Implications of labour measures enforced through Government Advisories/Directions/Circulars/Orders issued during lockdown period due to COVID-19 pandemic.
Keeping in view of the spread of novel Corona Virus (COVID-19) in India, its declaration as pandemic by the World Health Organisation (WHO), the Indian Government decided to treat this as a ‘notified disaster’. For which, it is necessary to take effective measures to prevent its spread across the country and for mitigation of the threatening disaster situation. Therefore, in exercise of powers under Section 6(2)(i) of the Disaster Management Act, 2005, the National Disaster Management Authority has decided to direct Ministries/Departments of Government of India, State Governments and State Authorities to issue appropriate measures.[1] Drawing such power, Ministries/Departments of the Government of India, State/UT Governments and State/UT Authorities have issued respective directive and orders in the interest of public. One offshoot of such multiple guidelines is the “Order” that prohibits “lay-offs/termination” and “deduction of wages” of workmen/employees.
Briefly, Ministry of Home Affairs, Government Order (“said Order”) directs all 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 of their establishments are under closure during the lockdown.[2] Firstly, the said order does not distinguish employees to workmen. Hence, using the term “workmen” validates intention to not cover employees under the directive. Secondly, the said order prohibits deduction of wages i.e. the employers cannot opt for temporary lay-off (allowing payment of half-the basic salary) which is “right of the employer” under the Industrial Disputes Act, 1947 in case of a “natural calamity”. Thirdly, an implication that establishments not closed during the lockdown, can lay-off and can deduct salaries of workmen not reporting to work. Subsequently, only directives/advisories/communications/notifications have been issued to the effect of “directing private employers to pay full wages/non-termination of employees” to substantiate the said Order.
Firstly, the reason for full payment of salary: Ministry of Finance, Government of India issued an Office Memorandum that order that in order to avoid any undue hardships under the prevailing extraordinary circumstances, it has been decided that where ever any such contractual, causal and outsourced staff of Ministries/Departments and other Organizations of Government of India, is required to stay home in view of lockdown order regarding COVID-19 prevention, as announced by various States/UT Governments, they shall be treated as “on duty” during such period of absence and necessary pay/wages to be paid accordingly. Such justification has been given towards payment of salaries to “Office attached to/of Government of India” and not to the private employees.[3] Ministry of Labour & Employment, Government of India, vide Demi Official Advisory stated “all the Employers of Public/Private Establishments are advised to extend their coordination by not terminating their employees, particularly causal or contractual workers from job or reduce their wages. If any worker takes leave, he should be deemed to be on duty without any consequential deduction in wages for this period. 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]
Secondly, the reason for no temporary lay-off: The termination of employee from the job or reduction in wages in this scenario would further deepen the crises and will not only weaken the financial condition of the employee but also hamper their morale to combat their fight with this epidemic.[5]
Thirdly, refusal to work and payment of wages: DPIIT Secretary vide Office Letter sought suggestions to Ministry of Home Affairs, for new activities to be allowed that are essential to improve the economic activity and provide liquidity in the hands of people. Out of which, one of the suggestions made reads as “All employers whose entity is allowed to operate, may be allowed to ask the labourers to report for duty. If labourers do not report for duty, no salary guarantee without work will be the responsibility of the employer”. Hinting, the need for Ministry of Labour and Employment to address concerns such as employees non-reporting to work (establishments rendering essential services).[6]
The Law of the Lockdown vs. Labour Laws in India
The Disaster Management Act, 2005 is an Act “with an objective to provide for the effective management of disasters and for matters connected therewith or incidental thereto.” By virtue of this Act, lockdown has been declared by the Central Government followed by myriad public notice, regulations, guidelines and directives that are deemed necessary to prevent the outbreak of such disease or the spread thereof. The fundamental question here – is there a statutory provision to support the directions of the Central or State Government with regard to “empowering themselves” to the effect of directing private employees to pay wages/non-termination of employees?[7] in the light of objective of this Act and Section 10(2)(l) [that empowers statutory bodies to lay down guidelines or directions to concerned Ministries or Departments of the Government of India, the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster]. It is pertinent to note here that, Section 72 of the Act, has an overriding effect on all other laws in force for the time being.
Separate Writ Petitions are filed by two firms and an MSMEs challenging the said Government Order/Impugned Notifications/Advisories as being violative of the following grounds. In order words, the Supreme Court shall adjudicate upon the following:
1. The employer and employee have fundamental right to carry on any occupation, trade or business, as enshrined under Article 19(l)(g) of the Constitution of India, the notifications/order stands violative of the right guaranteed under Article 19(1)(g) imposing unreasonable restrictions on the said right of the employer.
2. The said Government Orders are purely based on economic status of the two classes, therefore discriminatory and suffers from arbitrariness. Hence, it does not clear the test of constitutionality resulting in violation of Article 14 of the Constitution of India. Further, the said orders violate Article 14 and Article 39 of the Constitution, for being contrary to principle of “Equal Work Equal Pay” and also “No Work No Pay”.
3. Whether Government was right in issuing vague directions without specifying as to its applicability to employers of migrating workers, or is a blanket direction to all employers?
