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COVID-19: Employer & Employees Should Settle wages dispute by themselves

CA Pradeep Kumar Rajput 
on 19 June 2020

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On 24 March 2020, the Government of India under Prime Minister Narendra Modi ordered a nationwide lockdown for 21 days, limiting movement of the entire 1.3 billion population of India as a preventive measure against the COVID-19 pandemic in India. It was ordered after a 14-hour voluntary public curfew on 22 March, followed by enforcement of a series of regulations in the country's COVID-19 affected regions.

On 29th March 2020 the Ministry of Home Affairs (MHA) issued an order under section 10 of the Disaster Management Act 2005. Through that order MHA obligated all the employers be it Industry, Shop or Commercial Establishment to make the payment of wages of their employees during the lockdown in spite of the fact that they are working or not.

After the order of MHA writs were filed by different employers, employers' associations questioning the orders issued under Disaster Management Act, 2005 and other consequential orders issued by different States where directions have been issued that all the employers be it in the industries or in the shops, commercial establishment, shall make payment of wages of their workers, at their work place, on the due date, without any deduction, for the period their establishments are under closure during the lockdown.

COVID-19: Employer and Employees Should Settle wages dispute by themselves

Apart from challenging the orders petitioners Contention/demands were that the:

  • That section 10(2)(l) of Disaster Management Act, 2005, has also been questioned and the Central Government cannot direct the private employers to make full payment of wages to the employees during the period of lockdown
  • Directions have also been sought to subsidise 70 to 80 percent of the wages for the lockdown period by utilising funds collected by Employee State Insurance Corporation or the PM Cares Fund or through any other Government funds/schemes
  • Impugned notifications are arbitrary, unreasonable, and contrary to the provisions of law including Article 14, & Article 19(1)(g) of the Constitution of India.
  • Because of this order stable and solvent industrial establishment can be forced into Insolvency and loss of control of Business.
  • The Home Secretary, Ministry of Home Affairs, cannot invoke Section 10(2)(l) or any other Section of Disaster Management Act,  2005, to impose financial obligations on the Private Sector.
  • Some counsel have also raised the submissions that the order dated 29.03.2020 was issued only with regard to migrant labour and the scope of order should not be extended to cover the entire workforce of the establishment. Further, the order dated 29.03.2020 was not a direction to the employer but it is an order to the State/UT Government and other statutory bodies to take necessary action and this is the violation of Article 14 and Article 19(1)(g) and Article 300A.
  • The order to compelled to not only continue to retain their migrant workers but also their regular workers and also pay full wages at a time when the business is effectively closed, and there is no income arbitrary and unreasonable
  • That all industries and private establishments have different financial capacity, circumstances and all establishments cannot be grouped in one category for issuing a direction to pay wages to its employees during lockdown period and in possibility cannot be directed by any executive action. Some of the petitioners have come forward with the prayer that they are ready to pay 50 percent wages during the said period. Some of the learned counsel have also submitted that they are also negotiating with their workers regarding payment of wages during the preiod of lockdown and some of the workers have re-joined their work.

Employees, different employees' unions, namely All India Central Council of Trade Union, Trade Union Centre of India and few other employees' organizations also join the proceedings as interveners:

 

Government Interveners Contention

  • Order dated 29.03.2020 can certainly be traced to inter alia Section 10(1) and nothing under Section 10(2) restrict the ambit or scope of Section 10(1). The order dated 29.03.2020 was fully in conformity with the provisions, schemes of Disaster Management Act, 2005.
  • The direction dated 29.03.2020 was issued in public interest by the Competent Authority. The directions are neither arbitrary nor capricious. The ground of financial hardship, incapacity which has been pleaded by the petitioner is legally untenable ground to challenge the direction issued by competent authority in exercise of statutory power
  • The Union of India issued the above direction as a temporary measure to mitigate the financial hardship of the employees and workers especially contractual and casual workers during the lockdown period. The measure was proactively taken by the respondent to prevent perpetration of financial crisis within the lower strata of the society, labourers and employees. Directions issued by the Government of India where an economic and welfare measure as a benevolence in the object sought to be achieved.
  • By order dated 17.05.2020, the National Executive Committee has revoked its earlier impugned directions w.e.f. 18.05.2020, hence, the order remain in operation only for 54 days. The impugned notifications have been outlift their lives, the adjudication of the same would only entail an academic exercise.
  • It is further stated that right to wages is a pre-existing right which flows inter alia from the contract of employment as well as broader constitutional and statutory scheme flowing from Article 14 and 21 of the Constitution and encompassing Payment of wages Act, Minimum Wages Act, The Contract labour (Regulation and abolition) Act and the Industrial Disputes Act, 1947. Nationwide lockdown and resultant closure of the workplace directly affected the sustenance and livelihood of members of the Employees Union. All measures taken by the Government of India are within its legislative competence. The prayer of the petitioner to utilize the ESIC fund has been refuted.
  • orders dated 20.03.2020 and 29.03.2020 were issued in larger public interest to prevent the possible spread of the disease.
  • The Government of India has offered Economic Stimulus package to all Small and Medium Industries to enable them to cope with the current financial situation so as to ensure that they can cope with the burden of payment of wages and continue to be viable.
  • The Disaster Management Act, 2005, is a self- contained code and no reliance can be placed on any other law. Further by virtue of Section 72 of Disaster Management Act, 2005, all other enactments are overridden. It is further submitted that order impugned seeks to reinforce the pre-existing right of the worker to get their wages without any reduction. The Payment of Wages Act of 1936 has also been referred to in support of their submission.
 

