? CLICK HERE WATCH IT
Sannam S4 is glad you were able to join us and hope everyone is getting used to the new normal working from home. We are happy to have you with us. For those of you who weren’t able to join us on our March 20th webinar, my name is Michael Green and I am the Director of Government Relations and Strategic Development at Sannam S4 based out of Washington DC.
I am happy to have my colleague, Susmita Sen, with me as well. Susmita leads Sannam S4’s HR Advisory Practice Group out of our New Delhi office. Susmita advises some of the world’s leading universities, nonprofits and businesses on employment best practices and implementing those practice on the ground in India. From administering insurance schemes to advising on salary benchmarking and tracking labor compliance, Susmita and her team act as a local partner to global HR Teams managing India from afar.
Since we last addressed the audience, in just about two weeks, there have been many developments on the ground in India. For one, Prime Minister Modi announced a 21-day lockdown which is set to end on April 14.
Let’s start there.
Question: Susmita, can you bring the audience up to speed on where India stands in its COVID-19 response, particularly since the Prime Minister’s announcement?
Covid-19, as we all know, is a global humanitarian challenge. PM Modi has been fast and quick to respond, calling for the Janata Curfew on the 22nd, which was a great move to test the sentiment of the masses, and quickly follow that up with a complete lockdown. All public and private sector organizations, except those in healthcare, have been asked to shut down till the 14th Apr. MOHFW is regularly coming up with updates on ways to maintain hygiene, practice social distancing and also a directory of helpline numbers across states to access the healthcare aid, from the government.
Disaster Management Act à The Disaster Management Act, 2005 (DMA) has been invoked, giving wide powers to the Ministry of Health and Welfare to enhance preparedness and containment of the virus. Various State Governments have also classified COVID-19 as an ‘epidemic disease’ under the Epidemic Disease Act, 1897 (EDA), giving local administration authority to impose various containment measures, such as quarantine, closures and surveillance. The Central and several State governments have been issuing numerous advisories and regulations on matters of travel, employment and healthcare. Any person disobeying the orders of the government in this regard shall attract the punishment as provided for ‘disobedience to order duly promulgated by public servant’ under Section 188. Virtually all travel into the country has now been halted.
All malls, supermarkets have shut down and only essential item shops will remain open for limited times
Some relief from the government has come in the way of our Finance Minister extended the filing dates of ITR, GST, linking of PAN and Aadhar and other reliefs for the big and small enterprises. The finance ministry has announced the stimulus, an economic package to mitigate the impact of coronavirus on the Indian economy.
The government has also announced for small companies upto 100 people workforce, the PF contribution on the employer side will be paid by the govt, as economic assistance.
Question: Prior to the PM’s announcement, states were taking action, requiring offices to limit the amount of staff in office, for example. The lockdown has now forced all businesses, effectively, to move to remote working platforms. How have companies been managing this change?
For some of the sectors, the work-from-home proposition is posing implementation challenges as it has a direct bearing on the business operations. This is particularly true for manufacturing units where workers are required to be physically present at the production sites, and services sectors like banking and IT where a lot of confidential data is used and remote working can enhance security threats. Hence, companies operating in these sectors are finding it difficult to implement work-from-home facilities without compromising on their day to day operations.
For the rest, the coronavirus pandemic has fundamentally changed the way many organizations will perhaps continue to operate for the foreseeable future. As governments and businesses around the world profess isolation, social distancing etc, remote work is our new reality.
More questions employers need to ask themselves:
- What steps are needed for staff to be able to continue to work from home, if needed?
- Cyber Security?
- Are list servers up to date?
- How will sensitive information stay protected?
- How will the building be secured?
- Cost of operational changes?
- Donor communication?
- What policy will need to be adapted for the current situation?
There are bandwidth issues and connectivity challenges cropping up now with the entire family dependent on wi-fi.
Though the mobile and internet penetration in India is far reaching, there are few cases of staff members with no connectivity etc. For them, their mobile hot spot is being utilized to stay connected.
And if this experiment does take off well, with business as usual outcomes, many organizations are already contemplating their office set ups, infrastructure/ real estate costs as the first to slash down.
Question: What are some of the challenges you see organizations facing with the shift to work-from-home and what solutions would you suggest?
One part of the question, as addressed earlier, does deal with concerns like cybersecurity, data sensitivity etc. and ensuring all employees have full access to resources and equipments.
But the bigger question is how are corporate leaders, managers, and individual workers making this shift?
- Managing remote teams- How often should we communicate? Should it be video, phone, instant messaging sites etc? Set smaller milestones for evaluation and feedback. You’ve got to help people understand how to do this and give them confidence that it works. Newer employees, those working on critical projects and people who need more contact will require extra one-on-ones. Remember, too, that you can do fun things virtually: happy hour, coffee breaks, lunch together. All these things can continue the connection you had at the office. And there’s ample research showing that virtual teams can be completely equal to co-located ones in terms of trust and collaboration. It just requires discipline.
