Payment of wage for lockdown period – Supreme Court directs negotiation & settlement

Payment of wage for lockdown period – Supreme Court directs negotiation & settlement with workers/employees

ABCAUS Case Law Citation:
ABCAUS 3320 (2020) (06) SC

Payment of wage for lockdown period

In the instant case, several writ petitions had been  filed by  different employers, employers’ associations questioning the orders issued  under  Disaster Management Act, 2005 and consequential orders issued by different States directing 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. 

Also, the vires of Section 10(2)(1) of the Disaster Management Act, 2005, was also challenged in event, Section 10(2)(1) is interpreted as conferring power to Central Government to direct the private employers to make full payment of wages to the employees during the period of lockdown. In few of the writ petitions, directions had been sought to subsidise70 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.

As per the leading Petition, the petitioner was a MSME company whose business after the lockdown period was reduced to 5-6 percent. According to the Petitioner the order dated 29.03.2020 and the D. O. dated 20.03.2020 was violative of Article 14, Article 19(1)(g)of the Constitution of India.

In counter affidavit, the Govt. of India stated that the impugned notifications and D. O. have been withdrawn by the Union of India. Further, it was stated that D.O. dated 20.03.2020 issued by Secretary, Ministry of Labour and Employment, to the Chief Secretaries of all the States was an advisory and an order was issued on 29.03.2020 by National Executive Committee in exercise of powers under Section 10(2)(l) of Disaster Management Act, 2005.

It was submitted that when the authority  had declared a lockdown, it was also  liable  to  provide for the consequences of the lockdown. In event, the order dated 29.03.2020 struck down, the very lockdown order will be arbitrary and it is also liable to be struck down. 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.

It was submitted that 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 was 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 was also referred to in support of their submission.

The Hon’ble Supreme Court required the Govt. to file a detail counter affidavit and listed the case in the month of July 2020.

However, the Hon’ble Supreme Court acknowledged that the lockdown measures enforced under the Disaster Management Act, 2005, had adversely effectted the employers alongwith employees.

The Hon’ble Supreme Court opined that in view of the different nature, 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.

The Hon’ble Supreme Court opined that undisputedly, both Industry and Labourers need each other as    No Industry or establishment can survive       without employees/labourers and vice versa. 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 Govt. order dated 29.03.2020, the said steps may restore congenial work atmosphere.

The Full Bench directed the following 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: –

(i)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 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.

(ii) Those employers’ establishments, industries, factories which were working during the lockdown period although not to their capacity can also take steps as indicated in direction No.(i).

(iii)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.

(iv) 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

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