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This Article analyses the meaning of force majeure, evaluates whether Covid-19 is a force majeure event, and its effect on the compliance requirements under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act).
Introduction:
‘Force Majeure’, in French means major force or greater force. This concept emerged as part of Civil Laws of France – Napoleonic Code enacted in the 1800s.
The term ‘force majeure’ has been used in contracts to refer to a superior force which is outside the reasonable control of a party and which prevents that party from performing its obligations under a contract.
Force majeure events are usually an exhaustive list which may include the following:
- natural disasters like hurricanes, floods, earthquakes, and weather disturbances sometimes referred to as “acts of God.”
- war, terrorism or threats of terrorism, civil disorder, labor strikes or disruptions, disease or medical epidemics or outbreaks
- Acts of Government, curfew, strike, lock-outs, explosions, fire
- Such other acts or events that are beyond the control of the parties
It is pertinent to note that the Ministry of Finance, Government of India issued a notificationdated19th February, 2020, clarifying that the disruption of supply chains due to the spread of coronavirus should be considered as a case of natural calamity and force majeure clause may be invoked, wherever considered appropriate, following due procedures. Following this, on 11th March, 2020, World Health Organisation (WHO) categorized the novel coronavirus as a global pandemic.
Therefore, coronavirus is considered as a force majeure event.
Legal Provisions:
Force majeure is governed by the Indian Contract Act, 1872. (‘Contract Act’), specifically under Section 32 and 56 of the Contract Act.
Under the POSH Act, the obligations set out for the employers can be considered as an implicit contract between the employer and its employees. It is to be noted that a force majeure event could impact the ability of the employer to fulfill those obligations / compliance requirements under the POSH Act.
Section 19 read with Rule 13 of the POSH law stipulates certain duties of the employer. Some of the duties are as follows:
- Formulate and widely disseminate an internally policy on prevention and redressal of sexual harassment at workplace;
- Display posters/notices at conspicuous places in office with penal consequences and order constituting IC;
- Constitute an Internal Committee (‘IC’) and conduct capacity building workshops for IC members;
- Conduct inquiry into complaints of sexual harassment in time-bound manner;
- Organize employee awareness programmes;
- Monitor timely submission of annual report by the IC
Let’s look at the illustration below to understand the ingredients of force majeure and how it could affect the compliance requirement of conducting inquiry in timely manner under the POSH Act.
A
A (employer) has an implied contract with B (employee) to conduct a time bound inquiry into the complaint of sexual harassment filed by B.
B
Covid-19
Lockdown
Unexpected event occurred.
Assumption by parties that Covid-19 lockdown would not occur
In case of inquiry, both A and B did not expect the office to be shut down indefinitely due to Covid-19 lockdown
The lockdown made the performance of obligation impossible.
In case of inquiry, since the parties (complainant and respondent) and the IC members could not come to office due to the lockdown, the IC could not conduct an in-person inquiry.
A took steps to perform obligations or mitigate damages by taking steps
In case of inquiry, the IC tried to conduct the inquiry virtually instead. However, the complainant was not comfortable with same as she did not want to attend inquiry meetings from home as she lived with her family members (due to lack of privacy)
The affected party i.e., A will show that the event has affected such party’s performance of contract.
In case of inquiry, as the IC could not conduct the inquiry either in person or virtually, they notified the parties that the inquiry will have to be deferred till the force majeure event is over.
Given below are some of the other compliance requirements that could be affected by a force majeure event
- Dissemination of Policy and display of posters
Rule 13 (a) of the POSH Rules states “formulate and widely disseminate an internal policy or charter or resolution or declaration for prohibition, prevention and redressal of sexual harassment at the workplace intended to promote gender sensitive safe spaces and remove underlying factors that contribute towards a hostile work environment against women.”
Section 19 (b) of the POSH Act states “display at any conspicuous place in the workplace, the penal consequences of sexual harassments; and the order constituting, the Internal Committee under subsection (I) of section 4.”
The compliance with both these requirements became difficult in most organisations, during the Covid-19 lockdown especially in those where employees did not have E-mail ids or access to electronic devices.
