During the ongoing Covid-19 pandemic, videoconferencing is the new normal & Indian courts are adopting videoconferencing as a critical measure to continue the judiciary to work & to ensure the implementation of social distancing as a mandatory safety measure for all.
Now, most of the courts don’t have in-person appearances and have started using videoconferencing tools to facilitate and streamline the administration of justice.
We have seen a sudden rise in court proceedings via videoconference but lawyers are still to catch up with the new technology and their new normal of pleading in the court. Lawyers are trying to navigate the not so easy screen of video conference software & the attached new etiquette of it. Unfortunately in a country like India where technology penetration among Lawyers is low and not all practicing lawyers have become accustomed yet with the digital techniques of practice. Recently an honourable Judge made an observation and requested that lawyers appearing before him through videoconference should at least wear shirts and dress in a manner that is appropriate to the courtroom.
So the key question is WHAT IS THE RIGHT ETIQUETTE FOR COURT APPEARANCES via VIDEOCONFERENCE? What steps can – and should – you as a Lawyer take to ensure that your videoconferences are professional and suitable for the hearing?
Court appearances using videoconference are very new methods and there are no well-established rules or accepted practices available as of now. Having said that, I feel common sense along with practical knowledge can be used to make sure that you put your best foot forward when pleading for your clients via videoconference. I have collated a few practical tips for you so that you can follow these tips and stay ahead in the practice of the online representation in courts.
It’s very practical & common sense that you should dress appropriately for the online hearing, at least on the top half of your body, since that’s all that will be visible on the screen. Put on a white shirt and/or a black coat, this is applicable to both the genders. This can make a huge difference. Comb your hair and make yourself presentable. We all are homebound during lockdown, but if you’re appearing in an online video court proceeding, dressing is the key. By doing that, your looks will not distract from the point you’re trying to make. And if your client is also asked to appear in the hearing, make sure to remind your client about the importance of dressing correctly.
This is very important because Judge is also looking at your name to talk to you hence if your ROLE is also mentioned there, it will help him/her identify you correctly. For example Mahesh Moorthy, Lawyer for the defendant. If your client is also attending via videoconferencing, the client should also use the same nomenclature i.e. Ajay Mishra, Defendant. By doing this, it becomes immediately clear to everyone attending the hearing who you are and what is your role, thus providing more clarity and ensuring that the proceeding runs smoothly.
Like in the real court, we all are present before the Hon’ble judge’s entry in the courtroom, similarly, it is a good idea for both you and your client to log in for the hearing a few minutes early. By doing that if you find any technical issues while logging in, you will have time to correct it.
As a lawyer, you know that court craft is all about your body language and it is equally important for your clients too even during a videoconference. For new users (in Indian scenario almost all are new) it may be difficult to get used to it i.e. looking directly at the camera when you speak. Also, during the videoconference, don’t do any kind of multitasking. You should keep your hands away from your face and keep your face as neutral as possible. Your facial expressions are more easily identifiable during videoconferences and you don’t want any expression to be misinterpreted by the judge! Make sure that you share these tips with your clients who also might be appearing in the hearings.
Yes! that is the most ignored aspect in a Video Conference and that is the most disturbance causing reason too. Always check your background before logging into the videoconferencing session. If you are sitting in your room then be aware of what’s behind you and how it will appear to the Judges during the hearing. Make sure there are no distractions like reflections of lights or the sunlight coming directly on the background behind you. If there is no option and you are in a room which is not professional; like a bedroom or kitchen, then you can use a background image in the videoconferencing software usually now available in all of them and if you are using a background make sure to choose a professional-looking background for example a bookshelf etc.
Technically check your computer system before you go live on videoconferencing. It is a good idea to conduct a practice session before you appear for your live hearing and more importantly advice your client also to check his computer system thoroughly. If you have never used the videoconferencing software preferred by the court, make sure it’s compatible with your laptop/mobile or desktop and download the software before the scheduled conference. Advice your client to do the same. Better safe than regret!
As a technology company we advise avoiding usage of your computer’s audio. You should use a good quality headset and if it’s Bluetooth make sure that you have paired it with your device much in advance to the video hearing. We also suggest keeping a wire ready in case Bluetooth fails for any reason like not charged enough, pairing issues etc. A headset, allows you to maintain client confidentiality and have better sound quality all around. It is a very important etiquette to mute yourself whenever you’re not speaking i.e. keep your microphone off to avoid any unwanted sound/noise which can create a distraction. This advice applies equally to your clients attending the videoconference hearing.
If your client will be participating in the virtual court hearing, make sure that your client understands how the videoconference hearing works and that all participants can hear what’s being said if you’re not muted. Explain the importance of confidentiality and how it is critical to avoid sharing confidential information or to have confidential discussions during the appearance.
Those are my top videoconferencing etiquette tips for Lawyers. Did I miss anything? If so, let me know in the comments.
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The impact of COVID-19 (coronavirus) cannot be miscalculated in project finance, as this virus is considered as a global pandemic and has resulted in the closedown of construction work and its related operations. The consequences can be seen as slow production and manufacturing of necessary equipment in projects are delayed due to the outbreak of COVID-19 which means the supply chain will be disrupted worldwide. Moreover, in project financing, Project Company is usually considered as a special purpose vehicle (SPV), and pursuant to present critical situation lenders are having no recourse to sponsors where the project is not performing as per the expected plan. But considering the different scenarios as the government now is hacking interest rates and making banking rules more convenient at this time of financial crunch.
Due to lower interest rates, demand for financing the new upcoming projects will increase along with debt financing and this effect will operate for the long term from the present. However, this article provides a snapshot of FORCE MAJEURE clause activation in project financing, how to get through the force majeure risk, and what all are the necessary consideration for the purpose of force majeure. Along with the force majeure aspect this article will also focus upon other immediate impacts on project financing due to COVID-19.
