Employees Entitle to 50% of Wages During Lockdown says High Court

MHA order directing payment of 50% wages applicable to employees on duty before lockdown : HC

Introduction

WHO declared COVID-19 as a global pandemic. Government of India also declared COVID-19 as a notified disaster under the Disaster Management Act, 2005 whereafter lockdown was imposed in the entire country including in the State of Maharashtra. The Centre had directed the states to ensure all employers pay wages to their workers without any deduction during the lockdown.

Can such direction be applicable for those workers who remained unpaid for a long period even before the lockdown?

Similar issue was raised in Premier Employees Union vs State of Maharashtra and others where the employees union sought compliance of the Union Home Ministry’s order dated March 29, 2020 and a subsequent Maharashtra government resolution issued on March 31, 2020, directing employers to pay wages to all workers even during the lockdown period.

Brief Facts of the Case:-

Premier Employees Union is a trade union registered under the Trade Unions Act, 1926 representing the interest of about 200 workers of M/s. Premier Limited, a company incorporated under the Companies Act having its registered office in the district of Pune.
Members of the union are permanent employees of the company which is engaged in manufacturing heavy machinery.
The union had raised the grievance of unfair labour practice against the company.
On complaint raised by the union alleging unfair labour practice by the management, Complaint was registered before the Industrial Court, Maharashtra at Pune.
Company obtained No Objection Certificate (NOC) from the office of Commissioner of Labour, Maharashtra (respondent) for shifting of its plant from the original site.
The NOC was conditional in as much as the company had to give an undertaking that it would make full payment of wages and dues to the workmen and ensure continuity of their employment.
Therefore, the workmen did not oppose shifting of the plant. However, the company defaulted and had not paid wages and dues to the workmen since May, 2019.
On shifting of the plant, the company sold the land where the original plant was located thereby substantially reducing its debts from the money received from the sale. Notwithstanding the same, wages of the workmen were not paid.
Management also did not make any payment towards the legal dues, such as, employers’ provident fund contribution, gratuity of retired employees and renewal payment of mediclaim insurance premium.
Though the workmen expressed willingness to work at the relocated plant but they were not provided any such work by the management.

What led to the filing of this Writ?

In this backdrop, company issued a notice dated 03.03.2020 addressed to all the workmen and staff stating that the management had decided to suspend operations with immediate effect until further notice / orders as per clause 18 of the Model Standing Orders of the Industrial Employment (Standing Orders) Act, 1946 in respect of the workmen and under clause 19A in respect of the staff.
Raising the grievance that the aforesaid suspension notice amounted to unfair labour practice, the union filed a complaint before the Industrial Court against the company.
Vide order dated 20.03.2020 Industrial Court found that the company did not follow proper procedure while issuing the notice dated 03.03.2020 and arrived at the conclusion that the company had committed unfair labour practice.
Consequently the Industrial Court directed the company to pay wages to the workmen w.e.f. 01.03.2020 on or before the 10^th day of each month.
Despite such an order by the Industrial Court, the company did not make any payment to the workmen
On 11th March, 2020, the WHO declared COVID-19 as a global pandemic. Government of India also declared COVID-19 as a notified disaster under the Disaster Management Act, 2005 whereafter lockdown was imposed in the entire country including in the State of Maharashtra w.e.f. 24.03.2020.
Ministry of Home Affairs, Government of India issued an order dated 29.03.2020 under section 10(2)(i) of the Disaster Management Act, 2005 directing all the states/union territories as well as authorities of the states/union territories to ensure that all the employers, in industry, shops or commercial establishments, shall make payment of wages to their workers at their workplaces and on the due date without any deduction for the period their establishments are under closure during the lockdown.
Government of Maharashtra in the Industries, Energy and Labour Department issued a government resolution dated 31.03.2020 declaring that all the workers / employees including contractual, temporary and daily wagers working in private establishments, shops (except essential services), factories etc., who had to remain indoors due to outbreak of COVID-19 and the lockdown, shall be deemed to be on duty and shall be paid full salary / wages and allowances.
According to the union, the workmen having not received any wages for the month of March, 2020 despite the order of the Industrial Court and the aforementioned directions of the Central and State Governments, petitioned the respondent about the above followed by several reminders but no action was taken by the respondents.
Aggrieved by the above, the present writ petition was filed by the union seeking the reliefs as indicated above.

Proceedings of the High Court

MHA order dated 29.03.2020 and the government resolution dated 31.03.2020 of the Government of Maharashtra, Industries, Energy and Labour Department.

