China, on 31.12.2019, reported
pneumonia of unknown cause, detected in the city of Wuhan, to Word Health
Organization (“WHO” for brevity),
wherein WHO on 22.01.2020 issued statement regarding human to human
transmission of Novel Coronavirus in Wuhan. The WHO, on 30.01.2020, declared
this outbreak as Public Health Emergency of International Concern (PHEIC), and
it has declared the Coronavirus Disease as COVID-19 on 11.02.2020, subsequently,
WHO declared Covid-19 as Pandemic. The Corona Virus Disease is hereinafter referred as “Covid-2019”.
The
Ministry of Home Affairs (“MHA” for
brevity) on 14.03.2020 notified Covid-2019 as notified disaster. Thereafter,
the Ministry of Health and Family Welfare issued advisory on social distancing
measures. The Ministry of Labour and Employment, on 20.03.2020, issued a letter
to the authorities to issue the advisory to employers/owners of establishment not
to terminate/reduce the wages of employees. The country observed “Janta
Curfew” on 22.03.2020.
That
the Department of Expenditure, Ministry of Finance, on 23.03.2020, ordered that
if any contractual, casual and
outsourced staff of Ministries/Department and other organizations of
Government of India is required to stay at home due to lock down period till
30.04.2020, it shall be treated as “on
duty” and necessary wages shall be paid to be paid to any such
employees. The Ministry of Labour and Employment, on 23.03.2020, issued the
direction to issue an advisory to all public/private employer/owner of
establishment to extend their coordination by not terminating employees,
particularly casual or contractual,
from their jobs and reduce their wages.
The
National Management Disaster Authority informed, vide its order dated
24.03.2020, that it has satisfied that the country is threatened with the
spread of Covid-2019 and directed the Government to issue guidelines in terms
of section 10(2)(l) of the Disaster Management Act, 2005 (“DMA”
for brevity). Accordingly, Home Secretary, MHA, acting as a Chairperson of
National Executive Committee issued the order of lock down from 25.03.2020 to
14.04.2020 and issued guidelines in respect of same, which was extended till
03.05.2020 with some relaxations.
Interestingly,
the MHA vide its order dated 29.03.2020
(“subject order” for brevity)
directed the state and union territory governments to take, inter alia,
following additional measures:
i.
State/Union Territory Governments shall
ensure adequate arrangements of temporary shelters, and provision of food etc.
for the poor and needy people, including migrant labourers, stranded due to
lockdown measures in their respective areas,
ii.
The migrant people, who have moved out
to reach their home states/home towns, must be kept in the nearest shelter by
the respective state/union territory government quarantine facilities after
proper screening for a minimum period of 14 days as per standard health protocol.
iii.
All the employers, be it in the
industry or in the shops and commercial establishments, shall make payment of
wages of their workers, at their work places, on the due date, without any
deduction, for the period their establishments are under closure during the
lockdown.
iv.
Where ever the workers, including the
migrants, are living in rented accommodation, the landlords of those properties
shall not demand payment of rent for a period of one month.
v.
If any landlord is forcing labourers and
students to vacate their premises, they will be liable for action under the
Act.
It was also mentioned in the
subject order that necessary action will be taken in respect of violation of
any of condition of subject order. The Ministry of Labour and Employment, on
30.03.2020, issued an advisory to all the Regional Labour Commissioner that all employees/workers may be
deemed to be on duty in case place
of employment is made non-operational due to lock-down. All public and
private enterprises were advised not to terminate their employees from jobs,
including the casual and employee of contractual, and not to deduct their
wages.
