Monday, September 25, 2023

Quash MHA Circular For Full Payment Of Wages During Lockdown: Karnataka Based Company To SC

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A Writ Petition has been filed in Supreme Court by Karnataka Based Company ‘Ficus Pax Private Limited’ challenging the constitutional validity of Notification issued by Central Government to pay full wages of workers during the lockdown period. 

The petition filed by Advocate-On-Record Mr Jeetender Gupta seeks direction to declare the notification issued by the Ministry of Home Affairs ultra vires Article 14, 19(1)(g) of the Constitution of India and seeks subsidizing of the wages of workers to the tune of 70-80% for lockdown period by utilization of the funds collected by the Employees’ State Insurance Corporation (ESIC) or the PM Cares Fund.

The writ petition has been filed by the petitioner challenging the constitutional validity of the following notifications:

Advisory issued by Ministry of Labour & Employment on 20th March 2020: The advisory was issued to all Chief Secretaries of States and UTs, requesting them to issue necessary Advisory to Employers and Owners of all establishments in the state, to extend their cooperation by not terminating their employees, particularly casual or contractual workers from job or reduce their wages. According to the advisory, if any worker takes leave, he should be deemed to be on duty without any consequential deduction in wages for this period and if the place of employment is to be made non- operational due to COVID-19, the employees will be deemed to be on duty.

Order of Ministry of Home Affairs on 29th March 2020:  The Ministry of Home Affairs then issued a government order dated March 29th invoking its powers under the Disaster Management Act, 2005 stating that all employers whether in factories or in shops or in any form of commercial establishments will have to pay wages to their workers on the due date and amount cannot have any reduction owing to the closure of the workplace. The Order further directs the States / UTs to take necessary action for the violation of the Said Order

The Petitioner is a company engaged in the business of packaging for several essential items such as pharmaceuticals, food products etc with 11 factories spread across 7 States, and had employed 176 permanent workers and 939 contract workers in all its factories. The Petitioner has already paid the wages to all workers including contractual workers for the month of March 2020, and has been permitted to operate during the lockdown period in terms of guidelines by Ministry of Home Affairs. The operations are however limited only to support production of some essential.

According to the petitioner, there are many workers who are not reporting to work hoping that they will continue to get wages for lockdown period in terms of impugned notifications, as the notifications do not differentiate between the workers who report to work and the workers who refuse to work, when it comes to entitlement for wages for lock down period as concerned, thereby being contrary to the principle of “Equal Work Equal Pay”.

The petition has been filed challenging the notifications on the following grounds:

Notifications are arbitrary and illegal: Because of the impugned notifications, an otherwise stable and solvent industrial establishment, especially an MSME establishment, can be forced into insolvency and loss of control of business, making arbitrary, illegal, irrational, unreasonable and contrary to provisions of law.

Contrary to principle of Equal Work Equal Pay” and also “No Work No Pay: The notifications does not differentiate between the workers who are working during the lock down period in establishments such as the Petitioner who have been permitted to operate during the lockdown period thereby violating principles of Article 14 and Article 39 of the Constitution of India, being contrary to principle of “Equal Work Equal Pay” and also “No Work No Pay” for it.

Wrongful invocation of Disaster Management Act 2005: The Government of India cannot invoke Section 10(2)(l) or any other provision of the Disaster Management Act 2005 to impose financial obligations on private sector such as payment of wages, contrary to the obligation of state under Article 43 of Constitution of India.

Responsibility of Government: The Central Government in terms of Section 46 of DMA 2005 has the power to constitute National Disaster Response Fund for meeting the expenses for emergency response, relief and rehabilitation and has the power to constitute National Disaster Mitigation Fund for the purpose of mitigation, under section 47. The Central government has the power to allocate fund for emergency response, relief, rehabilitation, mitigation of disasters under DMA 2005. Therefore, the ultimate onus for any compensation towards workers shall ultimately be of the Government and cannot be shifted upon the employers in private establishments.

Causing financial hardship to industrial establishments: The government cannot be permitted to cause financial hardship to industrial establishments by compelling them to pay “Wages” without getting any work done from the employees during the lockdown period.

Government should not compel the employers : The Government should not compel the employers to pay for the wages for lockdown period and should instead utilize the funds collected by the Employees’ State Insurance Corporation (ESIC) in terms of Section 46 of the Employees’ State Insurance Act, 1948 

The funds can be utilized to make periodical payments to workers who are undergoing preventive treatment as a part of the lockdown period against COVID-19. 

Subsidizing the wages of the workers for the lockdown period:  The petition states that while empathizing with the workmen and doing whatever is possible to support them, the ultimate responsibility to provide a financial package or grant so as to subsidize the wages of workers lies with the Government. The government should subsidize the wages of the workers for the lockdown period, especially for the employers under the MSME Sector to the tune of 70-80 percent, taking example from other countries like Australia, Canada & UK etc

Establishments will be forced into insolvency: If the notifications are implemented for entire lockdown period, many MSME establishments would be forced into insolvency and loss of control of business as they will be compelled to pay for manpower during the shutdown without receiving any substantial revenue from their customers, thereby hampering the right of the petitioner under Article 19(1)(g).

Many establishments failing to bear the financial burden and hardship may have to close their businesses. The very notifications issued for the benefit of the workers might end up adversely impacting those workers who would be rendered unemployed.

-India Legal Bureau

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