As far as the central government order is concerned, the same was issued under section 10(2)(i) of the Disaster Management Act to deal with the situation arising out of the lockdown for containment of spread of COVID-19 in the country and for effective implementation of the lockdown measures as well as to mitigate the economic hardship of the migrant workers.
A direction issued was that all the employers, in the industry, shops or commercial establishments shall make payment of wages to their workers, at their workplaces, on the due date, without any deduction, for the period their establishments are under closure during the lockdown.
In consequence to the aforesaid central government order, Government of Maharashtra issued the government resolution dated 31.03.2020.
As per the government resolution, all categories of workers (contractual, outsourced, temporary or daily wage basis), working in private organisations, industries, companies, shops (except those dealing with essential services) etc. who are confined to their homes due to the lockdown shall be deemed to be on duty and they shall be paid their full salary / wages and allowances to which they are entitled to.
A conjoint reading of the central government order and the Maharashtra government resolution showed that those have been issued to mitigate the situation arising out of the lockdown.
Due to the lockdown, the industrial and commercial establishments were closed. This caused great deal of economic hardship and distress to the workers and employees.
This also resulted in the movement of a large number of migrant workers in some parts of the country so as to reach their native places. Such movement resulted in violation of lockdown measures. In such circumstances, to mitigate the hardship of the workers and employees certain directions were issued.
Sum and substance of the related measure is that the employers shall pay full salary / wages to their employees/workers during the period when their establishments were closed because of the lockdown. Such payment shall be made at the workplace and on the due date without any deduction. For this period, the employees/workers shall be deemed to be on duty.
But the question is could the central government order and the Maharashtra government resolution be invoked in a situation where the management and workmen are engaged in an industrial adjudication relating to non-payment of salary/wages and suspension of work much prior to closure of the establishments due to the lockdown? Or where the related cause of action arose prior to the lockdown?

Observations of the High Court pertaining to Applicability of above mentioned Order and Resolution

In the view of the High Court, taking the above aspects into consideration, the claim of the workmen to wages will not be covered by the central government order and the Maharashtra government resolution.
The measures introduced by the above two would cover a situation where an employee / worker was in employment as on the day the lockdown was declared and had received salary / wages for the previous month i.e. the month immediately preceding the lockdown.
To be deemed to be on duty one should be on duty on the date when the lockdown was declared.
To be entitled to or for continuity of salary / wages during the lockdown, an employee / worker should receive the same till the month which is previous to closure on account of the lockdown.
That apart, when there is an ongoing industrial adjudication pertaining to claim of the workmen to wages, the claim to wages would be subject to such adjudication.
The central government order and the Maharashtra government resolution cannot be invoked to short circumvent an industrial dispute which is being adjudicated upon before the competent forum.
That being the position, the union is not entitled to the benefit of the central government order dated 29.03.2020 and the Maharashtra government resolution dated 31.03.2020.

Reference to Provisions of Industrial Disputes (Amendment) Act 1971

This Act was enacted to provide for recognition of trade unions to facilitate collective bargaining in certain undertakings; to state their rights and obligations; to confer certain powers on unrecognized unions; to provide for declaring certain strikes and lockouts as illegal strikes and lockouts; to define and provide for the prevention of certain unfair labour practices; to constitute courts as independent machinery for carrying out the purposes of according recognition to trade unions and for enforcing the provisions relating to unfair labour practices.
While unfair labour practice is defined in section 26, Schedule IV mentions general unfair labour practices on the part of employers which includes failure to implement award, settlement or agreement and to indulge in act of force or violence.
Section 28 which is placed in Chapter VI lays down the procedure for dealing with complaints relating to unfair labour practices.
As per sub-section (1), where any person has engaged in or is engaging in any unfair labour practice, then any union or any employee or any employer or any investigating officer may file a complaint before the court competent to deal with such complaint i.e., the Industrial Court or the Labour Court as the case may be.
Such complaint may be filed within 90 days of the occurrence of such unfair labour practice. The court may entertain a complaint even beyond the stipulated period if good and sufficient reasons are shown by the complainant for late filing of the complaint.
Sub-section (2) says that the court shall take a decision on every such complaint as far as possible within a period of 6 months from the date of receipt of the complaint.
Section 30 deals with powers of Industrial and Labour Courts. As per sub-section (2), in any proceeding before it the Industrial Court or Labour Court as the case may be, may pass such interim order including any temporary relief or restraining order as it deems just and proper.
Such interim order may include directions to the person to withdraw temporarily the practice complained of, which is an issue in such proceeding, pending final decision.
Proviso to sub-section (2) empowers the court to review any interim order passed by it on an application made on that behalf.
Section 50 deals with recovery of money due from an employer. Where any money is due to an employee from an employer in view of an order passed by the court under Chapter VI, the employee himself or any authorised person may make an application to the court for recovery of money due to him and on satisfaction the court shall issue a certificate for that amount to the Collector who shall proceed to recover the same as an arrear of land revenue.
Though such application is required to be filed within 1 year from the date when the money became due, on sufficient cause being shown, such application may be entertained even after the stipulated period. The procedure laid down in section 50 for recovery of money is without prejudice to any other mode of recovery.

