The spread of the dreaded coronavirus has led to serious disruptions across the globe, India being no different. The virus has caused an unprecedented and incalculable damage to the economies worldwide, a situation equated to the Great Depression 1921, and caused deaths of millions of people across the globe. It has led to such a situation that even day to day activity such as access to print media is difficult.
The lack of demand and consequent lesser production has resulted in loss of millions of jobs worldwide and apart from causing insurmountable damage to the social and economic conditions of the world. Among, all these pertinent issues which are being faced by people one of them being the effect of COVID-19 on businesses.
Even as the economy has virtually come to a standstill and people are being directed to remain quarantined in their respective homes, several employees and workers are either being retrenched/laid off from their jobs or are being sent on unpaid leave till the normalcy is restored citing financial crunch. A study by the Centre for Monitoring Indian Economy has claimed that as much as 27 million youth in the age group of 20-30 years have lost their jobs in April 2020 due to the nationwide lockdown to prevent the spread of Covid-19[i]. The COVID – 19 has had a deleterious effect on almost all the industries especially the aviation, hospitality, auto, IT sector being most affected ones.
- STATUTORY FRAMEWORK AND GOVERNMENT INTERVENTION
Due to the nationwide lockdown w.e.f 24th March,2020, almost all the business have been temporarily shut except perhaps those indulging in essential commodities and services; movement of people is restricted and there is little to none inter –state or cross border business which has in turn sharply affected the revenues of most the business and has thereby decreased their financial capacity, therefore in these business in order to maintain their solvency and taking into consideration lack of demand and consequent production, have told their employees or workers to either go on an indefinite unpaid leave or have retrenched their employment or in some way or other reduced their wages/allowances etc. Often these drastic measures have been taken in complete contravention of the terms of contractual terms of employment or/and statutory framework governing them.
India being a socialist welfare country has taken several proactive steps to safeguard the interest of both the employers and employees alike. Based upon skills and qualification, an employee may be a ‘worker’, ‘contractual, ‘freelance’ and so on and so forth. Pertinently, the relations between them are also governed according to the class to which they belong to, for example the Factory Act, 1948 is applicable for disputes between workmen and employer.
An employer has to mandatorily follow several laws and regulations, if applicable, such as the Mines Act, 1952, Equal Remuneration Act,1976, Codes of Wages Act, 2019, (hereafter, ‘Code’), Maternity Benefit Act, 1961, Indian Contract Act, 1872, Trade Union Act, 1926, Delhi Shop and Establishment Act, 1954 etc. These are basically social beneficial legislation and have been framed to ensure equality of bargaining power and have been enacted in furtherance of Directives Principles of State Policy such as Art. 39 of the Indian Constitution etc.
The Govt. realizing that many employees/workers were being terminated unjustly had to step in to protect the interest of the workers and consequently issued several notifications and guidelines from time to time, one of these are the Ministry of Labour and Employment letters dated 20.03.2020[ii] & 23.03.2020[iii] stating therein that employees should not retrench or reduce the wages of existing of workers/employees, however as these merely advisories and without any legal force, the Ministry of Home Affairs issued Order No. 40-3/2020-DM-I(A), dated 29.03.2020[iv] (hereafter, ‘MHA Order dated 29.3.2020’) in exercise of the its power conferred upon it by virtue of Section 10 of the National Disaster Management Act, 2000 (hereafter, ‘DMA’) which inter-alia states that –
“iii. All the 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 their establishments are under closure during the lockdown”
The enforcement of the above directions is vested with the concerned District Magistrate and Superintendent of Police making them personally liable for their effective implementation, further as per section 51 off the DMA non-compliance of any such directions passed under the Act is an punishable offence with imprisonment upto 1 year or fine or both which in certain cases can extend upto 2 years.
On Similar lines, the Noida District Magistrate has also directed that any worker or employee infected with coronavirus and in isolation for treatment will get 28 days of paid leave from their employers which will tantamount paid leave to their workers and labourers for the duration of the closure[v].
Following the MHA order dated 29.02.2020; various state govts have also issued similar guidelines such as Haryana[vi], Karnataka, Telangana[vii]etc. The state of West Bengal on 29.3.2020[viii] has also directed that the employers in industry or commercial establishment shall pay to its workers full wages without any deductions till the lockdown persists.
From a reading of afore-said MHA order dated 29.03.2020, it can understood that it shall be applicable only to ‘workers’ to whom ‘wages’ are paid, it mandates that employers ought to pay wages to them until the lockdown persist making no case for any exemption. In view of restrictions to curb the spread of COVID – 19, employers are advised to encourage employees/workers to work from home. However, it is a ground reality that these directions are not implemented by many employers and workers are being continued to retrenched. Further, as this notification is made applicable only to workers leaving the question wide open as to what would be the status of employees who are not ‘workers’, also the constitutionality validity of this order also seems to be quite debatable on several accounts such as whether the govt. can resort to section 10 of the DMA to issue such an omnibus order in the first place, whether such an order is arbitrary and discriminatory against the employers etc.