The Employers are aggrieved by the
subject order on the following grounds:
i)
Due to lock-down, Employers have less or
zero revenue, and incurring, due to fixed costs, huge losses,
ii)
Employers are not in a position,
financially, to pay the salary/wages,
iii)
If the employers are forced to make the 100%
salary/wages during the period of lock-down, it may lead to closure of many
MSMEs, which will ultimately lead to permanent unemployment,
iv)
Government cannot force the employer to
pay for NO WORK,
v)
Welfare of citizen is the duty of state,
and government should take appropriate action for these workers during the
period of lock-down. The huge amount, contributed by the employers and
employees in relation to their employment, in the form of EPF and ESI and their
respective interest is lying with the government, and the government should
utilize the same, at this crisis situation, for the welfare of
employees/workers and industries,
vi)
Government has not given any general
waiver/relaxation as far as liability of employers are concerned except giving
some deferment of payment,
vii)
There is a provision under the
Industrial Disputes Act, 1947 to deal with employees under the situation of
natural calamity, and therefore, any action by invoking DMA is
unwarranted,
viii)
The Government has no power to issue the
subject order under the DMA,
ix)
The subject order is violation of
Article, 14, 19, 21, 265 and 300A of the Constitution of India,
x)
The Ministry of Corporate Affairs has
considered the payment of salary/wages to employees/workers as moral duty of
the employer, and therefore, the employers may not be forced for their moral
duty,
xi)
There cannot be identical order for all
kinds of employees,
On the other hand, the Labour
Unions, representing employees/workers, are justifying the subject order on the
following grounds:
i)
The subject order is necessary for the
Protection of the weaker section of the society,
ii)
The subject order is necessary for
sustenance and livelihood of weaker section of the society,
iii)
Most of the workers cannot survive in
such lock down without wages,
iv)
The contract of service is subsist,
even, during the lock down, and accordingly, the employer is duty bound to make
the payment of wages/salary,
v)
Cessation of Work is not due to any
fault on the part of the workman, and accordingly, the same is recognized as
continuous service in terms of Section 25B of the Industrial Disputes Act, 1947
vi)
The workers have not denied to work, and
they are ready to work,
vii)
Reduction of wages requires due
procedure in term of Section 9A of the Industrial Disputes Act, 1947
viii)
The need, expenses and requirements of employees/workers
have increased due to Covid-2019 as the prices of various essential goods have
been increased, additional goods like sanitizer, mask and other equipments are
required for personal protection, and therefore, the workers are in want of,
even, increased wages,
ix)
There is no change in basic fixed
expenses of employees/workman, like school fee, rent, loan/borrowing repayment,
etc. wherein most of them, having no savings, are depended on their monthly
salary/wages only.
Whether the government has
power under the DMA to pass any subject order directing the employer to pay
full wages or constitutional validity of such provisions of DMA is Question of Law. Technically, the answer may be NO, however, as the subject matter is
related to the Protection, sustenance and livelihood of the weaker section of
the society, the court may take up the Mischief Rule of
Interpretation to consider the order of government as measures taken by
government in response to threatening situation of Covid-19. The said order of
the government may consider as reason for successful/effective lock-down to
contain the spread of lock down encouraging employees to follow the lock down
on the assurance that government will protect their livelihood. The recent
judgment of Hon’ble Supreme Court on free Covid-19 testing, benefit to poor was
retained even after modification, is the example of same.
As far as Articles 14, 19 and 21 of the
Constitution of India (“COI” for brevity) are
concerned; both the parties may claim their respective rights under these articles
for their own benefits. Article 300A of COI may not be applicable in this case
as the direction is only in respect of employees and not others, and accordingly,
the question of deprivation of property does not arise at all. Similarly,
Article 265 of COI may not be relevant here, as it may not be termed as
imposition of tax by government as the order is limited to the payment of wages
at existing rates to existing employees by the employers. Again, the Court may
consider the Article 14, 19 and 21of COI for the Protection,
sustenance and livelihood of the weaker section of the society.
Ministry of Corporate
Affairs (“MCA” for brevity), on 10.04.2020, issued FAQs
in the context of inclusion of contribution made in “PM Cares Fund” qualifying
as Corporate Social Responsibility (“CSR” for brevity) expenditure,
wherein MCA had clarified that payment of wages to employees during the period
of lock down cannot be considered as CSR expenditure on the ground that payment
of wages during the normal condition is statutory responsibility of company,
and during the lock down is moral duty of the company. Further, MCA has
clarified, in another question, in same FAQs, related to casual/daily wage
workers, that it is moral/humanitarian/contractual
obligations of the company irrespective of
their obligation to make CSR expenditure in accordance to section 135 of the
Companies Act, 2013 and rules made there-under. Needless to say, these FAQs
were issued by MCA for specific purpose, after the impugned order of MHA, and
may not be helpful/binding/relevant/applicable in contending the issue of
payment of salary/wages to employees/workman.