Force majeure clause comes into play when one party is unable to perform his contractual obligation which he needs to perform and due to natural circumstances i.e. unforeseeable circumstance’s which includes acts of war and natural disaster, he was hindered or delayed in performing the same. Force majeure is governed by Section 32 and Section 56 of Indian Contract Act, 1872 and is also considered as exception to what amounts to breach of contract. This concept is explained in detail in one of the celebrated Supreme Court Judgement titled Energy Watch Dog vs. CERC. Usually this concept of force majeure is prevalent in project financing and construction cases. In an epidemic or pandemic scenario, like of COVID-19 this clause gets into play by contractor in construction project because he is the first one to encounter the consequences because of disrupted supply chain. When the force majeure clause is invoked due to the COVID-19 outbreak there is no surety that the contractor will succeed because it will depend on contractual interpretation whether this outbreak will be considered as “epidemic” or not.
After invoking force majeure number of key considerations arose which are as follows:
Now in order to analyze the force majeure in the contract the contractor or say the project company has to establish connectedness between the qualifying force majeure event and the impact to its performance of contractual obligations, and in most of the cases this will be based upon factual circumstances which will differ from case to case basis. Due to government measures that are related to business lockdown, mandatory quarantine measures, which will directly affect the working of the project and contractual obligations can be considered as evidence for the activation of force majeure clause. Concerned expert feedback would be required for the collection and preparation of evidence for notices of force majeure.
This also requires the affected to take steps in order to mitigate the force majeure events and it is considered as an obligation upon the affected party to do so. Also, it was required to draft or take the alternative options in consideration to perform the obligations pertaining to the contract and it would be advantageous to take remedying measures to address the impact due to unforeseeable events like COVID-19. However, in order to ensure that the claim is not time-barred, time is an essential ingredient for the notice requirement for the purpose of force majeure claim.
The loopholes in the force majeure clause should be taken into consideration and such gaps should be addressed when the project documents were subject to bankability due diligence. Bankable project documents will typically contain similar force majeure provisions and the contractor's notice of force majeure will form part of the project company's notice in the project documents. Also, if there is any discrepancy or say loophole is identified, then the force majeure will be tested through the COVID-19 outbreak.
Further, others get through consideration include the timeline for submission for force majeure clause. In practice, the contractor and the project company may be engaged in negotiations or discussions on the impact of force majeure and will, therefore, need to consider the timelines that are running in parallel. Usually, Project documents with future cash flows contain time which provides a sufficient amount of time to project companies to provide its notice of force majeure under the upstream project documents. Another important contemplation is the different governing laws for project documents. Offshore construction contracts will be governed by English law, but on the other hand, power purchase agreements should be governed by the local law. Therefore, if the risks associated with different governing laws are not mitigated when the project documents were being developed, contractual interpretation of force majeure provisions can be difficult.
Moreover, the party claiming force majeure has to prove that he has taken all reasonable circumstances in order to avoid or mitigate the risk and its effect. Thus, this will depend upon case to case basis and in project company case contractor has to prove the same. In project financing consideration under financial document needs to be taken care of, project lenders are widely analyzing the COVID-19 outbreak as they begin receiving notices related to force majeure and due to which they cannot wash their hands off this outbreak. This outbreak requires taking steps in financial documents that are in consonance to the terms of the project document. Furthermore, after receiving the notice of force majeure the project lender has to consider carefully the impact on the project and positions under the financial document. Also, prior consent is also required before agreeing to any relief obtained through force majeure and certain time constraints need to be undertaken by the project company in this case.
After considering force majeure scenario there are other events too which will be triggered due to COVID-19 outbreak in project financing and major of these defaults might extend to necessary parties involved in the successful completion of the project that is construction contractor, operator, and main manufactures of necessary equipment’s. Default events are as follows:
Considering the impact, Project Company has to take the following measures:
COVID-19 outbreak is spreading at an alarming rate due to which economy is diversely affected and the project finance sector is also facing uncertainties through the hampered supply chain, labour availabilities, financial crunch, and unforeseen circumstances. This outbreak has also affected debt financing and tax equity involved in project financing. Further, continuous monitoring of government policies are required for project financing. So, at last, after considering the crucial aspects of force majeure, the negative impact of several defaults due to the COVID-19 outbreak is one of the worst nightmares in today’s economic sense for project financing.
JEMTEC School of Law
Disclaimer: The content of this article is solely the author’s personal analysis and interpretation. In case you wish to act upon on the basis of the content of this article, please seek legal advice. The author shall not be responsible for any loss you may incur as a result of your actions relying upon this content. The content herein is the copyrighted material of the author and is informational and shall not be used for commercial purposes other than for personal reading.
Businesses are experiencing unprecedented challenges and market disruption due to the Covid-19 pandemic and consequential economic meltdown seems inevitable. Economists predict that economy is now dealing with a situation far worse than the global recession of 2008. We are not prepared to deal with this situation since no business has anticipated or predicted menace to this extent, where globally national borders are locked down halting global market and business operations.
Importantly, we are dealing with a war waged by the unknown, and nations are fighting to safeguard and protect their people and economy. In this context, businesses/ entrepreneur has to operate sustainably, and it is important to set up and administer certain proactive measures to mitigate financial and business losses. These special circumstances require special measures to sustain and thrive, and this article covers some measures that companies may imbibe to thrive over the crisis and to sustain.
