Payment to Employees during COVID 19 with recent developments

The corona virus pandemic had plunged the nation into a state of lockdown. The lockdown has disrupted the economic activities across the country in an unprecedented manner and have rendered the working population into a state where they can not go to their respective places of work as they used to under ordinary circumstances.        

With now a sense of normalcy retuning in the face of systematic unlocking the country, the businesses which suffered the most are trying to find firm ground to stand on.       

But what does it entail for the employers and the employees both. Whether the employers are under any compulsion to pay their employees during the lockdown of they are not reporting to their work places. To this effect the following points are highlighted:-

1. On March 20, 2020 the Labour Ministry issued advisories to the employers’ associations not to terminate their employees (especially precarious workers) and reduce wages for their absences. The advisory assumes a legal dimension when it says:-
2. if the workers take leave during the lockdown period they should be “deemed to be on duty without any consequential deduction in wages.
3. Further if the place of employment is to be made non-operational due to COVID-19, the employees of such unit will be deemed to be on duty.
4. On March 24, the Home Ministry invoked the National Disaster Management Act, 2005 (NDMA) and the Epidemic Diseases Act, 1897 (EDA) and clamped a national lockdown for 21 days from March 25 which further was extended on 14^th April to continue to operate till 3^rd May, 2020.       
5. Initially, a couple of State governments issued orders for a limited period. The governments of Telangana and Delhi in Government Orders dated March 22, invoked Epidemic Diseases Act, 1897 to issue lockdown during March 22-31, and directed that this period shall be treated as a paid holiday for all employees in the shops and establishments (for Telangana) and in all the private establishments (for Delhi).
6. The government of Maharashtra has ordered (31 March) that all workers (including contract, temporary and daily-wage) in private factories and shops and establishments shall be deemed to be ‘on duty” and be paid full salary and allowances during the lockdown period.         
7. On March 29, the Government of India, to effectively implement the lockdown order and to mitigate the economic hardship of the migrant workers issued an order under Section 10(2)(1) of the NDMA. It directed the State governments and the Union Territories (SGs/UTs) to issue orders, compulsorily requiring all the employers in the industrial sector and shops and commercial establishments to pay wages to their workers at their workplaces on the due date without any deduction during their closure due to lockdown.
8. According to Section 51(b) of the NDMA, non-compliance with the directives issued under it will be punishable with fine and/or imprisonment.
9. The “no work no pay” judicial principle cannot be invoked in the present circumstances. So the employers cannot deduct wages for absences due to national lockdown.           
10. The government of Karnataka has allowed the employees affected by the coronavirus to avail 28 days of paid leave under the ESI Act by securing a certificate from the ESI-hospitals and those not covered under the ESI Act can avail paid sick leave and others under Section 15(3) of Karnataka Shops and Establishments Act, 1961.
11. On March 30, the Ministry of Skill Development and Entrepreneurship ordered all the establishments to pay full stipend to the designated and trade apprentices engaged by them during the lockdown period.
12. None of the notifications legally restrains employers from firing workers, though those industrial establishments (registered factories, mines and plantations) employing 100 or more workers need to take prior permission from the appropriate government to do so.           
13. On May 15, the SC had passed an interim order in the petitions filed by Hand Tools Manufacturers Association and Jute Mills Association that no coercive action should be taken against the petitioners for non-compliance of the MHA direction.
14.  On June 4, while reserving orders in the case Ficus Pax Pvt Ltd vs Union of India and connected cases, a bench comprising Justices Ashok Bhushan, S K, and M R Shah had ordered that no coercive action should be taken against employers on the basis of the MHA direction to pay full wages amid lockdown.  
15. On 12/06/2020 The Supreme Court batted for negotiations between establishments and workers on the full payment of wages, regardless of the direction issued by the Ministry of Home Affairs on March 29, 2020 and passed various interim directions upon the method to be adopted for conciliation between the employees and the employers
16.  The Supreme Court further adjourned the matter to July and ordered that no coercive action should be taken against employers on the basis of the MHA direction to pay full wages amid lockdown.         

The interim directions are as follows:-

1. In case some employers can not pay the wages for 50 days or any other period applicable in a State then they need to start negotiation process with the employees. In event a settlement is arrived at, that may be acted upon by the employers and workers irrespective of the order dated 29.03.2020 issued by the Government of India, Ministry of Home Affairs.           
   1. Those employers’ establishments, industries, factories which were working during the lockdown period although not to their capacity can also take the above steps.
   1. The steps taken by the employers as stated above must be duly notified and publicized before the employees inviting their response and participation on it.
   1. The Central Government, all the States/UTs through their Ministry of Labour shall circulate and publicize the order of Supreme Court for the benefit of all private establishment for benefit of employers and employees.  
      
      

Conclusion

The governmental orders which mandated the payment of wages by employers even during the lockdown have now been put to the test before the judiciary and the legality of such orders and the legal provisions under which they are passed are yet to be decided by the judiciary. They are beneficial step in safeguarding the interests of the employees but for the employers a chord of balance has to be struck because their business also suffered during the global pandemic and the statutory compulsions only add up to their predicament.

The judiciary has to determine the legality of the direction of various governments which are hanging upon the throats of the employers to pay in full the wages/ salaries to their employees.  For the same it has to be kept in mind that the structure of business differs from one another, for instance a manufacturing sector requires a high operating cost and if they are  not able to produce during the lockdown then how can they can pay the wages and salaries. A traditional business involving sale of finished goods that operates on rental premises would have to pay the mandatory fixed rents despite the lockdown but as a result their business suffers during the lockdown, the payment of salaries to employees would become difficult.

Hence, the balance has to be struck by the employers and the employees by understanding the need of the hour and the present situation of the business. That since the stakeholders understand the business better than the government, the liberty to negotiate has been granted to them by the Supreme Court. If an agreement is struck about payment of wages for the lockdown period then it has to be followed. If not, then the employers can not be forced to pay the wages.

The employers are not supposed to pay wages till July , 2020 and no coercive action can  be taken against them and meanwhile the below measures can be followed :-

1. Negotiations between the employees and employers on the quantum and duration for which wages are to be paid.
2. In event a settlement is arrived at, that may be acted upon by the employers and workers irrespective of the order dated 29.03.2020 issued by the Government of India, Ministry of Home Affairs.       
3. The steps towards negotiation should clearly be conveyed to the employees.

You may contact me for consultation or advice by visiting Contact Us

You May Also Like:

Foreign National Prisoners Businesses which not being able to invoke Force Majeure during COVID 19 pandemic New economic package for reviving the economy How Is Covid 19 Impacting Life And Health Insurance Companies In India Payment to Employees during COVID 19 and position after National Disaster Management Act, 2005 in India Protecting the legal position and planning a successful defense after disruptions caused by COVID 19 pandemic