Employers are obliged to pay wages during lockdown period

KR Shyam Sundar | Updated on April 13, 2020

“No work no pay” principle cannot be invoked here. A March 29 GOI order makes it clear that deduction of wages during the lockdown will be construed as a legal offence

On March 20, the Labour Ministry issued advisories to the employers’ associations not to terminate their employees (especially precarious workers) and reduce wages for their absences, among others. Curiously, the advisory assumes a legal dimension when it says: if the workers take leave during the lockdown period they should be “deemed to be on duty without any consequential deduction in wages…Further if the place of employment is to be made non-operational due to COVID-19, the employees of such unit (sic) will be deemed to be on duty.”

On March 24, the Home Ministry invoked the National Disaster Management Act, 2005 (NDMA) and the Epidemic Diseases Act, 1897 (EDA) and clamped a national lockdown for 21 days from March 25. It ordered closures of commercial and private establishments, industrial establishments, all transport services, educational institutions exempting essential services. However, migrant workers, provoked by the absence of work and income and possibly ejections from their residential spaces, began a panic exodus, violating the national lockdown order.

Legal basis

Initially, a couple of State governments issued orders for a limited period. The governments of Telangana and Delhi in Government Orders dated March 22, invoked EDA to issue lockdown during March 22-31, and directed that this period shall be treated as a paid holiday for all employees in the shops and establishments (for Telangana) and in all the private establishments (Delhi). The government of Maharashtra has ordered (31 March) that all workers (including contract, temporary and daily-wage) in private factories and shops and establishments shall be deemed to be ‘on duty” and be paid full salary and allowances during the lockdown period.

On March 29, the Government of India, to effectively implement the lockdown order and to mitigate the economic hardship of the migrant workers issued an order under Section 10(2)(1) of the NDMA. It directed the State governments and the Union Territories (SGs/UTs) to issue orders, compulsorily requiring all the employers in the industrial sector and shops and commercial establishments to pay wages to their workers at their workplaces on the due date without any deduction during their closure due to lockdown.

Further, the SGs/UTs were directed to take necessary action against those violating these orders. According to Section 51(b) of the NDMA, non-compliance with the directives issued under it will be punishable with fine and/or imprisonment.

Further, the “no work no pay” judicial principle cannot be invoked in the present circumstances as neither the employers offer work nor the workers are able even if willing to report for work. ovid-affected workers are rendered ineligible to work. So the employers cannot deduct wages for absences due to national lockdown.

Further, the government of Karnataka has allowed the employees affected by the coronavirus to avail 28 days of paid leave under the ESI Act by securing a certificate from the ESI-hospitals and those not covered under the ESI Act can avail paid sick leave and others under Section 15(3) of Karnataka Shops and Establishments Act, 1961. On March 30, the Ministry of Skill Development and Entrepreneurship ordered all the establishments to pay full stipend to the designated and trade apprentices engaged by them during the lockdown period.

So there is a legal basis for payment of wages to the workers, at least during the lockdown, contrary to the argument made by an article by Anand Gopalan in this paper.

Open to interpretation

The sole reason for the GOI order is the economic hardship of the migrant workers, but the eventual substantive legal order required payment of wages to all employees, not just the migrant workers. Further, while the order directs non-levy of rents by the landlords for a ‘month’, it directs the employers to pay full wages “for the period” during which the establishments are under closure during the lockdown.

Does this mean that the wages could be paid pro-rata as per the lockdown period and not for the entire month? Should the order be construed for March and/or April, since the lockdown covers parts of both months? Since the NDMA does not define workers, which law’s definition of workers should be used under this order? Will the employees, including the supervisory, administrative and managerial staff who are generally excluded from the definition of workers in the Industrial Disputes Act, 1947 (the ID Act) be included or not?

While these are fine legal issues which require attention by the lawmakers, human values and norms will mean that the order may be liberally interpreted to pay wages and salaries to all. However, the MSMEs may not have the capacity to comply with the government orders and need wage subsidies. Further, none of the notifications legally restrains employers from firing workers, though those industrial establishments (registered factories, mines and plantations) employing 100 or more workers need to take prior permission from the appropriate government to do so.

The writer is Professor, HRM area, XLRI, Jamshedpur

Published on April 13, 2020

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