“Pragmatic ideation and proactive resolution will mitigate the impact of impending problems”
“Work From Home is not an exception but has become a Rule”
Legally, the success of a business and its sustenance depends on how well it protects its confidential information and trade secrets. Especially, in times like now, it has become imperative not only to have sustainable business modus operandi to thrive and succeed during bad market conditions but also to protect what has been already built through years of hard work. This sounds simple yet very difficult to implement and execute in the frontline.
Employees are key to every organization. Their performance and conduct in operating the business decide the company's future. Good employees build a successful business and the bad ones ruin the organization. A simple claim or lawsuit will change the future of the company or drag the company into darkness (third party infringement and damages suits), so the company should explicitly set out the framework within which the employees have to function within the company.
With a large number of employees working remotely at the comfort of their houses, the management is now grappling with the management of infrastructure to facilitate employees with work from home access and to keep the business running. While companies are dealing with infrastructure difficulties, protection of confidential information and trade secrets should be set on high priority in order to avoid future uncertainties and to govern the way the organization continues to operate within an uncontrolled environment of homes of the employees.
Measures: Implementing effective policies and conduct awareness training programs so as to how to operate and function while working at the comfort of home. Data Protection Policy, Information Technology and Security Policy and Work from Home Policy are few policies that companies should implement and effectuate measures for protection of data and confidential information.
Businesses don’t operate in silos but are reliant upon clients, service providers, and customers (the list may vary business to business). It is important to evaluate and strategically secure and retain existing business connections. Practically, retaining old clients is a cost-effective measure, since securing new clients is a costly affair during this market meltdown. The business relationship with the client is regulated by a document called “Agreement” and this provides how to govern and operate during the subsistence of the agreement.
An agreement may be implied or express contract. Where the terms of the agreement are explicit, the business should evaluate the risks and be prepared for any foreseeable risks that may arise in the current market circumstances and protect itself from the unforeseen risks (Force Majeure Clause). For implied and unwritten business arrangement, the company will be operating in an uncontrolled and ungoverned territory and may cost the company irreparably, if things don’t operate the way they are supposed to, and legal binding of the implied agreement depends on external factors and burden of proving the transaction and losses are high. So, the management should focus on dealing with the governing business through the Agreements.
“Agreement decides whether you have a falling business or scope to rise above the troubled water.”
It is imperative to work along with the legal team to overcome the uncertainties and to operate within a controlled business environment. In the interest of economies of scale of business, as a rule, litigation should be the last resort. When agreement provides for business certainty why take long shots with regard to company future.
As such, in case a client (or a set of clients) is important for the survival of a business, then the business should take proactive measures to re-negotiate, re-design, or structure the transaction to make it sustainable to both the business and the clients. If you are expensive to your client, your dealings with them are bound to fall to the ground. Importantly, be the first to make a proposal for restructuring a transaction before your clients make a decision against you and it’s too late.
“Change is constant, adaption is a rule and knowing when to adapt will decide the success”
Conventionally, business teams are oriented to gain business, finance to control costs and project profits, so they pay no heed to transactional risks. Inevitably, in order to succeed, the leaders have to make decisions that involve exposure to risk. However, it is important to take calculative and informed decisions with regard to such a risk exposure and the same has to be documented through an agreement to avoid uncertainties and ambiguity. Drawing up an agreement is not just a good-to-have measure, but it is a tool to resolve conflicts in case of disputes.
To be triumphant, all teams should collaborate and structure a workable business transaction for the clients. Overpromising-Underperformance and low promises and overperformance both strategies kill the business, but a sustainable, performance and an achievable business agreement works well for all and leads business to a successful path. In this, the legal contribution would be to enlighten the business with unbiased views of the nature of risk and consequences that may arise therefrom.
Notably, business conglomerates are successful in a way they are, since they operate and function by making informed decision knowing their exposure and risks, and on the contrary, start-ups can’t afford legal costs and hence fall prey in the hands of business eagles who specialize in acquiring businesses at low cost (or no cost). As a result, start-ups rise and fall over-night.
Measures: Evaluate your business agreement and understand the cost-value proposition as the deal/ transaction stands. In essence, restructuring your business agreement to current market will help companies to retain clients. This task also helps companies to evaluate high-cost clientele and to allocate funds to sustain the business or make the decision to let go of a client for the larger good.
“Pragmatic and proactive measures make to business sustainable and keep it afloat.”
This article outlines legal measures which the business managers have to evaluate and reconsider under the Covid-19 crisis. It aims to highlight the common areas of lacuna in business operations. Pragmatic and proactive measures make the business sustainable and keep it afloat. Introspection into business processes, models, operations, and business flow, and the results of such analysis helps to strategize and acclimatize to the current business environment. Change is inevitable so the factors are key to thrust and succeed. Having enforceable and sustainable contracts is vital to govern the way the business operates and to understand obligations and liabilities. This will help to plan, strategize, and execute business in an informed way during the time of change in the business environment, and to stay out of troubled waters. These measures may mitigate the disaster and help to survive and succeed in the long run.
Corporate and Litigation Lawyer, Hyderabad
Disclaimer: The content of this article is solely the author’s personal analysis and interpretation. In case you wish to act upon on the basis of the content of this article, please seek legal advice. The author shall not be responsible for any loss you may incur as a result of your actions relying upon this content. The content herein is the copyrighted material of the author and is informational and shall not be used for commercial purposes other than for personal reading.
