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Non-payment of wages amid COVID crisis- SC says to negotiate and settle

June 23, 2020

The Supreme Court of India on June 12, 2020 in the matter of Ficus Pax Private Limited v. Union of India[1] passed a set of interim directions for establishments addressing the most crucial issue of payment of wages amid COVID 19 pandemic.

The Ministry of Home Affairs (hereinafter referred to as ‘MHA’) had earlier passed an order/ notification on March 29, 2020 which stated that employers should ensure payment to their employees during the period of lockdown[2]. However, with the extension of the said lockdown and with industries not functioning in a regular manner, it had become impossible for the employers to comply with the said order.

MHA in this regard, had earlier explained that financial incapacity cannot be a reason to challenge the impugned notification. The notification was issued to prevent human suffering and was a provisional step taken to mitigate financial constraints arising upon the employees especially those who were hired on a temporary basis.

The said MHA order was challenged by the Petitioners in the instant case stating that the impugned MHA order was violative of the fundamental right to trade and business of the employers. The order was in force for 54 days starting March 29, 2020 till it was withdrawn eventually on May 18, 2020.

SC says settlement between employers and employees must be carried out

Addressing the significant issue of non-payment of wages and dispute arising between employers and employees amidst the COVID crisis, the Hon’ble Supreme Court said that “No industry can survive without workers, thus settlement between employers and employees must be carried out.” Accordingly, the Supreme Court passed the following interim directions:

  1. Private establishments, employers, industries are now allowed to initiate a process for negotiation and settlement with their employees/ workmen for the period of closure during the lockdown as applicable in the respective state. If the settlement cannot be carried out by them, the establishments can approach the labour authorities for such settlement. Once the settlement is arrived at, the same may be acted upon irrespective of the MHA order dated March 29, 2020.
  2. The above measure of settlement is also made applicable on those establishments which were not functioning in their full capacity.
  3. The settlement shall be without prejudice to the rights of the employers and employees which is pending in the writ petitions already made by them. The private establishments shall permit the workers who are willing to work without prejudice to their rights regarding unpaid wages of above 50 days.
  4. The Government shall take all measures to publicise and circulate this order to secure the benefit of both establishments and employees. The said circulation has to be carried out through Ministry of Labour.

These interim measures provide a big relief to the establishments/ employers who were continuously slapped with multiple complaints and litigations due to non payment of wages. However, the Supreme Court also took into consideration the plight of the workmen who were facing extreme financial difficulties. The provision of settlement shall now at least resolve the existing disputes and would assist in reaching an amicable position which could be beneficial for both employers and employees.

The instant case will now be taken up in the last week of July and till then no coercive action can be taken against the employers for non- payment of wages in furtherance of the MHA order.

[1] WPC Diary No. 10983 of 2020

[2] https://www.ssrana.in/articles/ministry-of-labour-advises-organizations-extend-support-employees-lockdown/

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