Force Majeure And Coronavirus: Frequently Asked Questions - Part 2

Part 2: Possibility of Reduction in Workforce and Wage Bills

In Part 1 of this series, we discussed Force Majeure and Suspension/Termination of Contracts. You can contact [email protected] to get a copy of Part 1 of this series. 

In this Part 2, we have attempted to answer some of the questions which businesses are asking concerning their ability to reduce workforce and wage bills.

Question:

Can businesses reduce their wage bill under force majeure clause? 

Answer:

Simple answer is – Yes. Under Indian laws, answer to this question needs understanding from two perspectives: 

For management/supervisory category employees: In India, protection under most of the labour laws is not available to the employees in management/supervisory category. The employment of such senior executives is therefore governed by their contracts. [We have discussed in Part 1 of this series, the possibility of suspension/frustration of contracts due to the