Provisions of the order dated 20.03.2020 passed by the Industrial Court

The management had issued suspension of operations notice on 03.03.2020. This was challenged by the union before the Industrial Court by filing a complaint under section 28(1).
Prayer was made to declare that the management has indulged in unfair labour practices; to direct them to desist from such practices; to declare the notice dated 03.03.2020 as illegal and void ab initio; and for a direction to the management to pay full wages to the workmen from 03.03.2020 onwards on regular basis before the 10^th day of each month till final disposal of the complaint.
Union also filed an application under section 30(2) seeking interim relief to the effect that the management be directed to pay wages to the workmen till final disposal of the complaint.
After hearing arguments on the interim prayer, the Industrial Court passed the order dated 20.03.2020.
Industrial Court took the view that in a case of suspension of operations on the ground of economic crisis and shortage of orders from the customers, clause 20 of the Model Standing Orders would be applicable and not clause 18 as claimed by the management.
When it is a case under clause 20, 7 days prior notice has to be given which was not done in the present case. Thus Industrial Court held that proper procedure was not followed while issuing the notice dated 03.03.2020.
Coupled with the fact that management has not paid wages to the workmen, Industrial Court prima facieheld that the management has committed unfair labour practice by not following the provisions of law

Observations of the High Court pertaining to order dated 20.03.2020 passed by the Industrial Court

It is evident that the above findings of the Industrial Court, the notice dated 03.03.2020 was actually one under clause 20 and not under clause 18 and consequently the procedure prescribed in clause 20 has not been followed.
The fact that management has committed unfair labour practice, are all tentative findings for the purpose of deciding the interim application filed by the union. These are prima facie findings and cannot be construed as final conclusions.
The management had the remedy of filing an application for review of the interim order as per the proviso to section 30(2) which it did not avail.
Industrial Court noted that a prima facie case for interim relief was made out by the union. It was further observed that if the management was not directed to pay wages, members of the union would suffer hardship and inconvenience.
On the contention of the management that the interim relief was one of the main reliefs sought for in the complaint and that final relief cannot be granted at the interim stage, Industrial Court held that though it is a settled legal proposition that final relief cannot be granted at interim stage but in appropriate cases court can grant such relief on proof of prima facie case.
Since according to the Industrial Court, complainant had made out a strong prima facie case, interim direction was issued to the management to pay wages to the workmen from 01.03.2020 onwards till final disposal of the complaint; the payment to be made on or before the 10^th day of each month.
HC found the view of the Industrial Court to be contradictory. It is a settled proposition of law that ordinarily the final relief may not be granted by way of an interim order. Power to grant interim relief is discretionary. Such discretion has to be exercised on well-established principles.
Since a prima facie view has been taken that the management has committed unfair labour practice, certainly an interim order is called for. But what should be the nature of the interim order?
It is an admitted position that the workmen have not been paid wages post May, 2019.
Since their employment has not been disturbed because even as per the management the notice dated 03.03.2020 has only declared suspension of operations, the workmen cannot be left in the lurch.
At the same time the financial condition of the company cannot also be overlooked at the time of granting interim relief.
In the interest of industrial peace a balance has to be struck between the competing claims. Survival of the industry is equally important not only for the management but also for the workmen.
Therefore, in the interest of justice it would be just and proper if a direction is issued to the management to pay 50% of the full monthly wages to the workmen with effect from 01.03.2020 till disposal of Complaint.
Such payment shall be made on or before the tenth day of each month. To the above extent the order dated 20.03.2020 would stand modified.

Conclusion by the High Court

Summing up the deliberations and on due consideration, HC passed the following orders:-

Government of India, Ministry of Home Affairs order dated 29.03.2020 and the Maharashtra government resolution dated 31.03.2020 would not be applicable in the case of the workmen represented by the union
Order dated 20.03.2020 passed by the Industrial Court would stand modified to the extent that the workmen represented by the union shall be paid 50% of their full wages on or before the tenth day of each month effective from 01.03.2020 till disposal of Complaint.

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Employees Entitle to 50% of Wages During Lockdown says High Court