Pandora’s Box – protecting labour rights during the crisis

The fiasco of the Covid-19 pandemic has prompted the government and its agencies to take drastic and dynamic measures to tackle its economic fallout.

The economic response to the crisis has been swift and timely with Prime Minister Sheikh Hasina leading the way to announce a financial stimulus package for export-oriented industries facing the raft of economic shutdowns in European countries on the eve of our 49th Independence Day celebration.

The incentives package of Tk5,000 crore – equivalent to $600 million – is for paying workers' salaries and allowances for a period of three months. While the incentives package is unprecedented, it requires a bit of twigging from the legal perspective to avoid opening Pandora's Box, jeopardising long-fought-for labour rights secured in Bangladesh.

Put into perspective, on par with the prime minister's declaration, Bangladesh Bank published a circular on April 2 called "Loans/Investments from stimulus Fund with minimum service charge (one time at 2%) for active export-oriented industries due to breakout of novel coronavirus (Covid-19)". Clauses 2(ka) and (ga) of the circular provided that the loans from the Financial Stimulus Fund can only be used for paying salaries plus benefits of workers and employees. They set out other conditions relating to the process of getting the loans and disbursing them.

On April 8, Bangladesh Bank published another circular related to the Financial Stimulus Fund for active export-oriented industries, whereby it explicitly stipulated that "Salaries and benefits for officers of the industrial establishment cannot be paid from this fund."

The limbo between workers and employees, plus officers of the establishment, has been a long-standing tangle under the Bangladesh Labour Act 2006. As expected, businesses applying for loans under the Financial Stimulus package for export-oriented industries are locked in their positions as to the interpretation of the distinction between workers and employees plus officers of establishment.

Given that the stimulus loan facilities are disbursed by the banks based on the banker-client relationship, one might not doubt that one establishment may be in a favourable position than the other in such instances, hence, we call for a unitary approach to this issue and put forward the position as per the labour laws of Bangladesh.

The Labour Act, 2006 and Labour Rules, 2015 require that an establishment comply with provisions of the Act – exempted, or, by extension, unregulated businesses, shall not set standards below those provided by the Act. An individual's employment status and categorisation in Bangladesh is governed by the Labour Act, 2006 – Section 2 (65) and the preceding case laws. The Act distinguishes between the worker and employer represented by non-workers, by reference to managerial, administrative and supervisory roles, whereby the former receives protection under the Labour Act, 2006 and the latter's rights are addressed in the form of a contractual relationship embedded in the employment contract.

In this regard, it is important to note that the definition of the employer, as provided in section 2 (49)(b) of the 2006 Act, includes a person "concerned with the management and responsible to the owner for control of the industrial establishment". In the case of Managing Director, Rupali Bank Ltd v Md. Nazrul Islam Patwary and other, the Appellate division noted that workers can be employed for any purposes including skilled, unskilled, manual, technical, trade promotional or clerical work, hence, only high-level services of the establishment fall outside the pretext of the 2006 Act.

It was held in Mujibur Rahman v Chairman, Labour Court at the determination of the nature of a job shall be based on evidence and is a matter of fact for the court to decide. As a result of the classification of "worker" status, the worker shall be entitled to the benefits under the 2006 Acts.  Therefore, it is safe to say that judicial interpretation focused on the factual issues and the nature of the job while determining the status, and does not include designation of the worker.

Though, factual indicators – such as under the control of another, working for the benefit of another, working hours, duration, continuity, availability, periodic payment and other benefits as provided by ILO Recommendation R198 Employment Relationship Recommendation, 2006 – have not been incorporated into the Labour Act, 2006.

As a result, the distinction remains a debated topic affecting staff members and employees of the corporate or executive levels. Regardless of the seniority of the post, some individuals are excluded from receiving benefits provided under the Act.

This exact situation arose in the case of disbursing loans under the Financial Stimulus Fund for active export-oriented industries. The banks are in the same limbo of ascertaining who is a worker or employee for the purposes of this stimulus package, and who is an "officer" – therefore, by default, outside the ambit of the package. Industrial establishments are having difficulty ascertaining the ambit of who to incorporate on the Salary Sheet to be submitted during the application. Meanwhile, bankers, having taken an approach based on their banker-client relationship, favour one while disfavouring another.

The issue was raised by the President of the Bangladesh Garment Manufacturers & Exporters Association (BGMEA) in a letter on April 10 addressed to the Governor of Bangladesh Bank. The letter referred to the Gross Wage 2018 published by the government, and one to seven grading relating to workers' rank or classification therein.

The Number 1 grade includes patent masters, chief quality controllers, chief mechanics, senior line leaders (line chiefs or supervisors) while the Number 7 grade includes their assistants. Furthermore, few factories have posts that are not mentioned in the gazette notification, but they are considered workers or employees, which, according to clause 2 of the gazette notification, shall be considered workers for the minimum wage set by the government.

Rightly so, the president requested that BGMEA and BKMEA members pay the wages according to the classification set by the government and as such the commercial banks have been directed to this effect pursuant to new circular from April 15 adopting the suggestion of BGMEA. Consequently, mid-level officers (e.g. assistant account managers) surely and potentially junior level supervisors, even in the protected sector (e.g. line supervisors), are then likely to be exposed and left out.

The risk further exposes the companies with burdens to their own pockets, resulting in them starting to downsize mid-level employees, clearly not covered by the benefits of the stimulus package. Also, it has been reported that banks are using an amount of salary as an indicator to determine workers and non-workers, with each bank using its own definition of what they think would be the acceptable salary to draw the line between a worker and a non-worker, a concept that neither the legislator ever intended nor the judiciary ever permitted.

Even more volatile, some companies are not giving individuals legal severance packages, in accordance with the 2006 Labour Act, by classifying them as "glorified officers," instead of "workers." This way, the individuals are governed solely by their employment contracts. The potential danger is that if they go to the labour court, based on case precedent, the court is likely to accept them being protected under a wider interpretation of "workers," and therefore entitled to the severance package as per the law.

It is further submitted that Bangladesh Bank does not dictate labour policy, so why open up the box? Wouldn't it be better if they simply adopted, and instructed the banks to adopt, the policy implemented by the Ministry of Labour and Employment – in relation to the minimum wage set as per grade-based system – as well as take into consideration mid-level employees? Why unsettle an industry with inconsistent decisions?

If this inconsistent approach is not immediately addressed and resolved, eventually the crisis could rapidly escalate from a labour or contractual issue to a constitutional one.

This is likely to be the case because the Constitution of Bangladesh provides and protects fundamental rights for the citizens of Bangladesh, including the rights of workers, under Article 14 that states "it shall be a fundamental responsibility of the state to emancipate the toiling masses, the peasants and workers, and backward sections of the people from all forms of exploitation."

Additionally, Article 15 deals with the provision for reasonable wages for workers and Article 34 prohibits forced labour. Article 27 also guarantees equality and freedom from discrimination. These fundamental rights are inalienable and enforceable in the High Court under the writ jurisdiction.

In this context, excluding the affected workers or employees may make the government susceptible to challenges for breach of fundamental rights. It is important to bear in mind that challenges and suits are not the most effective way forward to address a lack of policy decisions in times of economic peril.

It is time that the state, agencies and regulators accept the changes and new realities, assess the business climate, and stand up for the affected – plus intervene to address potential unemployment and a rise in poverty.