This article contemplates and articulates the broad legalities and operational standpoint on Termination of employees from Service, Lay-off, and Retrenchment so as to allow the business management to make well-informed decisions weighing legalities against business objectives. Law provides broad-level directives and guidelines which companies shall have to oblige and comply with, without compromising the interests of the subject matter of the Act (welfare of workforce). Employment and Labour laws are a cumbersomely clumsy, yet comprehensive compendium of labour Acts applicable to deal with the law relating to employment and labour aspects. The common objective of all is to provide safeguard and protection to varied kinds of the workforce, be it an employee, workman, contract employee, etc., working in varied lines of business at different levels from daily wager to contract labour and all kinds of employees in between. Apparently, although different laws govern varied kinds of the workforce, these laws have effectively achieved the main objective of providing protection to a varied workforce. In a basic sense, this law governs the relationship between the employer-employee, covering the workforce in varied spectrums.
The government has been working to enact uniform labour code to condense varied employment legislations at central and state levels to bring in comprehensive legislation to simplify compliances for employers and thereby achieve better workforce protection.
The definitions of lay-offs and retrenchment are specifically covered under the Industrial Disputes Act, 1947. However, while determining the termination of service of employee it is pertinent to delve into the spectrum of Labour and Employment Acts and regulations which are prevalent in India in order to take statutorily compliant decisions taking into account the business objectives of the company.
The law relating to lay-offs and retrenchment is specifically expounded under Chapter VA (Entitled, Layoff and Retrenchment) and Chapter VB (Concerning, Special provisions relating to Lay-Off, Retrenchment, and Closure in Certain Establishment) of the Industrial Disputes Act, 1947. These two chapters in ID Act elaborately delineates provisions relating to Lay-offs and Retrenchment.
It is imperative to understand the applicability of the Act, since the objective, purpose and applicability of every act are different, and so contemplating and analyzing the applicability of relevant law to the issue in hand is the key to arriving at a targeted solution. The ID Act is applicable to a certain class of workmen as defined under Section 2(s) of the Act. “Workman” means
"Any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute”
Further, notably, there are certain exclusions to the definition of a workman, and according to the Act, Workman who is,
(i) in a managerial or administrative capacity; or
(ii) employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem, or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature, are express exclusions to the definition.
As such, this Act does not become applicable to the sizable spectrum of employees working in various organizations or companies either due to their nature of work or earning being at a higher scale.
This Act has provided lucid definition to the words “lay-offs” and “retrenchments” under Section 2(kkk) and Section 2(oo) of the Act and the extract thereof is below.
"Lay-Off (with its grammatical variations and cognate expressions) means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery [or natural calamity or for any other connected reason] to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched."
Explanation: Every workman whose name is borne on the muster rolls of the industrial establishment and who presents himself for work at the establishment at the time appointed for the purpose during normal working hours on any day and is not given employment by the employer within two hours of his so presenting himself shall be deemed to have been laid-off for that day within the meaning of this clause:
Provided that if the workman, instead of being given employment at the commencement of any shift for any day is asked to present himself for the purpose during the second half of the shift for the day and is given employment then, he shall be deemed to have been laid- off only for one-half of that day
Provided further that if he is not given any such employment even after so presenting himself, he shall not be deemed to have been laid-off for the second half of the shift for the day and shall be entitled to full basic wages and dearness allowance for that part of the day.
“Retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include-
(a) voluntary retirement of the workman; or
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
(c) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or
(d) termination of the service of a workman on the ground of continued ill-health"
The law relating to lay-off and retrenchment is effectively applicable for the workman in industrial establishment, as defined under the Act, and effectively, the scope and validity of these provisions to said workman are categorically restricted to certain persons employed in an industry subjected to exclusions as delineated under the definition of the workman.
Bare reading of the Act clearly indicates that employees working in companies with salaries higher than the limit applicable for the workman, or who are in managerial or administrative capacity does not fall within the ambit of the scope of the said Act. Given the exclusions, the scope and applicability of the Industrial Disputes Act are limited to the workman as defined under the said Act.
The SE Act regulates the law relating to the regulation of employment and conditions of service of workers employed in shops and establishments for matters connected therewith and incidental thereto. This is a state enacted law and every state enacts its own Act. This Act has vast applicability as the words” commercial establishment” and “shops” have wide applicability covering businesses and organizations in varied sectors and industries.
As per the Act, the term Commercial Establishment means “an establishment which carries on any trade, business, profession or any work in connection with or incidental or ancillary to any such trade, business or profession or which is a clerical department of a factory or an industrial undertaking or which is a commercial or trading or banking or insurance establishment and includes an establishment under the management and control of a co-operative society, an establishment of a factory or an industrial undertaking which falls outside the scope of the Factories Act, 1948, (Central Act 63 of 1948), and such other establishment as the Government may, by notification declare to be a commercial establishment for the purposes of this Act but does not include a shop.”. The meaning of word Shops means “any premises where any trade or business is carried on or where services are rendered to customers and includes a shop run by a Co-operative Society, an office, a storeroom, godown, warehouse or workplace, whether in the same premises or otherwise, used in connection with such trade or business and such other establishments as the Government may, by notification, declare to be a shop for the purposes of this Act, but does not include a commercial establishment”.
It is important to understand the sect of employees who are governed by the said Act, and the definition of Employee under the SE Act means “A person wholly or principally employed in, and in connection with, any establishment and includes an apprentice and any clerical or other staff of a factory or industrial establishment who fall outside the scope of the Factories Act, 1948; (Central Act, 63 of 1948).”, and the said definitions had certain stipulated exclusions. This definition widely encompasses employees in organized as well as unorganized sectors which relatively include higher income groups.
Contextually, understanding the exemptions to the Act is equally important to apply the relevant labour Act righteously to any given situation. Under the said Act, Section 79 deals with exemptions to the applicability of the Act, and the exemptions delineated under the Act are “employees in any establishment in a position of management and having control over the affairs of the establishment, whose average monthly wages exceed sixteen hundred rupees”.
