While extending the nationwide COVID-19 lockdown on Sunday, the Union government also effectively withdrew its previous order directing employers to mandatorily pay wages to workers.
“Whereas, save as otherwise provided in the guidelines annexed to this Order, all Orders issued by NEC under Section 10(2) of the Disaster Management Act, 2005, shall cease to have effect from 18.05.2020,” the guidelines by the Ministry of Home Affairs (MHA) stated. In the annexures, the order that mandates payment has been removed. This was first reported by the Business Standard.
In an order on March 29, the government had said, “All the employers, be it in the Industry or in the shops and commercial establishments, to 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.” This was issued under the Disaster Management Act.
On May 15, however, the Supreme Court had said that no coercive action must be taken against small industries who are unable to pay the wages. There may be small companies which are not earning and therefore unable to pay, the top court observed.
A bench of Justices LN Rao, SK Kaul and BR Gavai, hearing multiple petitions, observed that the MHA circular was an omnibus order and there was a larger question involved which needs to be answered. The top court issued notice on a plea of Hand Tools Manufacturers Association, comprising MSMEs seeking quashing the order asking private establishments to pay full wages to their workers during the ongoing lockdown.
The bench said there may be small industries, which are affected due to the lockdown as they can sustain for say 15 odd days but not more and if they cannot earn, how are they going to pay their workers.
It added that if the government does not help these small companies, then they will not be able to pay their workers.
MSMEs did receive some relief as part of the financial package announced by Finance Minister Nirmala Sitharaman, but many said it was inadequate.
Solicitor General Tushar Mehta, appearing for the Centre, said that he had a conference on the issue and needs to file a detailed response on the pleas. The Centre was given a week to file its response.
The Association of MSMEs said in its plea that the Ministry of Home Affairs had passed orders without due care and deliberation on the financial implications for employers.
The small industrial units warned that making full payments will lead to their closure, which, in turn, will cause permanent unemployment and adversely affect the economy.
They have said that such a blanket direction for payment of full salaries is arbitrary, unconstitutional and unsustainable.
With PTI inputs