This issue was tackled by disseminating policy and/or posting soft copies of notices on:
- Website/Intranet;
- Groups on different messaging apps;
- Official pages on social/professional networking sites/handles;
- Sending pertinent information through text messages
- Constitution of IC:
Section 4 of the POSH Act states that ‘Every employer of a workplace shall, by an order in writing, constitute a Committee known as the Internal Complaints Committee.’
An order in writing in case of a company means a board resolution. A few concerns that needed to be addressed due to the covid-19 force majeure event were –
- whether the board resolution still needed to be passed, and;
- if yes, how would the board meet amidst the lockdown.
As per Section 175 of the Companies Act, a board resolution can be passed through circulation that is –
- A draft of the board resolution to be delivered to the registered address of all the directors via post, courier or electronic means, and such draft to be approved by the majority of the directors that are entitled to vote on the resolution. Such resolution must be recorded in the minutes of the next board meeting.
- If not less than one-third of the directors are of the opinion that the circulated resolution must be discussed at a meeting, then the resolution to be added on the agenda of subsequent board meeting.
To address concerns regarding physical meetings during the pandemic, Ministry of Corporate Affairs (MCA) vide its Notification dated 19th March 2020 came up with Companies (Meetings of Board and its Powers) Amendment Rules, 2020, which amended Rule 4(1) to allow for meetings to be conducted through video conferencing (VC) or other audio visual means.
With regard to this, it is also important to discuss the observation made by the Hon’ble Supreme Court in Energy Watchdog v. Central Electricity Regulatory Commission (2017), where it observed that just because an act has become onerous does not mean that it is impossible, as there are alternative modes of performance that are available.
Therefore, an IC must be constituted by a board resolution. However, the meeting of the directors need not necessarily be conducted physically, it can be done by circulation or VC.
- Conducting awareness sessions
As per Section19 (c) of the POSH Act, employer must conduct awareness programmes at regular intervals to sensitise employees, and orientation programmes for members of IC.
The compliance with this requirement also became difficult with employees not coming to office due to the Covid-19 lockdown, and most having gone to their respective home towns. However, in order to mitigate this, most organisations stepped up by conducting awareness session via-
- Webinars;
- Curating online modules for employees/IC members to be updated on the law and the latest developments.
- Signing annual report
As per Section 21 of POSH Act, Internal Committee must submit in each calendar year an annual report to the employer and District Officer. Further, as per Section 22 of the POSH Act, the employer must also include the number of cases filed in the annual report of the organisation that is filed with the Registrar of Companies (ROC).
In order for the report to be considered valid, the e-signature must comply with the provisions of Information Technology Act, 2000 read with Information Technology (Certifying Authorities) Rules, 2000. This means that a valid e-signature must be created and verified by cryptography so it can be transformed into unintelligible form and back again.
This dilemma regarding validity of documents in the absence of wet or digital signature is resolved with the judgement of the Hon’ble Supreme Court in “Trimex International FZE Limited, Dubai v. Vedanta Aluminium Limited, India (2010)” wherein it was observed that “In the absence of signed agreement between the parties, it would be possible to infer from various documents duly approved and signed by the parties in the form of exchange of emails, letter, telex, telegram and other means of communication.” The court held that receipt of email confirmation is sufficient for it to form a valid agreement.
For submission of annual report under Section 21 of POSH Act–
- All IC members would be required to acknowledge the report via Email
- The Presiding Officer or Member of IC who is going to courier or post the hard copy of the annual report to the District officer will have to necessarily enter their signature by wet ink or digital signature if sending the soft copy of the report via Email.
Conclusion:
The Covid-19 pandemic impacted the performance of not just contractual obligations but also statutory requirements. Particularly under the POSH Act, it created complexities in conducting inquiries, meeting timelines, and discharging other compliance duties such as constitution of IC and/or filing of annual report.
Under such circumstances, the recognition of Covid-19 as a force majeure event, and the relaxations introduced by the Government comes as a huge respite to the employers as it helped address many concerns that the Covid-19 lockdown brought with respect to the compliance requirements under the POSH Act.