COVID-19 PANDEMIC AND THE PAYMENT OF WAGES ACT
Author : Aishwarya Jain, 2nd Year L.L.B (Hons.), Amity Law School, Noida
Abstract
The global pandemic called Covid-19 impacted the entire world tremendously. On March 23, 2020, the Indian government issued a nationwide lockdown order after notifying it as a “notified disaster” on 14th March, 2020. The workplace has been significantly impacted by the pandemic, according to the International Labour Organization. In addition to posing a risk to public health, the economic and social turmoil also compromises the long-term livelihoods and general well-being of millions of individuals.
The Ministry of Labor and Employment released a directive on March 20, 2020, urging all employer associations not to fire employees or reduce worker wages due to the lockdown that was currently in place due to numerous state restrictions.
Because of India’s federalism, both the apex government and the states have implemented emergency measures. The Ministry of Labor and Employment released a directive on March 20, 2020, urging all employer associations not to fire employees or reduce worker wages due to the lockdown that was currently in place due to numerous state restrictions. After the government made this announcement, the governments of various states, including West Bengal, Maharashtra, and Delhi, used the 1897 Epidemic Diseases Act which did a complete lockdown.
However, the majority of these initiatives have been implemented without following a consultation procedure, and their reach is sector-specific and fragmented. As a result, these policies only cover a small portion of the nation’s labour force and fall short of fully ensuring every worker’s fundamental entitlement to social security. These initiatives could only cover a bleak portion of India’s labour population and hence could not keep up with the fundamental right to socially secure all the labours.
Keywords: Covid, Labour Law, Payment of Wages, Social Security, Unorganised Labour,
I. INTRODUCTION
The government is bound under our Constitution to make every effort to guarantee that workers have a decent standard of living and can actively participate in social, cultural, and recreational activities. The minimum rate of pay for a variety of jobs was established by the 1948, Minimum Wages Act. The Act’s primary goal is to guarantee equitable treatment to those with scheduled labour by establishing a minimum salary for them. In addition, the 1936 act in question ensures that workers receive their pay checks on date and without any unlawful deductions other than those allowed by the Act.
Labor-related statutes, the Industrial Disputes, Payment of Wages, Contract Labour, and Inter-State Migrant Workers, among others, regulate wage payments to employees.
If the layoff continues for more than 45 days, no earnings are payable. The Ministry related to Work and Employment appears to have purposely issued an advice rather than a formal rule or directive demanding wage payment during lockdown.
There appeared a notable influx of migrant workers hoping to return to their homes as the country struggled with a statewide lockdown. Understanding that this mass labourer exodus would increase the risk of viral transmission, the federal government moved through the Department of Domestic Affairs to address the situation. As per the DM Act’s section 10 (2) (l), they issued an order on March 29, 2020- ” This instruction directed states and union territories to take a number of actions, such as providing meals and temporary accommodations for migrant workers who had either fled or were stuck in those districts.[1]
The order issued on March 29, 2020, aimed to alleviate the financial difficulties faced by migrant workers. The directive required states and union territories to take action to ensure that hiring managers in a variety of businesses, outlets, and commercial enterprises pay their workers in entirely during the period of lockdown, without withholding any wages, while their businesses were closed. Consequently, all employers were obligated to make prompt and full wage payments to their employees, regardless of whether they were unable to work or provide services during the lockdown period. In addition, the regulation forbade landowners from collecting rent from migrant labourers living in rented housing, which was in line with the goal of supporting these people during this difficult time.
II. PAYMENT OF WAGES ACT, 1936
An important piece of Indian legislation, the Payment of Wages Act, 1936, attempts to guarantee that workers engaged in a variety of businesses and establishments receive their payments on time and in full. The Act includes provisions to safeguard workers’ rights and establishes a legal framework for wage payments. The Payment of Wages Act’s principal goal is ” to control how much particular categories of workers are paid,” according to the preamble. This suggests that the Act aims to create a framework that controls how much wages are paid to particular groups of employees.
The following are the Payment of Wages Act’s main objectives:
- On-time wage payment: The goal of the Act is to guarantee that employees get paid on schedule. It outlines the deadline for paying salaries, which is often within a predetermined window of time following the conclusion of the pay period.
- Complete and accurate payment: The Act attempts to guarantee that employees get the entire and accurate number of wages to which they are legally entitled. It forbids unlawful wage deductions and establishes limits on allowable deductions, such as those for provident fund contributions or income tax obligations.
- Accountability and transparency: The Act encourages accountability and openness in the payment of wages. It mandates that wage records be kept up to date and that employees get wage slips that clearly outline the various components of their pay.
- Grievances pertaining to wages: The Act gives employees a way to file grievances pertaining to wages. It defines the function of labour inspectors and lays out the steps for resolving conflicts in labour courts or other suitable forums.
