While extending the nationwide COVID-19 lockdown on Sunday, the Union government also, in effect, withdrew its previous order directing employers to mandatorily pay wages to workers. “Whereas, save as otherwise provided in the guidelines annexed to this Order, all Orders issued by NEC under Section 10(2) of the Disaster Management Act, 2005, shall cease to have effect from 18.05.2020,” the guidelines by the Ministry of Home Affairs (MHA) stated.
In the annexures, the order that mandates payment has been removed. This was first reported by media.
In an order on 29 March, the government had said, “All the employers, be it in the Industry or in the shops and commercial establishments, to 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.” The government had issued this order under the Disaster Management Act.
On 15 May, however, the Supreme Court had said that the state must not take coercive action against small industries that are unable to pay the wages. There may be small companies that are not earning and, therefore, unable to pay, the apex court said.
Hearing multiple petitions, the bench of Justices LN Rao, SK Kaul and BR Gavai observed that the MHA circular was an omnibus order and there was a larger question involved which needs to be answered. The apex court issued a notice on a plea of Hand Tools Manufacturers Association, comprising MSMEs seeking to quash the order asking private establishments to pay full wages to their workers during the ongoing lockdown.
Several companies had challenged the constitutional validity of the government’s order on wages at the Supreme Court. On Friday, the apex court asked the government not to take any coercive action against private companies that were unable to pay wages to workers. The SC was to hear the petition this week. The court, terming it as an “omnibus order”, had asked the government to re-examine it.
The trade union leaders have criticised the government’s step to withdraw the order. “The order for lockdown 4.0, by a slight of hand, allows employers to get away without paying wages during the lockdown. So no payment of wages and no wage subsidy just where do workers go? Who is responsible for a worker in a containment or red zone or for that matter even in an orange or green zone where full public transport has not been resumed?” Gautam Mody, General Secretary, New Trade Union Initiative said.
On the other hand, employers have welcomed the step, saying it was absolutely necessary especially in the absence of grants from the government to the industry towards wage payment. “We have to work on the principles of ‘no work no pay’.”
“Our opinion is that organisations should be considerate towards employees and in a difficult situation like this, minimum sustenance pay should be given but where will they get the income to pay? In many countries, the government have shared the wage bill but it didn’t happen in India,” MS Unnikrishnan, chairman of the Confederation of Indian Industry’s committee for industrial relations, said.
In its petition to the SC, Nagareeka Exports Limited had prayed that the payment of full salary to workers during the lockdown period when production was zero or “very minimal” would lead to closure of many micro, small and medium scale enterprises and “permanent unemployment of many people, directly affecting the economy.”
Before the MHA’s 29 March directive, the labour and employment ministry had issued multiple advisories to the industry to not lay-off or retrench workers during the lockdown and asking them to deter from deducting wages.
Notably, the MHA order, which was issued under the DM Act, had said the state governments had to issue their separate orders to implement the diktat. Any contravention of the order was punishable under the DM Act.
The Association of MSMEs said in its plea that the Ministry of Home Affairs had passed orders without due care and deliberation on the financial implications for employers.
The small industrial units had warned that making full payments will lead to their closure, which, in turn, will cause permanent unemployment and adversely affect the economy.
They said that such a blanket direction for payment of full salaries was arbitrary, unconstitutional and unsustainable.