SC Payment of wages
SC Payment of wages

Breaking: No coercive action to be taken against employers pursuant to March 29 MHA order on payment of wages, Supreme Court

Debayan Roy

The Supreme Court today ordered that no coercive action could be taken against employers with respect to the Ministry of Home Affairs (MHA) notification compelling payment of wages to employees amid the COVID-19 lockdown.

The Court also reserved its order on the validity of the MHA notification for June 12.

The order was passed by the Bench of Justices Ashok Bhushan, SK Kaul and MR Shah.

The Court was hearing a batch of petition including the one filed by Karnataka-based company Ficus Pax, challenging the constitutional validity of a March 20 notification by the Secretary (Labour & Employment) and clause III of the March 29 notification by the MHA, both of which compelled payment of full wages to workers and employees during the period of lockdown.

At the outset of today's hearing, the MHA submitted that the March 29 notification was a temporary measure for 54 days.

Attorney General for India KK Venugopal, appearing for the MHA, said,

"...people were migrating in crores, they wanted the industries to continue. The notification was to stop the workers which they only would if they are paid."

Venugopal submitted that the notification was brought in to prevent human suffering. Keeping aside its validity, it was a matter between employers and employees, the AG added.

At this point, Justice Bhushan sought to know,

"But your notification compelled the payment of 100% of can be around 50 to 75%. So the question is, do you have the power to get them to pay 100 per cent, and on their failure to do so, prosecute them?"

Justice Ashok Bhushan

Justice Kaul then pointed out that the government had not invoked the provisions of the Industrial Disputes Act while issuing notification. Under the Act, workmen who are laid off are entitled to 50% of total wages as compensation. "But you (MHA) directed 100%", Kaul J said.

In response, AG Venugopal said that the most appropriate thing would be to consider the humanitarian situation.

Justice Bhushan then said that negotiations have to take place between employers and workmen to ascertain what has to be done for the salary for these 54 days. Justice Kaul weighed in, saying,

"On one hand you say you’re trying to put money in the pocket of worker. So now, some negotiation is required for a solution."

Advocate Jeetender Gupta, appearing for Ficus Pax, submitted that the Labour Ministry's advisory asking establishments not to terminate employees or reduce their salaries, was not passed under the Disaster Management Act.

When the Court asked Gupta whether he agreed that negotiations have to take place between employees and employers, he said,

"Interim order of no coervice action should be extended to us, as labour officers are harassing us."

Justice Shah responded,

"You tell us, can you run an industry without labour? Therefore you have to strike a balance and this should not be tilted either on the side of the employer or the employee."

Justice MR Shah

Claiming that the company he represents carried out essential services, Gupta said that all in house workers have been paid salaries.

"...but why should I pay the 800 contract workers when no work is happening? There is a separate ESI fund which has 80,000 to 90,000 crores as surplus fund.

The government could have utilized 30,000 crore and paid the entire minimum wages to all workforce in the country...but they speak of 20 lakh crore..."

Senior Advocate KV Vishwanathan appearing for one of the MSME's challenging the March 29 MHA notification argued that not only was the impugned notification beyond the scope of Disaster Management Act but was violative of Article 14 of the Indian Constitution.

The act is called the Disaster management act. This covid is a disaster for all citizens. Union cannot discriminate and treat it As if, it is a disaster for one section and bonanza for another

Vishwanathan submitted

Vishwanathan further urged the court that during lockdown, industries have had no revenue generation and in that background, direction for "payment of wages without deduction was manifestly arbitrary."

"Employers will under pain of prosecution pay or go to jail...the industry will be will lead to closure and permanent loss of jobs..apart from loss to the economy," the senior lawyer submitted.

Next, Senior Advocate Indira Jaising made submissions on behalf of a labour union. She said,

"Who is the affected community? Advocate Gupta says he does not want to pay the contract workers. But they are those who were prevented from eating with no roof on their head. Ask them how much do they pay to their contract workers? What is their financial liability?"

Senior Advocate CU Singh made arguments on behalf of a workers' organisation. He said,

"If they have means, why should Supreme Court under Article 32 be called upon to interfere? As of now no prosecution has been initiated against any employer."

Justice Bhushan then asked Venugopal whether the Employees State Insurance (ESI) funds can be used to help workers. The AG responded that ESI funds cannot be redirected, but they can borrow from it.

The judge then asked the AG,

"There is a submission that this order was issued only for migrant workers, what do you say to that?"

Venugopal replied,

"It was not restricted. The main objective was that if they get paid then they need not migrate."

Ultimately, the Court reserved its order for June 12. It also ordered that no coercive action be taken against employers with respect to the MHA notification dated March 29.


Ficus Pax Payment of Wages order.pdf
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