In “T. Prem Sagar vs The Standard Vacuum Oil Company Madras and Others”, the apex court had laid down certain tests to ascertain whether an employee is in a position of management and extract of the judgment is provided below.
“So, in order to determine whether a person is in a position of management or not, the factors to be considered are whether the person had the power to operate on the Bank account, whether he could make payments to third parties and enter into agreements with them on behalf of the employer, whether he was entitled to represent the employer to the world at large in regard to the dealings of the employer with strangers, whether he had the authority to supervise the work of the clerks employed in the establishment, whether he had control and charge of the correspondence, whether he could make commitments on behalf of the employer, whether he could grant leave to the members of the staff and hold disciplinary proceedings against them and whether he had the power to appoint members of the staff or punish them. The salary drawn by an employee may have no significance and may not be material though it may be treated theoretically as a relevant factor.”
The apex court had emphasized the applicability of the tests laid out under the said judgment that they should be considered against the facts of the case, particularly taking into account the nature and scope of work of the employee in the broader perspective of his/her work functions and responsibilities.
In accordance with provisions of the SE Act, in case any employee falls within the purview of the SE Act, the employer shall have to strictly comply with obligations of serving of notice period or alternatively pay wages in lieu thereof to employees in case employee is terminated of services of employment.
Considering the limited construct of the word “Workman” under the Industrial Disputes Act, the applicability and enforceability of ID Act are limited (as aforementioned). Now the majority of Multinational Companies, Start-ups, Information Technology and IT-Enabled Services (ITES), and industrial establishments have the manpower of varied spectrum of employees, operating at different levels. No single Act may be applicable to all kinds of manpower, and so it is important to delve into various labour and employment Acts that are prevailing.
Further, from the preceding analysis, it is evident that lay-off and retrenchment of workman would be dealt as per the provisions of the Industrial Disputes Act, and the Shops and Establishment Act stipulates provisions concerning termination of services of employees. However, the applicability of the Act would differ on a case-to-case basis depending on the nature of the job, income, nature of work, exemptions provided under the Act, etc., and therefore, application of relevant labour and employment Act is critical.
Nevertheless, it is important to note that the Shops and Establishment Act does not apply to the employees in any establishment in a position of management and having control over the affairs of the establishment, whose average monthly wages exceed sixteen hundred rupees. However, employees falling under the purview of the SE Act would be governed with regard to matters of Wages, Conditions for termination of services appeals, suspension, and terminal benefits, under Chapter VIII of the said Act.
Particularly, where Act is applicable to employees Section 47 of the Telangana Shops and Establishment Act stipulates conditions for terminating the services of an employee, payment of service compensation for termination, retirement, resignation, disablement, etc., and payment of subsistence allowance for the period of suspension. Pursuant to the said provision, “no employer shall, without a reasonable cause terminate the service of an employee who has been in his employment continuously for a period of not less than six months without giving such employee at least one month notice in writing or wages in lieu thereof and in respect of an employee who has been in his employment continuously for a period of not less than one year, a service compensation amounting to fifteen days average wages for each year of continuous employment”. While the said provision under the Act is illustrative, the above extract of the Section highlights that serving of notice period is mandatory for termination, retirement, resignation, disablement etc.,. Therefore, the companies will have to consider the mandatory notice period and service compensation guidelines illustrated under the said provision.
It is imperative to also take into account that evidently, hordes of the workforce falls to the exemptions of the Industrial Disputes Act and the Shops and Establishment Act, 1988, as a result of an employee being in the position of management or extensive salary packages, etc., In such a scenario, the governing document will be the Employment Agreement and applicable company policies, as the may be agreed between employer and employee.
The law prescribes the compliance framework and guidelines for companies to adhere to and comply with. However, companies may set-up pragmatic and workable workforce management and operational framework keeping in compliance with the applicable legal framework. In the event of any doubt, apropos the minimum compliance standards and framework, it is prudent to delve into the Acts and legal precedents before taking any decision.
“Ideally, the Employment Agreement should strike a balance between the applicable legal framework and interests of the company”
The employment agreement is an important document, as it legally binds and governs the relationship between employer and employee. So, if the employment agreement had legally enforceable provisions in line with applicable laws, then the employer's decisions in regard to termination of an employee from service will be governed by the provisions of this Employment Agreement.
In the wake of the outbreak of the novel COVID-19 pandemic and declaration of WHO that it is global health pandemic, the governments across global have taken unprecedented measures and many countries including India have locked down their nations restricting trade and commerce. Indisputability, lockdown measures although it helped nations to minimize the damage or loss of lives to a greater effect, yet this pandemic leads to the onset of economic crisis and market meltdown creating an adverse ripple effect across the global economies. The restrictions imposed by governments resulted in impacting the businesses in all areas ranging from exports/imports, transport, logistics, productivity, investment, etc.,. In other words, the market is in standstill mode with uncertainties leering from all corners of the world. With unpredicted and unprecedented meltdown, it is becoming difficult to ascertain the future.
The companies started experiencing less revenues and cash crunches due to steep plunge in the business operations, and virtually the businesses are preparing for a market meltdown by taking expeditious remedial steps. The major cost for any company is Human Resources and second, technological advancement. With clampdown of global operations, projects ramp down is underway and eventually, the companies would enter into cost-cutting mode and may result in laying-off and retrenchment of an employee in order to sustain the crisis.
In case companies are taking steps of lay-offs, retrenchment, and termination of services, then it would be prudent of Companies to follow legalities and be compliant so as to avoid the influx of litigation that may arise as a result of illegal termination of employment. Simple measures will mitigate future litigation expenses.