The Payment of Wages Act, in its entirety, attempts to safeguard workers’ interests by guaranteeing the timely and correct payment of wages, discouraging unlawful deductions, and putting in place procedures for resolving wage-related issues. It encourages social and economic justice for Indian workers and contributes to the development of a just and equitable wage payment environment.
III. PLIGHT OF THE LABOURERS
The COVID-19 pandemic posed significant challenges for labourers in India, particularly concerning their wages. Lockdowns and other measures taken to contain the virus caused a great deal of monetary chaos, which in turn caused unemployment, shortened workdays, and financial difficulties for a large number of employees.
A major issue faced by labourers was the loss of income due to job losses or the inability to work during the lockdown period. Daily wage labourers, migrant workers, and those in the informal sector were particularly vulnerable to these circumstances. With limited or non-existent savings, many workers found it difficult to meet their basic needs and provide for their families.
To compound matters, some employers resorted to unauthorized wage deductions as a cost-cutting measure, worsening the financial strain on workers. These deductions involved reducing wages, delaying payments, or withholding the full amount owed to employees. Workers in the informal sector were especially susceptible to such practices due to the absence of formal employment contracts and limited access to social security benefits.
Enforcing labour laws and ensuring timely wage payments became challenging during the pandemic. Regulatory authorities faced constraints in monitoring compliance and addressing violations due to resource limitations and a high volume of cases. This created an environment where unscrupulous employers could exploit vulnerable workers and deny them their rightful wages.
To alleviate the plight of labourers, the Indian government implemented various measures. These included financial assistance schemes, such as cash transfers and food distribution programs, to provide relief to affected workers. Additionally, labour welfare schemes were reinforced to protect workers’ rights and ensure the prompt payment of wages.
Despite these efforts, the impact of the pandemic on labourers’ wages in India was significant, exposing pre-existing vulnerabilities and gaps in the labour market. This emphasized the need for stronger social safety nets, improved enforcement of labour laws, and enhanced support for workers during times of crisis.
IV. PETITIONS TO THE SUPREME COURT OF INDIA
The aforementioned Order was revoked on May 18, 2020, a full 50 days later.
The Small-Scale Industrial Manufacturers Association, an employer’s association, and individual businesses filed 18 claims against this order on the grounds that it failed to distinguish between businesses that were required to cease operations during the lockdown and those that could continue, that this had financial ramifications for the employers, and that it violated the principle of compensation against work. [2]
Numerous pleas were submitted to the Supreme Court, raising concerns about the legality of the MHA Order. A Karnataka-based company, filed an opposition contesting the legitimacy of the MHA Order and a March 20 recommendation issued by the Ministry of Labour and Employment. The petitioner argued that these actions were against the Indian Grund norm’s Articles 14 and 19(1)(g) and also the notion of equality in payment for equal load of work.
The contention was that the order and advisory failed to differentiate between workers covered by the order and those who continued to work during the lockdown. The petitioners claimed that many industries were already financially strained due to the pandemic and the lockdown, and being required to pay full wages would push them towards insolvency.[3]
Certain petitioners argued that employers should receive a subsidy from the government, amounting to “70 to 80 percent of wages for the duration of the lockdown,” utilizing funds from sources, examples include the Employee State Insurance Corporation, the PM Cares Fund, and various other government funds or schemes.[4]
V. SUPREME COURT’S PERSPECTIVE
A Supreme Court decision has prompted employers and labour organizations to hold talks over wages paid during the lockdown. The highest court has instructed entrepreneurs, private sectors, and companies to try to reach agreements with their personnel and/or personnel about the reimbursement of salaries through an interim order. These negotiations would cover the time frame beginning on May 18, 2020, or any other time frame that applies in certain states where the shutdown caused the closure of their manufacturing establishment(s). In an earlier order in the applications filed on 4th of June of the Covid year, the federal and state governments were directed not to use pressure to compel any private employers who failed to pay their staff members and/or personnel their full salary during the shutdown.
The government’s admin was also sent a notice by the highest court in the nation, and its representatives responded with a counter-statement articulating its reasons, which would be considered in all of the court’s petitions. The Supreme Court subsequently issued an order on the fourth of June the year 2020, prohibiting compulsion and broadening that restriction to all employers.
In support of the Central Government, the India Attorney General argued that the Home Affair Ministry direction’s issuance was intended to minimize hardship among people during the countrywide shutdown. The Attorney General further argued that the directives contained in the order were meant to serve as a stopgap to ease the monetary strain that workers and employees—especially those with contract and casual employment—were facing during the shutdown. In its counter-affidavit, the Ministry of Home Affairs (MHA) stated that the corporations’ claims of financial incapacity did not serve as a valid basis for challenging the MHA Order.