As far as actions taken by
government for the reduction of salary of Members of Parliament, and the order
of government not disbursing the increased amount of Dearness Allowances till
July, 2021 cannot be compared with no payment or reduced payment to
employees/workers. As per available information, government has not taken any
action for reduction of wages of any of its Class-IV employees. I don’t think,
the Hon’ble Court would consider the same as ground for supporting the reduction
of salary/wages to employees/workers.
The
provisions for lay off, due to natural calamity, are available in the
Industrial Disputes Act, 1947 (“IDA”
for brevity), and accordingly, the employers should have the right to take
action under Chapter VA or VB of IDA in case of natural calamity. However, as
the subject order is passed under the DMA, wherein section 72 of DMA provides
that the provisions of DMA shall have effect, notwithstanding anything
inconsistent therewith contained in any other law for the time being in force
or in any instrument having effect by virtue of any law other than DMA. Therefore,
provisions of IDA may not be relevant in the present situation and the
provisions of DMA will prevail over the IDA. Even otherwise, the provisions of
Chapter VA or VB of ID Act may not be applicable in many establishments.
Further, court may consider that such provisions of IDA may not be effective in
the present situation for the protection of weaker section of the society. This
is pertinent to mention here that proper notice in terms of section 9A of IDA
is required to be issued before making any change in the condition of service,
including changes in wages, of workman. Accordingly, it may not be lawful for
the employers to reduce the salary/wages, without complying the provisions of
section 9A of IDA, even in the absence of subject order.
No
doubt, the subject order may be considered as an order issued in haste and
without considering its constitutional validity and financial ability of
establishments to pay the full wages even during the lock-down. It may be
because of the situation, wherein the primary duty of the government was to
take all necessary measures to contain and curb the spread of Covid-2019 and to
assure its citizen about the protection of their livelihood, which was
necessary for effective lock-down.
Due
to above grievances, the petitions are filed before the Hon’ble Supreme Court
challenging the subject order on behalf of industries. Further, counter
petition or intervening applications are also filed for the effective
enforcement of subject order on behalf of workers. The Hon’ble Apex Court has issued
notice in the matter on 27.04.2020
and granted Union of India two weeks time to file its response, however, no
interim order is passed in the matter till date. Therefore, the subject
order, as on date, is fully effective and have the force of law.
The
Government should come up with some fresh guidelines in respect of same, so
that it will be able to balance the affected industries and workers both. Needless
to say, favorable atmosphere for industries is necessary for long term
protection of weaker section of the society and overall development of economy.
The Government should allow the companies to have their own arrangement and
agreement with their employees for lock down period subject to the payment
of minimum amount as salary/wages/consideration amount along with security of
employment. Government should not interfere with the management decision
about the executive level employees. Government should also consider suspending
the provisions of minimum wages, EPF and ESI for some time with proper plan for
the long term protection of employment of workers. However, any of these
guidelines should be applicable exclusively to affected industries, and proper
mechanism should be framed to ensure that no unaffected industry is taking
undue advantage of these guidelines. The term affected industry should be
clearly defined in the guidelines to include only those industries whose
revenue during the lock down period is zero or minimal.
This
is the need of the hour to protect the affected industries, especially affected
MSMEs, at all costs. There cannot be a dispute that workers and employees are
part and parcel of industries, and industry cannot exist without them.
Therefore, a waiver of portion of salary/wages may consider better option as
compare to the risk of Permanent Unemployment. However, the protection of sustenance
and livelihood of workers and employees cannot be ignored, and therefore, the
limited reasonable government interference is necessary for same.
-THANKS-