4. Whether the Govt. directions are reasonable as they were issued without intelligent care and deliberation and without considering the financial capacity of the employer to bear the burden of payment of salary to its workers without being any production? Are raised in matter of Instruments and Chemicals Pvt. Ltd. & Ors v. Union Of India.[8]
5. Whether the Government is not bound by the principle “where the law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy over there the law will in general excuse him and further, impossibility of performance is a good excuse”, as propounded by the Hon’ble Court in case of Supdt. Of Taxes v. Onkarmal Nathmal Trust.[9] [10]
Though Disaster Management Act, 2005 has an overriding effect, it does not bar the right of an employer to take a recourse under the Industrial Disputes Act, 1947 provided the criteria set under Section 2 (kkk), Section 2 (oo) and Section 25C to 25N are complied, in letter and spirit. However, Section 37 of the ID Act states that no suit, prosecution or other legal proceeding shall lie against any person for anything which is in good faith done or intended to be done in pursuance of this Act or any rules made thereunder, providing protection for action taken under the Act.
The said Government Order seeks full payment of wages to employees employed under establishments under closure during the lockdown. Thus, the payment of wages is expected to be made in full. Whether such direction is mandatory or a moral obligation is to be considered by the Supreme Court soon. The ‘financial capacity’ of the employer to bear the burden of payment of salary to its workers without being any production, forms an integral part for the case of an employer being coerced/compelled. Though the directives are silent on payment of wages to employees refusing to work employed in establishments rendering essential services, there is no statutory direction barring application of Payment of Wages Act, 1936 for deductions during absence from duty in such cases.
Violation and Penalty:
Under the DM Act, section 51 whoever “without reasonable cause” – (b) refuses to comply with any direction given by or on behalf of the Central Government or the State Government or the National Executive Committee or the State Executive Committee or the District Authority under this Act, shall on conviction be punishable with imprisonment for a term which may extend to one year or with fine, or with both….”
The Supreme Court in Alakh Alok Srivastava vs. Union of India[11], a PIL that also challenged the Government Orders during COVID-19 held that “We trust and expect that all concerned viz., State Governments, Public Authorities an Citizens of this country will faithfully comply with the directives, advisories and orders issued by the Union of India in letter and spirit in the interest of public safety.” Further, mentions that “An advisory which is in the nature of an order made by the public authority attracts Section 188 of the Indian Penal Code” in case of disobedience.
Conclusion:
On one hand, Advisories are mere directions and not mandatory and on the other hand, such unprecedented scenario poses hardships to employees as well as the employers. Thus, mutual understanding between employer-employee is likely to result in a befitting solution. Mediation as a dispute resolution mechanism must be preferred from the preliminary stage. Much is awaited from the hearing of SLP by the Supreme Court. It is likely that the Hon’ble Court will strike a balance – between supporting the employees/workmen and easing the burden on employers. Because if the situation is to persist, then Companies especially MSMEs will opt for lay-off/retrenchment or undergo liquidation/insolvency resolution process post-lockdown. It is legally advised not to opt for lay-off/deduction of wages in the given situation, the same has been stated in D.O. Letter issued by Home Secretary, Government of India reads as “I would again urge you to ensure compliance of the revised consolidated guidelines, and direct all concerned authorities for their strict implementation in letter and spirit without any dilution and to ensure strict compliance of lockdown measures.”[12]
Nonetheless, there is no statutory prohibition to opt for a lay-off/retrenchment/closure/deducting wages under relevant laws in case of impossibility of Employers to pay wages to employees if the Company is non-operational during the lockdown. However, the power to grant permission to that effect by the appropriate authority must be exercised with care and caution, ensuring strict compliance to criteria set under respective labour laws. Lastly, the Supreme Court has sought Centre to submit a “policy on record” (response) with respect to implementation of said Government Order, by the second week of May 2020. So, only TIME will TELL.
[1] National Disaster Management Authority, Policy & Plan Division, Order No. 1-29/2020-PP (Pt II) dated 24th March 2020.
[2] G.O No. 40-3/2020-DM-I(A), Ministry of Home Affairs, GOI. Available at: https://www.mha.gov.in/sites/default/files/PR_MHAOrderrestrictingmovement_29032020.pdf
[3]Office Memorandum, Ministry of Finance, Department of Expenditure, Government of India, dated 23.03.2020, Available at: https://doe.gov.in/sites/default/files/Payment%20of%20Wages%20to%20Outsourced_Contractual%20Staff%20-%20COVID%2019.pdf
[4] Ms. Kalpana Rajsinghot, Joint Secretary, Ministry of Labour & Employment issued D.O. No. M-11011/08/2020-Media dated 20.03.2020.
[5] Ibid.
[6]News report: https://www.outlookindia.com/newsscroll/india-to-get-going-again-15-industries-street-vendors-to-be-allowed/1800302
[7] Tehelka Bureau, Legal Obligations to Pay wages during a Lockdown, 07.04.2020. Available at: http://tehelka.com/legal-obligations-to-pay-wages-during-a-lockdown/
[8] Writ Petition available at: https://www.livelaw.in/pdf_upload/pdf_upload-373836.pdf
[9] (1976) 1 SCC 766
[10] In the matter of Nagreeka Exports Limited v. Union of India. Writ Petition accessed at: https://www.livelaw.in/top-stories/plea-in-sc-challenges-validity-of-government-order-directing-100-payment-of-wages-during-lockdown-by-commercial-establishments-155433; Note: Nagreeka Exports Limited withdrew its plea, however, similar grounds were contested by Ficus Pax Pvt. Ltd.
[11] MANU/SCOR/24122/
[12] Sri. Ajay Bhalla, IAS, Home Secretary, Government of India issued D.O. No.40-3/2020-DM-I (A) dated 19.04.2020.
This article is written by Sneha Vardhani, practicing Advocate at High Court of Telangana.
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