The words used in the MHA’s order such as ‘worker’, ‘wages’, ‘closure’, ‘industry’, ‘commercial establishment’ are not defined therein, thus one has can look into the definition provided under the various statue to understand its true import.
Section 2 (l) of the Factory Act, 1948 defines ‘worker’ ‘means a personemployed, directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer, whether for remuneration or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing processbut does not include any member of the armed forces of the Union;
Section 2 (c) of the Industrial Dispute Act, 1947 defines closure as ‘means the permanent closing down of a place of employment or part thereof’.
Similarly, the Code defines worker under section 2(z) as ‘means any person (except an apprentice as defined under clause (aa) of section 2 of the Apprentices Act, 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and includes working journalists…sales promotion employees’, it includes Police officers, Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957 employed in a supervisory capacity drawing wage of exceeding fifteen thousand rupees per month or employed mainly in a managerial or administrative capacity.
The Code also defines wages under Section 2(y) as ‘(means all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,— (i) basic pay; (ii) dearness allowance; and (iii) retaining allowance, if any……’ It excludes certain criteria such as house allowance, pension contribution, travel allowance etc.
The Code also defines ‘Employers’ under section 2(l) as “employer” means a person who employs, whether directly or through any person, or on his behalf or on behalf of any person, one or more employees in his establishment and where the establishment is carried on by any department of the Central Government or the State Government, the authority specified, by the head of such department, in this behalf or where no authority, is so specified the head of the department and in relation to an establishment carried on by a local authority, the chief executive of that authority’, it also includes legal representative of employer, contractor, establishment as defined under Factory Act or any person who has ultimate control over the affairs of the management’
The meaning of the word ‘Industry’ and ‘Commercial Establishment’ is defined under the section 2(j) of the Industrial Dispute Act and under section 2(5) of the Delhi Shops and Establishments Act, 1954 respectively and are not repeated herein for the sake of brevity. Apart from the definition of ‘worker’ and ‘wages’ provided above, the term has also being defined under various states and central laws such as the Payment of Wages Act, the Contract Labour (Regulation & Abolition) Act, 1970 etc.
Though, the meaning of the word ‘worker’, ‘wage’, ‘industry’, ‘commercial establishment’ has been defined under the various statues but are very vague and ambiguous. An employer who is alleged to have defied the order may argue that they any of these four essentials does not apply to them thus no violation has been committed by them, also further despite these directions being issued their enforcement is a matter of concern especially in unorganized sector wherein records of workers are often not properly maintained.
- JUDICIAL INTERVENTION
Due to the mass retrenchment of employees/workers several cases have been instituted in the form of PILs before the Hon’ble Supreme Court or the High Court seeking various reliefs such as declaration that the termination was illegal and consequent damages, directions to the Govt. to pass an ordinance, writ of mandamus to private employers directing them not to fire employees, constitutionality of Section 10 of the DMA etc.
One of among several PILs that have been filed before the Hon’ble Supreme Court is by National Information Technology Employees Sena
seeking welfare of IT/ITES/BPO/KPO employees and has inter-alia claimed the effective implementation of MHA’s order dated 29.03.2020; the Hon’ble Court has agreed to examine the afore-stated issue and tagged it along with others petitions. It is to note that Court has no power to direct reinstatement of an employee/worker especially when the contract is determinable in nature[ix], due to the specific bar enshrined section 41(e) R/w S. 14 of the Specific Performance Act, 1963 and at best it can grant damages/back wages for illegal termination, if established.
In sharp contrast to this, another set of PIL has been filed challenging the direction to pay full wages one of them being by Instruments and Chemicals Pvt. Ltd before the Hon’ble Supreme Court seeking the relief that the MHA’s order dated 29.03.2020 to pay full wages is violates Articles 14 and 19(1)(g) of the Constitution of India. On Similar lines, Ficus Pax Private Limited, a Karnataka based company, has also filed a Writ Petition bearing Diary No(s). 10983/2020 before the Hon’ble Supreme Court challenging the constitutionality of section 10 of the DMA and MHA order dated 29.03.2020 stating therein that the afore-stated order is unconstitutional for being violative of Article 14, 19(1)(g), 39 of the Constitution, the same was listed before the Apex Court on 27.4.2020 wherein the Hon’ble court has sought the response of the Solicitor General. However, in another petition on the identical issue the hon’ble Supreme Court in Indian Jute Mills Association V. Union of India, bearing Writ Petition (Civil) diary No. 11281/2020, and Hand Tools Manufacturers Association V. Union of India, bearing Writ Petition (Civil) diary No(s). 11193/2020, vide order dated 15.05.2020 has issued notice and granted interim relief to employers stating therein ‘No coercive action shall be taken in the meanwhile.’
