No action against employers not paying wages during lockdown

The Supreme Court today has ruled out penalties against employers who refuse to pay wages to their employees for 54 days during the lockdown period. The government had issued a notification on March 29 directing companies to pay for the lockdown period.

"No coercive action against employers till July last week," said the top court. Employers and employees should talk and sort out the matter, it added.

A bench comprising Justices Ashok Bhushan, Sanjay Kishan Kaul, and M.R. Shah asked the employers to negotiate a settlement with their employees. "There can be no denial that lockdown measures which were enforced by the Government of India had serious consequences both on employers and employees," observed the bench.

The court said that the companies that operated during the lockdown but not on full strength should hold settlement talks with their employees.

"It cannot be disputed that both industry and laborers need each other. No industry or establishment can survive without employees/laborers and vice-versa. We are thus of the opinion that efforts should be made to sort out the differences and disputes between the workers and the employers regarding payment of wages of above 50 days and if any settlement or negotiation can be entered into between them without regard to the order dated March 29, the said steps may restore congenial work atmosphere," the top court said.

The bench asked the government to file a detailed reply on petitions challenging the notification within four weeks. The bench will conduct further hearing on the matter in the last week of July.

The apex court noted that in case the talks failed, parties could approach the Labor Department, which could facilitate a settlement, but efforts should be made to settle disputes between workers and employers.

"Some of the industries and establishments may bear the financial burden of payment of wages or substantial wages during the lockdown period to its workers and employees. Some of them may not be able to bear the entire burden. A balance has to be struck between these two competitive claims," said the top court.

The top court emphasized that the private establishments and workers sit together to negotiate to settle disputes relating to wages. The bench also asked state governments to facilitate such settlements and submit reports before the labor commissioners.

The top court emphasized that "piecemeal consideration" cannot be made, and Centre and state governments should circulate court order through labor departments to facilitate settlements.

"The state is also under obligation to ensure that there is smooth running of industrial establishment and the disputes between the employers and employees may be conciliated and sorted out," noted the court.

The bench noted that workers who are willing to work should be allowed to work notwithstanding disputes regarding wages.

The court added that in event a settlement is arrived at, that may be acted upon by the employers and workers irrespective of the March 29 order issued by the Ministry of Home Affairs (MHA).

The petitions were filed by a Punjab-based collective of 41 small-scale organizations, urging the court to set aside the March 29 MHA order.

The petitioners had challenged the constitutional validity of Section 10(2)(i) of the Disaster Management Act, 2005. Punjab-based Ludhiana Hand Tools Association claimed that the March 29 MHA order under the Disaster Management Act, 2005, was violative of Articles 14, 19(1)(g), 265 and 300 of the Constitution and that it must be "struck down".

The petitioners maintained that Section 25M of the Industrial Disputes Act provided for the right to layoff workmen due to natural calamity..