MHA Repeals Order Mandating Full Payment of Wages to Employees

The Ministry of Home Affairs (MHA) has introduced a revised version of its guidelines during the fourth phase of the lockdown. In an interesting turn of events, the MHA has repealed the order which was given on March 29 under the Disaster Management Act, 2005. It was about the full payment of wages by private companies including MSMEs and various industries to their employees during the lockdown irrespective of their presence in the workspace or whether the commercial unit was functioning or not. The guideline that was issued on March 29 stated the following: “All employers, be it in the industry or in the shops and commercial establishments shall make payment of wages of their workers, at their workplaces, on the due date, without any deduction, for the period their establishments are under closure during the lockdown”[1].

But in the latest guidelines, this specific guideline has been removed by the government. Instead, a new notification has been introduced by the Home Secretary, Ajay Bhalla which says : “Whereas, save as otherwise provided in the guidelines annexed to this Order (dated May 18), all Orders issued by NEC (National Executive Committee headed by Home Secretary Ajay Bhalla) under Section 10(2)(I) of the Disaster Management Act, 2005, shall cease to have effect from 18.05.2020,”[2].

The distressed employers who have been asking for either a wage stimulus or for not making payment of wages mandatory as their businesses have been severely affected by the lockdown. The Federation of Indian Chambers of Commerce and Industry (FICCI) had asked for a subsidy of fifty percent of the wages[3] and they had further said that in absence of such aid they would let go of some workers due to loss of business[4] .

Since the Centre has not included a wage stimulus in its twenty crore rupees financial relief package, the omission of the mandatory payment of wages clause will come as a great reassurance to all employers especially those who work in the small – scale industries and commercial units and were in dire need of such sustenance to alleviate monetary distress. A lot of businesses have been severely affected by the lockdown as it has led to minimal production and in turn, loss of revenue. Many small and medium scale industries are being pushed on the brink of bankruptcy which as a result, would lead to the downfall of the economy as well.

On the other hand, this updated notification has set alarm bells ringing for the working class who are already bearing the brunt of the lockdown and are suffering from major financial setbacks due to unemployment and lack of social security. Various trade unions have lambasted the Central government for going to such lengths to protect the industries from running out of business but not batting an eye when it comes to the employees. The trade unions have further expressed their concerns by emphasizing upon the fact that the removal of the notification has made the workers more prone to exploitation since the employees might use this as an opportunity to not to pay the employees their salaries at all.

Virjesh Upadhyay, Genral Secretary of Bhartiya Mazdoor Sangh (BMS) said that ensuring livelihood and wages during the lockdown is the duty of the government and there should be no discrimination when it comes to ensuring salaries of the workers[5]. The BMS has also called for a nation – wide protest on May 20 against the decision of many state governments such as Uttar Pradesh, Gujarat and Madhya Pradesh to do away with labour laws[6]. Their key demands are: complete payment of wages during lockdown, negation of the amendments made to the existing labour laws by various states and ensuring livelihood to all the migrant labourers[7].

This notification came after the Supreme Court on May 15 had issued a notice to the Central Government on a batch of petitions that were filed by numerous companies against the guideline that was issued by the Central government and invoked under Section (10)(2)(1) of the Disaster Management Act for the compulsory payment of wages to the employees[8]. The petitioners sought the revocation of the order as they found it to be unconstitutional, arbitrary, unsustainable and violative of the fundamental right to trade of the employers. They further argued that the order is violative of Articles 14, 19(1)(g) and 300A of the Constitution of India[9] and because of the fear of losing their business, the employers cannot afford to pay full wages to their employees. They raised another argument in which they accused the Central government of acting beyond the scope of their powers granted under the Disaster Management Act by issuing the order in question[10].

A three-judge bench comprising of Justices L. Nageswara Rao, Sanjay Kishan Kaul and BR Gavai issued notices that were returnable in the next week in many petitions such as those filed by Ficus Pax Private Ltd., The Twin City Employers Association, Rajasthan Steel Chamber, Instruments and Chemicals Private Ltd., Kerala State Small Industries Association, Federation of Industries and Association, All India Federation of Master Printers, Teknomin Construction Limited and Garments Exports Manufacturing Association and many others[11]. There were two petitions, Hand Tools Manufacturing Association v. Union of India and Indian Jute Mills Association v. Union of India in which the bench ordered that no coercive action be taken in the meanwhile and issued notices that were returnable in the next week[12]. The bench observed that the circular issued by the Central government was an omnibus order and there was a much larger question involved which needs to be answered at the moment[13]. Solicitor – General Tushar Mehta who was appearing for the Centre said that a conference was held for the same issue and a detailed response needs to be filed to the pleas[14].

On May 26, another development took place in the apex court. A new three – judge bench consisting of Justices Ashok Bhushan, Sanjay Kishan Kaul and MR Shah heard petitions, mostly from small businesses who were affected by the previous March 29 order issued by the Centre which made the payment of full wages to the employees mandatory for private companies and industries. The bench asked the Central government to treat the issues filed by petitioners with urgency since a lot of people are affected.  Attorney General K.K. Venugopal told the bench that a new notification has been passed by the Central government on May 17 which supersedes the earlier notification that was passed on March 29. In the Jute Mills Association v. Union of India case, the Court maintained its previous stance and directed that the interim order passed on May 15 which prevented coercive action against the employer for non – payment of wages shall continue. The Centre has been asked to file its response in an affidavit and has scheduled the hearing of the matter in the next week.

Therefore, it is safe to say that both the employers and the employees are in jeopardy and the Government cannot turn a blind eye to either of them. The employers are dealing with an unprecedented situation. The lockdown has put a temporary hold on their businesses, everything including the production has been put on a halt. This has caused a conundrum in the private companies and the industries because the lockdown has put all the owners especially those who own small businesses on the verge of losing their businesses. Thus, the first priority of these owners is to save their own source of livelihood i.e. their business.

The employees comprise of workers who earn wages on a day to day basis. Due to the lockdown, they have lost their sole source of income and have no choice but to head back home otherwise they would not be able to survive the pandemic. Many workers have been fired from their jobs and have been deprived of their basic income which is a violation of their right to life under Article 21 and the order passed by the Central government through which the payment of full wages to employees had been made mandatory for private establishments by invoking Section 10(2)(1) of the Disaster Management Act. There is a lot that needs to be done and can be done by the government to mitigate the deplorable condition of the workers amidst the lockdown,

Thus, keeping in mind the precarious conditions of both the employers, mostly the small business owners and the employees, the demand for seeking legal remedies is inevitable. That is why there is a dire need for bringing reform in the current labour laws such as the Industrial Disputes Act, 1947, Payment of Wages Act, 1937, Contract Labour Act, 1970 and Inter – State Migrant Workmen Act, 1979 to name a few which govern the payment of wages to workers as these laws have failed to protect the workers amid the Corona crisis . The rigidity of the existing labour laws has weakened its applicability instead of improving it because of which the poor workers are bearing the brunt of the lockdown. It is evident from the situation in hand, that a balanced perspective needs to be adopted which is of benefit to both the employers and the employees.  Hence, the government, the trade unions, policy makers and the judiciary should join hands and frame welfare policies and provide a wage stimulus or subsidy in order to empower the workers who are living under perilous circumstances and to help in keeping the small businesses afloat. Labour – friendly laws and policies are the need of the hour because they will play a crucial role in reviving the Indian economy and saving it from the clutches of the deadly pandemic.