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No coercive action against employers for violating order on payment of full wages for lockdown: SC

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New Delhi:  The Supreme Court on Thursday extended till June 12 the operation of its May 15 order asking the government not to take any coercive action against companies and employers for violation of its March 29 circular on payment of full wages to employees for the lockdown period.

The Ministry of Home Affair (MHA), in its circular, had asked all employers to make payment of wages to their workers without any deduction for the period their establishments were under closure during the lockdown to contain COVID-19.

The Secretary (Labour & Employment) had also written to chief secretaries of states to advise employers not to terminate employees from job or reduce their wages amid the challenging situation of the pandemic.

A bench of Justices Ashok Bhushan, S K Kaul and M R Shah expressed its concern over the MHA’s circular, saying that 100 per cent wage payment has been ordered with the direction that there would be prosecution of offending employers.

“We have reservations over this. Some discussion should be held to work out some solution for this period of time,” the bench said, adding that a balance has to be struck between wage payment for the lockdown period and protecting the industries.

“State may have to give small industries owners a hand. Negotiations need to be held industry to industry, workmen to workmen,” the bench said while reserving the verdict on batch of petitions.

In the proceedings conducted through video conferencing, the bench said there was a concern that workmen should not be left without pay, but there may be a situation where the industry may not have the money to pay and hence, the balancing was needed.

Attorney General K K Venugopal, appearing for the Centre, said as the people were migrating after the lockdown, the government came out with the notification to ensure that the workers are paid to help them in staying put at the work places.

The top law officer referred to the provisions of the National Disaster Management Act to argue the validity of the March 29 circular.

The bench asked the Centre whether it has the power to prosecute the employers for non-payment of 100 per cent wages to the employees in view of the fact that certain provisions of the Industrial Disputes Act have not been invoked,

“Some negotiations have to happen between employers and workmen to iron out what to be done for the salary for these 54 days (of lockdown),” it observed.

One of the firms, Ficus Pax, said that the work of the company has come to down to ten per cent and it has become an impossibility to pay the full wages.

The government could have utilized the ESI fund for paying entire minimum wages to all workforce in the country, a lawyer said.

Venugopal replied by saying that the money can be borrowed from the ESI fund, but cannot be redirected to pay the workers.

Senior lawyer Indira Jaising, appearing in one of the cases, said that the MHA’s direction should not be quashed and the workers needed to be paid full wages for the period of the lockdown.

The principle of no work no pay is not applicable in the present circumstances, especially when there is lockdown, she said.

At the end of the hearing, the apex court asked the parties to file written submissions in support of their claims and granted three days time to the Attorney General to submit a short note on the validity of the MHA”s notification.

The Centre also filed an affidavit justifying its March 29 direction saying that the employers claiming incapacity in paying salaries must be directed to furnish their audited balance sheets and accounts in the court.

The government has said that the March 29 directive was a “temporary measure to mitigate the financial hardship” of employees and workers, specially contractual and casual, during the lockdown period and the directions have been revoked by the authority with effect from May 18.

The top court, on May 15, had asked the government not to take any coercive action against the companies and employers who are unable to pay full wages to their employees during the nationwide lockdown due to the coronavirus pandemic.

The bench was hearing pleas including the one filed by Small Scale Industrial Manufacturers Association against the Centre’s direction.

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