Employer-employee or Employer-workman relationship is regulated by various labour and employment laws. However, in the context of lay-offs, retrenchment, and termination of services of an employee, predominantly, two Acts, namely the Industrial disputes Act and the state relevant Shops and Establishment Act governs and stipulates the law and procedures pertaining thereto. The ID Act governs the relationship between workman-employer and the SE Act of employee-employer. However, there is a class of employees who do not fall within the ambit of both acts due to depending facts such as remuneration, type of employment, nature of work, etc. Therefore, there is no straight forward formula for determining the applicability of provisions and so it is important to delve into applicable law and precedents so as to get a legal solution.
Companies as a practice enter into an employment agreement and bind their employees to comply with various company policies (such as leave policy, maternity policy, etc.). However, execution of employment agreement does not absolve the obligations of the company to comply with applicable Act and regulations, and it is imperative that employment agreement should be drafted and amended from time-to-time in strict compliance with applicable amending regulations. Employment Agreement which is not in line with applicable law may fall to the ground in the eyes of the law. From a high-level perspective, the employment agreement and company policies applicable to its employees play a vital role in streamlining the management of human resources, without compromising on legalities surrounding thereto. As such, companies should audit the human resources portfolio and accordingly implement an effective employment agreement that works both statutorily and organizationally. This employment agreement will govern the procedure of lay-offs, retrenchment, and/or termination of services, in case the ID Act and the SE Act are not applicable to particular class of workforce.
Corporate and Litigation Lawyer, Hyderabad
Disclaimer: The content of this article is solely the author’s personal analysis and interpretation. In case you wish to act upon the basis of the content of this article, please seek legal advice. The author shall not be responsible for any loss you may incur as a result of your actions relying upon this content. The content herein is the copyright of the author and is informational and shall not be used for commercial purposes other than for personal reading.
Buying a house is an important event in one’s life and if it’s the first one then it is attached with an emotional achievement and satisfaction. Though buying a house causes an enormous dent in one’s savings and exposes homebuyers to financial risks.
Typically, a sale agreement is entered into between the buyer and the seller to effect the purchase. This sale agreement becomes a valid instrument of transfer after it is registered. A registered sale agreement is also called a sale deed. It is important that one knows the legal requirements involved in a Sale Deed or the contract which will legally make you the homeowner. We bring to you a list of legal requirements which you should go through before you finalize the purchase of your house.
There are certain components that you should check before you are ready to sign the Sale Deed. These are:
Capacity to enter into the contract: Only those persons who have attained the age of 18 years and above, who are mentally sound and are not disqualified under any other law from entering into contracts, can sign the sale deed. For instance, your son or daughter who is not yet 18 years of age cannot sign the contract.
Who owns the House?/Legal Ownership: The Seller from whom you are buying the house, should have legal ownership over the property. This means that he should be the absolute owner of the property and not merely have an interest in the property. For example, a tenant cannot sell the house as he is not the absolute owner of the property. Ask for documents of legal ownership from the seller and preferably show them to a lawyer to check if the seller actually has title over the property.
Is the Seller genuine?/Identity of the seller: You should also verify the identity of the seller prior to buying a house. You can ask him to furnish any government-mandated identity proof documents, in order to check if you are buying the house from a genuine seller. This is generally relevant in resale transactions.
Disputed Property: You should check whether the property you are buying is subject to any dispute or not, before signing the sale deed. A title search report which is typically prepared by a lawyer will help you know, if the property is subject to any court dispute or not.
Defects in the Property: You should check the property for any possible defects. The law mandates the seller to inform the buyer of any material defect in the property which the buyer cannot find out by ordinary care and diligence.
Regulatory requirements: If you are buying your house from a builder, check if he has the occupancy certificate (this certificate deems the property fit for occupancy), if the property is registered under RERA and that the property is not mortgaged or has any other liability attached to it. This can be done by conducting legal due diligence over the property with the help of a lawyer.
Tax Verification: A house is typically subject to the payment of property tax. You should ideally ask the seller to furnish you with past tax receipts to assess whether there is no outstanding tax liability. If there is unpaid tax, then you should insist that the seller pays them before the title is transferred to you.
Registration: You should get the sale agreement signed by you and the seller registered at the Office of the Local Registrar. Proper stamp duty must be paid, otherwise the sale deed will be termed defective.
An agreement is a consensus of mutually agreed terms and conditions. However, the first step towards drafting an effective agreement is to ensure that it is placed within the correct legal framework. Competence of parties, checking if the seller has legal ownership over the property, registering the sale deed, etc. are some important things one needs to know before signing the sale agreement for a House.
RERA (Real Estate Regulation Act) was passed in 2016 in order to bring in transparency in the real estate sector. The RERA Act has created a kind of uniformity in the real estate sector. As per the Act, the builders must provide the flats to the buyers on a fixed date; they must provide the owners with information about the progress of construction, and follow the rules as laid down by the Act. The RERA Act, when passed, was made buyer-friendly rather than builder friendly.
Possession date is an important clause in the agreement made between a builder and a home buyer. Possession date is a date when the builder promises to complete the construction work of the building, obtain permissions from the local authorities, and hands over the keys of the flat to the rightful owner. It is a date by which the builder must give the possession of the flat to the owner. The possession date is normally a few months or years from the date of signing the agreement. The builder must provide the possession on time or else face the penalty as prescribed in the Real Estate Regulation Act.
The Real Estate Regulation Act is an act that was passed to protect the rights and savings of homebuyers from the builders. Section 18 of the Real Estate Regulation Act states that, if a builder fails to hand over possession of the flat as per the date mentioned in the Agreement of Sale, the homebuyer has two options-:
He can terminate the agreement and seek a refund from the builder, wherein the builder is liable to pay the entire amount paid by the homebuyer with the rate of interest. The percent of the rate of interest differs from state to state
The person can agree to continue with the project. However, the concerned person must be paid interest for every month of delay.
