BACKGROUND
It goes without saying Lockdown has caused trouble in each of our lives, Presently we are going through the 3rd series of lockdown that has been imposed by the government on all of us. There have been few relaxations depending the zones which you fall but still starting and operating of the workplaces still has it hassles, due to this reason the prime question of the Employer & the Employee still remains – Are the employees entitled for the Salary for the months of April & May 2020? This is the time during which the employees haven’t been able to perfectly work for the company like they used to pre-lockdown.
This is a classic example of what we call a “Dharam – Sankat”, The Employers feel that even before the lockdown they have been facing crisis due to the slowdown in the economy and the Covid-19 has been the final bow which could lead to their final end. Same is the situation with the Employee/Laborer who himself was in a hand to mouth condition struggling for his survival by the merge salary.
So today we will be discussing some supreme court cases and central government notifications to clarify as what is the current rule laid by them. Pause.
When we were experiencing the first lockdown then during that time the Ministry of Home Affairs released a circular under section 10(2)(l) of the Disaster Management Act. Clause 3 of this circular said that
“iii. All the employers be it in the industry or in the shops and commercial establishments shall make payments of wages to their workers at their workplaces on the due dates without any deduction, for the period the establishments are under closure during the lockdown”
Because of this for the month of march mostly all the Employers paid the due salary of their employees.
Now after that, the Lockdown got extended till 3rd May 2020 and thereafter till 17th May 2020. Now that in most of the industries there has not been a single day of the work the question remains that is it reasonable by the central government to force the private employer to pay the salary by the powers conferred under the Disaster Management Act.
To quash this circular, 2 cases were filed in the Supreme Court of India.
CASES THAT HAVE BEEN FILED IN THE SUPREME COURT AGAINST THE CIRCULAR
- Ficus Pax Pvt. Ltd.
- Ludhiana Hand Tools Association
Both of them appealed that the circular is illegal and ultra vires and should be set aside moreover the subsequent notices issued by the state government by relying on this should also be set aside.
KARNATAKA BASTED FICUS PAX PVT LTD argued that the notification is ultra vires meaning thereby that the central government has no power to force a private entity to pay their workers salary for a period in which no work has been done by them
Yes, on humanitarian or ethical grounds the same can be done but nothing can be imposed on them through statutory provisions.
To strong-arm their argument, they had cited 2 Articles of the Constitution of India .
Article 14, which speaks about equality before the law. So in the light of this Article if we see the notification it seems very biased towards the Employee as during this difficult time when everyone is facing so many troubles. Even then this Notification the Employers and Employees are being treated differently. The Employers are supposed to pay to their Employees full salary despite the fact that absolutely no work is happening and in many cases, most of the work orders have been rejected and the future too holds a bleak picture for them.
It is clear that Employees are given privileged treatment. Moreover, this Notification generalizes all the workplaces and so is applicable even to the biggest MNCs to the smallest shops, the big industries might be able to sustain themselves as they have cash reserves but for Micro Small and Medium enterprises it becomes very much difficult to do so and such notification would do no good and would shove them towards bankruptcy.
The second Article that was mentioned was Article 19(1) (g) that provides to citizen right to the occupation, trade, business in India. Which gives everyone the right to have a lawful occupation for earning a livelihood with limited restriction. under this article Usually whenever a person runs an organization there is a contract between the Employer and the Employee which could be expressed or implied. Such contract states No Work means No Pay and so this should supersede everything else even the Notification of the central government, which directs the employer to pay the salary irrespective of the fact that no work is taking place.
In Ludhiana Hand Tools Association case it was stated that
The Notification will lead to a lot of companies getting into Insolvency as Employers are made to pay to their Employees full salary despite the fact that absolutely no work is happening and in many cases most of the work orders have been rejected and the future too holds a bleak picture for them. Such notification would intern lead to many cases of default in the payment of the salary and also increase the unemployment in the future.
They had also referred to the provisions of Retrenchment and Lay-Off the employees in cases of any Disaster as mentioned in the Industrial Disputes Act. So in such cases any provision of the Disaster Management Act cannot direct the Employer to pay the salaries despite the fact that no work is being done by the Employee.
A common argument used in both the cases was to direct the central government to use the fund of 1000s of crore which is lying in the ESI/PF Corpus as well as the PM Care fund to subsidise the salary to lessen the burden which currently all the MSMEs and other private establishments are facing. It was stated that “ There is no denying that the employees ought to receive their salary but why should the employee bear all the burden”
The matter was listed on 27th April 2020 before a three-judge bench comprising of – Justice NV Raman, Justice Sanjay Kishan Koul, Justice Br Gavai. The matter was further listed after two weeks on April 27, 2020, for further hearing.
The Supreme Court has Directed Attorney general Tushar Mehta to frame and submit a clear policy regarding this circular.
Usually, 7th March 2020 is the date on which the Salary has to be paid to all the workers but Supreme Court has given a time of 2 weeks to central government and the same would go till 14th or 15th May 2020 and till then the ambiguity shall remain.
AUTHOR: A lawyer by Profession and an Entrepreneur by passion.After gaining some experience in the field of litigation, She founded my own startup by the name of 'Conformite Legal Pvt. Ltd.'. It is a company registered as a startup with a Government of India and incubated by the Amity Innnovation Incubator. The services that we provide are unique and unconventional like we provide compliances to the organizations in the field of Sexual Harassment of Women at Workplace and Protection of Children from Sexual Offences and we have provided our services to many big organizations and MNC's throughout NCR. Presently, She is handling the Sexual Harassment Compliance of many organisations and also the External Member of the Local Complaints Committee, Faridabad. Advocate Madhuri Bakshi, Associate Bakshi & Associates
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