Supreme Court Analysis and Order:

  • It is true that the orders dated 29.03.2020 which was passed in exercise of power under Section 10(2)(l) of the Disaster Management Act, 2005, stood withdrawn by subsequent order dated 17.05.2020 and the obligation cast on the employer to make payment of wages of their workers at their workplace, without any reduction, for the period their establishments are under closure during the lockdown is no longer in operation. However, the issue regarding obligation of the employer as per order dated 29.03.2020 when it remained in force is still to be answered  especially when the petitioners challenges the order as ultra vires to Disaster Management Act, 2005, as well as violative of Article 14, 19(1)(g) and Article 21. The petitioners have also prayed that Section 10(2)(l) of Disaster Management Act, 2005, be declared ultra vires to Article 14 and Article 19(1)(g), in event, it is interpreted in conferring authority to the Central Government to direct the employers of the Private establishments to pay wages of their workers during the lockdown period.
  • In the counter affidavit There are no reply to the other grounds raised in the writ petitions to attack the order dated 29.03.2020.
  • We are of the view that all issues raised by the petitioners and the respondents have to be decided together and the piecemeal consideration is not warranted.
  • In some of the writ petitions, this Court had already passed an order for not taking any coercive action against the employer
  • There can be no denial that lockdown measures which were enforced by the Government of India had serious consequences both on employers and employees.
  • The period of Unlock having begun from 01.06.2020 and even prior to that some of the industries were permitted to function by the Government of India by different guidelines, most of the industries and establishments have re-opened or are re-opening, require the full workforce.
  • All industries/establishments are of different nature and of different capacity, including financial capacity. Some of the industries and establishments may bear the financial burden of payment of wages or substantial wages during the lockdown period to its workers and employees. Some of them may not be able to bear the entire burden. A balance has to be struck between these two competitive claims. The workers and employees although were ready to work but due to closure of industries could not work and suffered. For smooth running of industries with the participation of the workforce, it is essential that a via media be found out. The obligatory orders having been issued on 29.03.2020 which has been withdrawn w.e.f. 18.05.2020, in between there has been only 50 days during which period, the statutory obligation was imposed. Thus, the wages of workers and employees which were required to be paid as per the order dated 29.03.2020 and other consequential notification was during these 50 days.
  • In most of the industries, factories and establishments, the workers are represented by Trade Unions or other Employees associations. The State is also under obligation to ensure that there is smooth running of industrial establishment and the disputes between the employers and employees may be conciliated and sorted out.
  • It cannot be disputed that both Industry and Labourers need each other. No Industry or establishment can survive without employees/labourers and vice versa. We are thus of the opinion that efforts should be made to sort out the differences and disputes between the workers and the employers regarding payment of wages of above  50 days and if any settlement or negotiation can be entered into between them without regard to the order dated 29.03.2020, the said steps may restore congenial work atmosphere.

Supreme Court Issued the interim measures which can be availed by all the private establishment, industries, factories and workers Trade Unions/ Employees Associations etc. which may be facilitated by the State Authorities:

  • The private establishment, industries, employers who are willing to enter into negotiation and settlement with the workers/employees regarding payment of wages for 50 days or for any other period as applicable in any particular State during which their industrial establishment was closed down due to lockdown, may initiate a process of negotiation with their employees organization and enter into a settlement with them and if they are unable to settle by themselves submit a request to concerned labour authorities who are entrusted with the obligation under the different statute to conciliate the dispute between the parties who on receiving such request, may call the concerned Employees Trade Union/workers Association/ workers to appear on a date for negotiation, conciliation and settlement. In the 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
  • Those employers' establishments, industries, factories which were working during the lockdown period although not to their capacity can also take above steps
  • The private establishments, industries, factories shall permit the workers/employees to work in their establishment who are willing to work which may be without prejudice to rights of the workers/employees regarding unpaid wages of above 50 days. The private establishments, factories who proceed to take steps as per directions (i) and (ii) shall publicise and communicate about their such steps to workers and employees for their response/participation. The settlement, if any, as indicated above shall be without prejudice to the rights of employers and employees which is pending adjudication in these writ petitions.
  • The Central Government, all the States/UTs through their Ministry of Labour shall circulate and publicise this order for the benefit of all private establishment, employers, factories and workers/employees.
  • In the event, any settlement is entered between the employers and employees in the establishments which are before us, an affidavit giving details shall be filed by next date of hearing.

More to come on last week of July 2020.


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