The Kerala govt. citing financial difficulty had issued executive order on 23-04-2020 stating therein that govt. employees who are in receipt of a gross salary of above Rs. 20,000/- shall be subjected to a deferment of a small portion of their salary, the afore-stated order was challenged by way of writ petition before the Hon’ble Kerala High Court, bearing W.P(C) TMP No.182 OF 2020, wherein the Court has stayed the operation of the executive order and has opined as under –
‘16. Payment of salary to an employee is certainly not a matter of bounty. It is a right vested in every individual to receive the salary. It is also a statutory right as it flows from the Service Rules. Right to receive salary every month is part of the service conditions emanating from Article 309 also
17. In State of M.P Vs. Ranojirao Shinde [AIR (1968) SC 1053], it has been held that right to a sum of money is ‘property’. In the decision in Deokinandan Prasad Vs. State of Bihar & others [AIR 1971 SC 1409], it has been held that right to receive pension is a property and the same cannot be taken away or withheld by a mere executive order. If, right to receive a sum of money is a property right W.P(C) TMP NOS.182, 183, 184, 196 & 198 OF 2020 21 and if pension, which is only a deferred salary, cannot be withheld without authority of law, it needs no elaborate consideration, at this stage atleast, to hold that salary or any portion of it cannot be withheld/deferred/denied, by the State Government, without authority of law. Article 300A of the Constitution of India which confers a constitutional right to property, will include within its purview, salary also, as a property right, atleast prima facie…[x]’
The Bombay High Court in relation to the MHA order dated 29.03.2020 has opined in Align Components Pvt. Ltd. and another Vs. Union of India, bearing Writ Petition No.10569 of 2020, that those workers in the state of Maharashtra who do not report to duty where lockdown is not in force, the management is entitled to deduct proportionate wages thereof, the relevant extract is reproduced herein below –
‘8. It is clarifed that since the State of Maharashtra has partially lifted the lock down recently in certain industrial areas in the State of Maharashtra, the workers would be expected to report for duties as per the shift schedules subject to adequate protection, from Corona Virus infections, by the employer. In the event such workers voluntarily remain absent, the Management would be at liberty to deduct their wages for their absence subject to the procedure laid down in Law while initiating such action. This would apply even to areas where there may not have been a lock down….’
In the light of afore-stated on going judicial developments, it would be safe to conclude that the higher judiciary, which is already functioning in limited capacity and conducting its proceedings through video conferencing, has become of hub of PILs.
- CONCLUSION
It is difficult to say with certitude as whether the employers can avoid paying full wages to their workers or if the workers were wrongly retrenched by their employers, primarily due to lack of authoritative judicial precedent. All in all, it is quite certain that once the lockdown is lifted and normalcy of courts is restored, several cases are going to instituted either seeking declaration that their termination was illegal and consequent damages and/or arrears of wages from the employers.
[i]The same has extracted from article published by economic times, available at https://economictimes.indiatimes.com/news/economy/indicators/unemployment-rate-dips-to-23-97-data-from-cmie-shows/articleshow/75689370.cms?from=mdr , last visited on 12th May, 2020 on 10 am.
[ii]Available at https://labour.gov.in/sites/default/files/Central_Government_Update.pdf, last visited on 12th May, 2020 on 10 am.
[iii]Available at https://ksandk.com/wp-content/uploads/2020/03/Ministry-of-Labour-and-Employment-Requests-Organisations-to-Not-Terminate-or-Deduct-Wages-of-Their-Employees-or-Contract-Workers.pdf , last visited on 12th May, 2020 on 11 am.
[iv]Available at https://www.mha.gov.in/sites/default/files/MHA%20Order%20restricting%20movement%20of%20migrants%20and%20strict%20enforement%20of%20lockdown%20measures%20-%2029.03.2020.pdf, last visited on 12th May, 2020 on 10 am.
[v] An extract of the DM’s order is available at https://economictimes.indiatimes.com/news/politics-and-nation/28-day-paid-leave-for-covid-19-patients-factory-shop-workers-to-get-daily-wage-for-lockdown-period-noida-administration/articleshow/74870185.cms?from=mdr , last visited on 12th May at 12 pm.
[vi] Available at http://www.nhmharyana.gov.in/WriteReadData/userfiles/file/CoronaVirus/Advisory%20for%20private%20establishments%20for%20not%20terminating%20the%20services%20of%20employees%20-%20COVID-19_23_03_2020.pdf , last visited on 11th May, 2020 at 11 am
[vii] Available at https://covid19.telangana.gov.in/wp-content/uploads/2020/03/Circular-Memo-No-2122-GAD-2020-Telangana-Government.pdf , last visited on 11th May, 2020 at 11
[viii] Available at https://wb.gov.in/COVID-19/OC5.pdf , last visited on 13th May at 11 am.
[ix] See judgement rendered by Hon’ble Delhi High Court in ‘GE Capital Transportation Financial Services V. Shri Tarun Bhargava’ bearing RFA No. 294/2004.
[x]Available at https://images.assettype.com/barandbench/2020-04/ff8e2588-f09a-4037-b5ca-ad35af5cfb91/KERALA_VYDYUTHI_MAZDOOR_SANGHAM_vs__STATE_OF_KERALA_AND_ORS____KERALA_HC_ORDER.pdf , last visited on 10th May, 2020 at 1 pm.
