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June 12, 2020

SC Gives Option to Establishment and Wage Earner to Negotiate on Full Payment of Wages during Lockdown

by facelesscompliance in Compliance Law

SC Gives Option to Establishment and Wage Earner to Negotiate on Full Payment of Wages during Lockdown

Supreme Court dismisses MHA Order of mandatory payment of wages during lockdown

The ongoing COVID 19 pandemic has been a taxing time for all. Not only human life is in danger, global shares have taken a hit, unemployment is on the rise, oil prices have crashed and certain industries have suffered their biggest hits. Due to the lockdown industries, shops, construction sites and businesses have also been forced to shut down. This has greatly impacted the workers and daily wage earners who depend on their daily earnings to survive.

The Ministry of Home Affairs (MHA) had dropped a pivotal order on March 29 that required all employers, shops, industries and commercial establishments to pay their wages to workers for the period the units were shut during lockdown. This order was bought into force to mitigate the economic hardships of the workers, in exercise of the powers, conferred under Section 10(2) of the Disaster Management Act, 2005.

This direction was in force for 54 days, before it was withdrawn with effect from May 18. A number of petitions were filed before the Supreme Court (SC) challenging the MHA order to make full salary to employees during the 54 days period of COVID-19 lockdown.

Although the order was to aid in the prevention of suffering of the wage earners, employers had put forth the point of financial incapacity to challenge the notification. The lockdown had proved to be a difficult time for the employers and business owners as well. Some claimed that they were incapable to pay wages during the lockdown period as they were financially distraught too.

A bench of the Supreme Court, headed by Justice Ashok Bhushan, and also comprising Justices Sanjay Kishan Kaul and M R Shah heard a bunch of petitions seeking a direction on payment of wages to the employees during this lockdown period. The petitioners raised the argument that the impunged order was beyond the scope of powers provided under the Disaster Management Act and is violation of Articles 14, 19(1)(g) and 300A of the Constitution of India.

The Supreme Court provided a major relief for private companies by diluting the MHA order that employees should be paid their full wages for the lockdown period. The apex court has asked the government not to take any coercive steps against private employers who have not paid salaries to their employees during the lockdown.

The Court stated that they are aware that no industry could survive without workers and the issue should be resolved through negotiations between the employers and their employees which would be mutually beneficial to both. The negotiation between employees and employers regarding wage payment are to be facilitated by state government labour departments. The government has been given four more weeks to file a reply on the legality of March 29 notification that had ordered mandatory payment of wages.

Following directions were passed by the Apex Court:-

  1. Directions for participation of employees for accomplishing this settlement may be disclosed for the benefit of the employers as well as the workers
  2. Workers who are willing to work should be allowed to work notwithstanding disputes regarding wages.
  3. The state government labour departments should facilitate settlements of wage payments between employees and employers before the concerned labour commissioners.
  4. A date for conciliation and settlement may be provided by the MHA

These are difficult times that we live in and the employers must also realize that if it is possible to pay wages which would aid to the survival of their workers, they must implement the payment of the same.

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