If the builder has delayed in giving the possession of flats to the flat owner and also refuses to pay the interest, then the aggrieved person can approach the court and initiate legal proceedings against the person under Section 31 of the Real Estate Regulation Act.
The format of filing complaints is different for different states. Although the basic structure remains the same, the aggrieved person must provide the RERA registration number, basic details of the project, description as to how the RERA act has been violated by the builder, compensation if any, and other relevant documents such as Agreement for Sale, payment proofs to the RERA. One copy must also be provided to the builder. Thereafter the RERA will provide a date for the hearing.
While hearing, the Adjudicating officer must follow the Principles of Natural Justice, i.e., he must hear both the sides and ask questions, if any, to the parties and thereafter decide the matter. The good part of RERA is that there is no Adjournment culture as Section 71 of the Act prescribes a time limit of 60 days within which the matter must be decided.
The party against whom the decision is not in favor of an appeal against the judgment before the Real Estate Appellate Tribunal within 60 days from the date when the order was passed by the Adjudicating Officer.
The RERA Act is regarded as Buyer friendly, it is a major step towards the protection of the homebuyer’s rights. Previously the aggrieved buyers would file complaints against the builder, but it would take years to come to a decision. With the enactment of the RERA Act, the aggrieved person can receive justice speedily on account of delay in receiving the possession of the flat.
Cheque Bounce is something that all of us would have faced in our lives. However, did you know that the person who had issued the cheque can go to prison for the same? The dishonor of a cheque drawn in furtherance of discharging, any debt or other liability owed by such drawer, is considered to be a criminal offense in India, punishable by imprisonment of up to 2 years, or with fine which may extend to twice the amount of the cheque, or with both. Hence, we have discussed below the legal provisions dealing with issues of cheque bounce.
As it stands, the ingredients required to constitute an offense relating to the dishonor of cheques have been mentioned within Section 138 of the Negotiable Instruments Act, 1881, and have been reproduced below:
The intention of the drawer is not considered relevant while deciding his culpability under this Section. Furthermore, it is worth noting that Section 141 of the Negotiable Instruments Act also renders liable, companies, partnership firms, and other associations of individuals liable for the offense mentioned in Section 138. Typically, the persons in charge of the company (usually directors or partners, as the case may be) are held liable for punishment under the same. They may claim defense on the grounds that the offense was committed without their knowledge or that they had exercised all due diligence to prevent the commission of such offense. The Court trying a case under Section 138 may order for interim compensation not exceeding twenty percent of the amount of the cheque to the payee during the pendency of the case.
If you have been presented with a cheque which gets dishonored, you can take the following steps:
Once your cheque bounces, you will be served with a notice to make the payment within 15 days of such notice. If you fail to do so, a complaint against you may be filed. You will be summoned to the Court, and a court proceeding will commence. It is advisable to take legal help in such circumstances.
Cheque bounce offenses lead to imprisonment of up to 2 years along with fine. Furthermore, intention does not play a role in affixing liability. Hence, you may be held liable, despite not intending to dishonor the cheque. The severity and seriousness of this offense hence need to be understood. It is pertinent to take care that if this offense has been committed unintentionally, the amount promised should be paid within the stipulated time period of 15 days. Also, it is preferred that in the event of such a situation arising; one should approach a lawyer and take advice.
Non-payment of salary to the employees by their employers is very common. The employers are often under the misconception that the employees are either not aware of their rights or would hesitate to follow the complex procedure of filing a complaint against them. However, there are various laws that safeguard the rights of employees and to claim the unpaid salary as well as the interest in it.
The Payment of Wages Act, 1936, ensures that employees get their salaries on time. However, if the employer denies or delays the payment of salary or wages to the employee or worker, then the employee or worker is entitled to interest on the amount to be paid for delay in providing the wages or salary. The employee then has the option of sending a legal notice to the employer for the payment of salary. A certain list of documents is required while sending a legal notice to the employer such as-:
Upon receiving the Legal Notice from his employee, the employer must pay the unpaid dues with interest to the employee. However, if the employer refuses or fails to do so, then further legal remedies such as Insolvency and Bankruptcy Mode, Arbitration and Mediation, and lawsuit can be opted by the employee for the recovery of dues.
In this method, the employee or a group of employees file a petition for the payment of unpaid salary under the Insolvency and Bankruptcy Code, 2016. After filing a petition, a resolution professional is appointed, and a committee of creditors is set up. If a suitable conclusion is not arrived at for the payment of salary, then the company is liquidated.
In order to file a complaint under IBC, the employee or employees must send a demand notice to the employer seeking the payment of unpaid dues. If the employer does not pay within the stipulated time, then the insolvency resolution process will be initiated against the company. Generally, such a process can be initiated by filing an application with the adjudicating authority, which is the National Company Law Tribunal or NCLT.
Arbitration is a costly method and can be used only if it is one of the clauses in the employment contract. Also, the decision arrived at in Arbitration is time-consuming in the matter of the application of the decision. Mediation is a process whereby a neutral third party comes to a hears the dispute of both the parties and helps to come to a decision in a peaceful manner. However, in this matter, Mediation can be useful only if the employer is willing to abide by the decision of the mediator.
The employee can file two types of suits under the law for the non-payment of salary-:
Civil Suit: an employee can file a civil suit under the Civil Procedure Code. Typically, the employee is required to send a legal notice demanding payment of dues to the employer. If the employer refuses or fails to do so the employee can initiate legal proceedings against the company. As per order 37 of the Civil Procedure Code, you may file a summary suit before the District Court. After filing a suit, summon is issued, and the employer has a period of 10 days to appear before the court. In case the employer fails to appear, then the decision is made in favour of the employee. The employee also must have some proof of employment and must mandatorily file a suit within three years from the date when the salary was due to him.