- Psychological effect of remote working- People get used to having these unplanned watercooler or cappuccino conversations with colleagues, and they are actually big, important parts of the workday that have a direct impact on performance. How do we create those virtually? For some groups and individuals, it’s will be constant instant messaging. For others, it will be live phone conversations or video conferences. Some people might want to use WhatsApp, WeChat, or Viber. A boss can encourage those types of contact points for psychological health. People are not going to be able to figure this out organically. You’ve got to coach them. There’s one more thing: Exercise. It’s critical for mental well-being.
- Culture- make sure that team members constantly feel like they know what’s going on. You need to communicate what’s happening at the organization level because when they’re at home, they feel like they’ve been extracted away from the mothership. They wonder what’s happening at the company, with our clients, with our common objective. The communication around that is extremely important. So you’re emailing more, sharing more.
- During this period, people will also start to get nervous about revenue goals and other things, so you’ll have to make sure they feel like they’re going to be OK. Another thing is to ensure that no members feel like they have no less access to you than others. At home, people’s imaginations begin to go wild. So you have to be accessible and available to everyone equally. Finally, when you run your group meetings, aim for inclusion and balance the airtime so everyone feels seen and heard.
- Productivity- Trust your staff. You can’t see what people are doing. But equip them in the right ways, give them the tasks, check on them like you’ve always done, and hope they produce in the ways you want them to. You can’t monitor the process, so your review will have to be outcome-based. But there’s no reason to believe that, in this new environment, people won’t do the work that they’ve been assigned. Remote work has been around for a very long time. And today we have all of the technologies we need to not only do work but also collaborate. We have enterprise-wide social media tools that allow us to store and capture data, to have one-to-many conversations, to share best practices, to learn.
- Childcare/ Homecare- Bosses should be prepared for that conversation and to help people think those issues through. The blurring of boundaries between work and home has suddenly come upon us, so managers have got to develop the skills and policies to support their teams. This might involve being more flexible about the hours in which employees work. You don’t have to eat lunch at 12pm. You might walk your dog at 2pm. Things are much more fluid, and managers just have to trust that employees will do their best to get their work done.
- Donor communication?
- What policy will need to be adapted for the current situation?
Question: Have there been any updates in terms of labor compliance and any laws to flag with respect to the employment that have come out as part of the India’s response to COVID-19?
- Well, there have been several advisories by the Ministry of Labor. The Ministry of Home Affairs has issued a notification on payment of wages on time and several state governments have issued similar advisories.
- There is a bill introduced in the Parliament called the Terminated Employee (Welfare) Bill. It The Bill proposes that if an employee is asked to leave due to reasons, such as a slump in the economy, political instability, technological changes, a court order, or if the business becomes insolvent, and so on, then the employee should be given unemployment benefits with assured income for nine months, which is considered sufficient time for them to find a new job. This Bill is not yet passed in the Parliament.
Question: As we’re at the end of the FY if performance reviews have not already happened, what’s best practice for conducting performance appraisals at this time? A follow-up to that, how are companies managing salary revisions and bonus pay outs?
Several countries are in a state of lockdown and businesses have suffered a great setback. As no one really knows when the situation will get better, leaders are currently in the process of revisiting many people and business decisions with extreme uncertainty.
Managing costs among several other things becomes critical. But at the same time employers have to retain their best of the best talent and also support their staff and ensure their job security. How do talent and business leaders strike a balance? What compromises should be worth making?
So the COVID-19 impact on the appraisals is imminent. However, there is an inherent need to conduct the performance assessments, for all staff to know and get an understanding of how they have really fared against the goals and KRA’s set. It’s time to follow through on assessments while managing expectations and addressing the critical question, on how pay and rewards/ increments are likely to get impacted. More than the immediate reward, top talent needs to be told that they are the top talent, and communication on the ratings is a step in that direction.
“Globally, companies can see the imminent economic downturn and are trying to balance ‘capacity to pay’ vs. ‘need to pay’, while keeping in view their employee expectations.”
The current situation is surely going to impact overall sentiment and hence may lead to slightly conservative bonus pay-outs and not necessarily a complete washout. There are two more trends that he predicts could take shape:
- Muted salary increases
Anticipating tough quarters ahead, and business getting further impacted, there is a chance that employers may give low percentage increases.
- Delay increments by at least quarter
Further, given that employers continue to monitor the situation closely some employers have decided to delay the increments by a quarter. Should the situation improve, or change for the negative, we will likely see an appropriate response from them.