The matters were scheduled for an orderly announcement on June 12, 2020. In its ruling, the highest court in the nation said that “no sector could thrive without its staff members and managers” and included the following provisional directions, with the assistance of the relevant state authorities:
- The bargaining procedure with the workers’ association can start for employers who are willing to work with their employees or staff members to reach an agreement over their salaries during the lockdown or while their operational establishment(s) were shut. Employers may, by a deadline set by the labour authorities, request conciliation from the appropriate labour authorities, who are tasked with mediating such disputes, if a settlement cannot be achieved. Regardless of the Home Affair’s Regulation, a settlement can be implemented by both employers and employees.
- Additionally, establishments, industries, and factories that operated to some extent during the lockdown period, albeit not at full capacity, can also follow the guidelines provided in direction No. (i).
- Managers are urged to hold talks with staff members and share their projects with them, asking for input and active involvement. It is crucial to stress that during the court’s adjudication process, these settlements do not impair the privileges of business owners or personnel.
- Companies must guarantee that the temporary shutdown does not impair individuals’ or interested personnel’s entitlement to unpaid compensation while permitting workers and/or willing workers to resume their activities in the place of employment.
- The federal, state, and union territory governments are responsible for publicizing and promoting Supreme Court orders, with the goal of ensuring that all employers, workers, and employees are informed and benefit from them.
The issuance of this Order was driven by the government’s commitment to safeguarding the welfare of workers during the lockdown and to prevent the widespread migration of workers lacking financial resources.
The highest court has often emphasized that minimum wages are a need rather than a reward and that an employer who cannot afford to pay the bare minimum must close their business. According to the court in the Ficus Pax case, the right to wages is an innate one that derives, among other things, from the employment contract as well as a more comprehensive constitutional and statutory framework that includes the Payment of Wages Act, the Minimum Wages Act, the Contract Labour (Regulation and Abolition) Act, and the Industrial Disputes Act, 1947. These frameworks flow from Article 14 and 21 of the Constitution.[5]
On May 15, 2020, the High Court of India, while hearing several petitions on the subject through video conference, ordered the Central Government to refrain from taking any form of force against businesses and employers who were unable to pay their workers or employees in full during the nationwide lockdown.[6] Later, all of the challenges were combined, and in its order of May 26, 2020, the Supreme Court cited the previously mentioned ruling and it noted that the MHA Order, which required businesses to pay workers’ or employees’ full wages, was an omnibus order and that there was a more significant issue that needed to be resolved.
VI. CONCLUSION
The interim directives from the Supreme Court have granted employers the flexibility to consider the potential impact of the lockdown on their businesses. Employers are required by law to provide compensation or renumeration to their personnel and staff, but they also have a moral obligation to take care of employees’ financial needs and safeguard their safety while there is a pandemic. In a same vein, the authorities owe society an equivalent duty.
From the government’s point of view, treating every organization similarly may seem irrational, regardless of their type of company, the effect of the epidemic, or financial gains. The Supreme Court’s strategy is workable and practical. Businesses are expected by the governing body and the highest court in the land to follow the court’s orders and take proactive steps to resolve conflicts peacefully, even though they are free to discuss and come to settlements with those they employ.
The highest Court-mandated settlement process gives the parties concerned a chance to come to agreements that take into account real-world issues unique to the business or establishment. This can promote unity, reinforcing the connections among both employers and staff or employees themselves, and cultivating an atmosphere in which workers are more inclined to share the load of maintaining the business or sector throughout these trying times.
[1] Payment of Wages during Covid; https://www.mondaq.com/india/employment-and-workforce-wellbeing/929816/payment-of-wages-during-period-of-lockdown-implemented-to-contain-covid-19
[2]Industrial Relations; https://industrialrelationsnews.ioe-emp.org/industrial-relations-and-labour-law-september-2020/news/article/india-supreme-court-decision-on-the-payment-of-wage-during-the-lockdown
[3] Supreme Court on MHA order; https://www.businesstoday.in/latest/economy-politics/story/supreme-court-quashes-mha-order-to-pay-full-salaries-during-coronavirus-lockdown-258536-2020-05-18
[4] Industrial relations; https://industrialrelationsnews.ioe-emp.org/industrial-relations-and-labour-law-september-2020/news/article/india-supreme-court-decision-on-the-payment-of-wage-during-the-lockdown
[6] Indian Jute Mills Association & Anr., vs. Union of India & Ors. 2020; Hand Tools Manufacturers Association vs. Union of India & Ors.; https://www.mondaq.com/india/employee-benefits–compensation/959246/supreme-court-order-on-payment-of-wages-during-the-lockdown-period-