Criminal Suit: It is the liability of the employer to pay the salary to the employee on time. However, if he denies, refuses, or fails to do so, then the employee can file a criminal suit for cheating and breach of trust under Section 420 of the Indian Penal Code.
The employer has paid the salary through cheque, which has bounced and thereafter refuses, or denies making a fresh payment, then the employee can file a suit under Negotiable Instruments Act, 1881.
It is pertinent that you know your rights as an employee. However, please note that if you work as a consultant or a professional on an independent basis, you may not be able to avail of the routes mentioned above, except filing a suit for breach of contract. You should approach a lawyer to understand and evaluate your options better.
Wrongful termination of employees refers to when the employees are terminated on account of wrongful means. The different grounds on which the termination of employees is known as wrongful termination are-:
The Employment Contract signed by the employer and the employee defines the procedure of terminating the employee. The contract may or may not have provisions regarding the procedure for the termination of employees; if it contains a procedure, then it must comply with the Labour laws; however, if it does have any such specific procedure, then the employer must follow the state-specific labour law. The two types of terminations of employees are-:
Termination by Contract: The employment contracts specifies a particular procedure for the termination of the employee. This method of termination is more popular. This form of termination is more common in a fixed-term employment contract, where an employee is hired for a fixed period of time. If the contract is not renewed by the employer, then the employee is automatically terminated, which does not amount to wrongful termination.
Termination by Law: In the absence of a provision for the procedure of termination of an employee, the employer must follow the state-specific labour law.
Termination for a cause: of disobedience, theft, fraud, lack of punctuality, accepting of bribe, dishonest, causing damage to the company's goods, negligence of work.
Ordinary termination: is the most standard procedure for the termination of an employee. In it, the employer must provide the employee with 30 days' notice to the employee.
There are various labour laws in India, such as the Industrial Disputes Act, 1947, the Workmen's Compensation Act, 1923, State Shops and Establishments Acts, which protect the employees from wrongful termination.
Industrial Disputes Act, 1947: Industrial Disputes Act, 1947, states that if an employee has been employed for more than a year, then the employer can terminate him only after permission is granted to him by a suitable government office. Also, he must provide a valid reason for terminating the employee and pay severance amount (equal to 15 day's salary) to the employee for the number of years he has worked under him.
Make a formal complaint: The employee has been wrongfully terminated by the employer; then, the employee must first make a formal complaint to the Human Resource (HR) Department. Many times if the employee has been wrongfully terminated then the HR Department will resolve the issue and restore the job of the employee, however, if the HR Department does not take any action then the employee must send a legal notice to the employer to seek the damages, such as-:
In case a contractual provision is violated, then the employee can file a civil suit in the Labour Court. For initiating charges of Criminal Intimidation, the employee can file suits in criminal as well as civil courts.
In India, the employment laws are complicated. The employers who wrongfully terminates his employees do know the laws and methods through which the employees can claim remedy, thus the employers also know ways to get out of the loopholes and avoid the liability. However, the employees must know their rights and more so as to what factors or grounds constitute wrongful termination and thus must file a suit against the employer for wrongful termination.
Trademark is a form of Intellectual Property. It essentially refers to the brand name that allows for differentiation between similar goods. Trademarks can be in the form of numerals, a combination of colours, signature, name, or device. Companies spend a huge amount of money through advertising and product design to establish their brand value. The same is treated as an asset that can be transferred like any other type of property, in accordance with the Trade Marks Act, 1999 and accompanying Rules of 2017.
The assignment of Trademarks refers to the transfer of ownership of the Trademark to the buyer. The transfer can be with or without goodwill.
Licensing refers to a limited transfer i.e.; the transferee is allowed to use the Trademark (within the limits of the agreement entered upon) without having the ownership transferred to him. The Licensor(owner of the Trademark) usually generates loyalties while the Licensee gets the ability to expand his business using the appeal of the Trademark.
The following are the different types of Assignments allowed under the Act:
I. Complete Assignment:
As the name entails, a complete transfer of all the rights pertaining to the Trademark is transferred to the buyer. The buyer would be empowered to sell it later on if he so chooses to.
II. Partial Assignment:
Herein only restricted ownership pertaining to specific products or services is transferred to the buyer.
III. Assignment with Goodwill:
Goodwill is a term that is easy to describe but hard to define. It refers to the intangible value of (in this case) a Trademark. In this type of assignment, the owner transfers the rights and values related to the product or service.
IV. Assignment without Goodwill:
Trademark Ownership excluding Goodwill stands transferred. The buyer cannot use the Trademark for the same product or service as used by the owner. That is, the buyer shall be allowed to use the purchased Trademark for products other than those already being produced by the original owner, as the goodwill relating to that product is not transferred.
There exist certain restrictions on the assignment of registered Trademark so as to prevent creating confusion in the mind of the public or users.
While drafting an assignment deed, it is necessary to include the following:
It is important to record the change in ownership with the Trademark Registry. According to Rule 75 of Trademarks Rules, 2017, Form TM-P should be filed with the Registry intimidating the changes to the ownership of Trademark. A flat fee is applicable - Rs.9,000 for E-Filing, and Rs.10,000 for Physical Filing. This has made the process of assignment streamlined and simpler.
Trademarks are valuable assets. They are a measure of a company's popularity and reputation in the market. Therefore, entities rather than investing a lot of time, effort, and money into creating a brand of their own sometimes prefer to buy it. It is advantageous for the buyer as through minimal effort; a customer base is handed over. Assignment deeds should be made with proper care otherwise, they might become a reason for litigation.
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