Talent would be of utmost importance for businesses in times of crisis and therefore retaining top talent is key. Organizations at this time will need to adhere to a compassionate and informed approach to strike the fine balance as they optimize salary costs while ring fencing their top talent
Question: More housekeeping and keeping with the theme of key HR processes. How are companies categorizing and managing leaves? What about insurance benefits?
- Leave obligations in India are dictated by the State specific Shops and Establishment Act guidelines. Employers should analyze their legal obligations to provide employees with leave in the event of sickness or disability and evaluate whether their policies need to be adjusted in the current circumstances. Companies should consider under which circumstances they would want to extend or expand benefits and protections, and they should evaluate their level of income protection for employees on leave, perhaps adjusting benefits plans for employees who exceed their sick-day allotment in order to support sick employees who must stay home.
- In case an employee tests positive for Covid owing to a travel undertaken for official purpose, he/ she is entitled to paid leave owing to the Workman’s Compensation Act and it’s interpretation in these cases. This has been formally announced by the Karnataka Government, and covers all employees irrespective of travel history, official or not. So for all other states, in case of an employee has been on personal travel and tests positive, the employer is not liable
- In case of providing care to sick family members, organizations may follow their regular leave policy.
- In case of employees with small kids to take care of, employees may look at relaxation of their leave rules, given the fact that Creche Facility is a legal requirement to be extended by employers.
- On the Benefits side, its about ensuring all staff members have the coverage and that includes Covid- 19. Typically, insurance benefit in organizations is not extended to part-time or consultants/ contract workers. This is the time to relook at insurance and cover as many staff members
- For organizations where business has come to a grinding halt, impacting the airlines, travel jobs and many in the sales jobs, employers are seeking recourse by advising staff to avail of their annual/ earned leaves.
Question: We are seeing executives from many of the leading companies around the world taking pay cuts while work forces are being furloughed. What developments are happening around this topic in India? What are some of the best practice alternatives?
While a worldwide containment effort to halt the spread of the virus is on, stock markets globally are plummeting. If the current global and domestic economic slowdown persists, it will impact demand and realization. And with the crisis deepening, it is undoubtedly set to pose challenging situations for the workforce.
The International Labor Organization has called for urgent, large-scale and coordinated measures across three pillars – protecting workers in the workplace, stimulating the economy and employment, and supporting jobs and incomes. There have been several advisories to public and private organizations on no wage cuts, no job cuts etc- with the Labor Ministry insisting that the termination of employees from the job or reduction in wages in this scenario would further deepen the crisis
So essentially, this is the time to take a hard look at the cost structures and see what can be trimmed including vendor costs, operational costs etc. Globally, the leadership in many organizations have opted for voluntary pay cuts, to keep all employees at lower levels intact. It’s a strong message to send out in times of crisis- That we care and we are in it together. People costs should be safeguarded for as long as possible
But in times of duress, and with minimalistic relief measures yet promised to organizations yet (PF and Covid relief activities) by the government, some organizations might be pushed to take some hard decisions like:
- Pay cuts for leadership, followed by across the levels
- Salary calibrated with reduced work hours
- Sabbatical- For a limited period, where you continue as employees and avail benefits of insurance coverage etc
- And in an extreme situation- Layoff
It’s important to note here, that in all such situations, explicit agreement from the targeted employees, is mandatory. This is to protect employers against a hostile group or employee who might file a petition in the labor courts and in such cases there is a high likelihood of decisions being made in favor of employees. Also, organizations need to keep the humane aspect intact by ensuring the losses are minimized.
Question: What’s your message to leadership – both the India based leadership as well as leadership from headquarters?
Organizations are trusted institutions in people’s lives and to continue to retain that trust is a humungus responsibility every leader needs to shoulder, and in doing so demonstrate the following:
- Safeguard People- Employees, partners, customers through requisite safety measures
- Understand and align with regulatory changes
- Ensure business continuity by working out alternate models
- Financial stress test to prepare for recovery
- Relook at demand and revenue targets
- Reassess business plan and re-align with opportunities in emerging scenarios
- Align people with changed plan
- Restructure the business in the changing landscape
- Reposition to be relevant in the market as this change might change consumer behaviour patterns for times to come
- Seize every opportunity that comes your way by leveraging your equity and USP
- In all this, keep the compassion and empathy alive. And communicate- with all stakeholders- customers, financers, suppliers etc. and most importantly with your people…
Do your staff have regular updates on the business, the impact, the likely slump and slowdown, the customer side- do your employees know it all?
Also, are you listening enough? Is there two- way communication? Are your people feeling heard? Is there enough empathy and reassurance in your messages?
If these are definitive ticks in the boxes, it helps with conditioning employees in a more implicit manner, without an untoward attempt to do so. And also helps build their appetite and be more receptive to the tough messages coming their way.