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June 4, 2020

No Coercive action against Employers on Govt order for full payment of Wages during Covid19 Lockdown: SC

by facelesscompliance in Compliance Law, Corporate Law

No Coercive action against Employers on Govt order for full payment of Wages during Covid19 Lockdown: SC

The Supreme Court today ordered that no coercive action could be taken against employers with respect to the Ministry of Home Affairs (MHA) notification compelling payment of wages to employees amid the COVID-19 lockdown.

The Court also reserved its order on the validity of the MHA notification for June 12. No Coercive action against Employers on Govt order for full payment of Wages during Covid19 Lockdown: SC

“Financial incapacity is a legally untenable ground to challenge a direction issued by a competent authority in the exercise of its statutory power”, states the MHA’s reply.

The Centre has justified its direction asking private establishments to pay full wages to workers during the COVID-19 lockdown and said that employers claiming incapacity in paying salaries must be directed to furnish their audited balance sheets and accounts in the court.

The affidavit filed by the Ministry of Home Affairs (MHA) said the direction was fully in conformity with the provisions, scheme and objects of the Disaster Management Act and it is not ultra vires.

It further said that these measures were proactively taken by the government to prevent “perpetration of financial crisis within the lower strata of the society, labours and salaried employees”.

“There was a legitimate state interest in issuance of the said directions. The said directions were neither arbitrary nor capricious. The same were also neither excessive nor disproportionate…,” it said, adding that the direction was issued as an economic and welfare measure.

The affidavit said the Centre has regularly assessed the situation and after taking feedback from the experts in the field, it permitted opening up of the commercial activities enabling the employees and workers covered by these directions to resume work.

The reply from the MHA came on a batch of petitions led by a Karnataka-based company, Ficus Pax, who had challenged the Constitutionality of the March 29 notification

The notifications effectively compelled the payment of full wages to workers and employees during the period of the lockdown.

The Court was hearing a batch of petition including the one filed by Karnataka-based company Ficus Pax, challenging the constitutional validity of a March 20 notification by the Secretary (Labour & Employment) and clause III of the March 29 notification by the MHA, both of which compelled payment of full wages to workers and employees during the period of lockdown.

The MHA has now termed the grounds for the challenge as legally untenable and urged the Court not to adjudicate the validity of the March 29 notification

The Centre maintains that the Government’s directions were a temporary measure to “mitigate the financial hardship of the employees and workers specially contractual and casual during the lockdown period.”

When the Court asked Mr Gupta whether he agreed that negotiations have to take place between employees and employers, he said, “Interim order of no coervice action should be extended to us, as labour officers are harassing us.

The Court reserved its order for June 12. It also ordered that no coercive action be taken against employers with respect to the MHA notification dated March 29.

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