The
The Order has resulted in a number of public interest litigation ("PIL") filings both challenging the legality and validity of the Order (as well as central ministry and state government advisories in furtherance of the Order, as relevant to the specific petitioner), as well as decrying non-compliance and seeking its enforcement.
1. Public Interest Litigation by Employers
PIL petitions challenging the Order (and relevant advisories) were filed before the Supreme Court in
- The Order is beyond the scope of powers granted to the government under the DMA. The DMA empowers committees to frame plans to meet disasters and allocate funds for emergency response / mitigation, but does not authorize the government or the DMA committees to direct private employers to pay full wages to employees.
-
The Order is discriminatory and violative of the right to equality under Article 14 of the
Constitution . It effectively only upholds the rights of employees while ignoring the rights of employers, whereas the economic rights of both groups have been affected by the pandemic. It also violates the "equal work, equal play" principle by not differentiating between workers who are working during lockdown (in businesses under exemption) and instead arbitrarily expands the scope to all workers. - The Order will force employers into insolvency, given their excessive financial burden, and thus violates the constitutional right to trade under Article 19(1)(g).
- It contravenes the Industrial Disputes Act, 1947 ("IDA", a special employee welfare legislation) which specifically contemplates the right to layoff workmen due to natural calamity upon following the required procedure.
-
The petitions have also suggested: (a) utilization of the unclaimed
Provident Fund deposits; and (b) subsidizing 70 - 80% of lockdown wages using funds collected by theEmployees' State Insurance Corporation ("ESIC"), thePM Cares Fund , or other government scheme.
The petitions were heard on
2. Public Interest Litigation by exempt organisations
Certain businesses which were permitted to continued operations during lockdown (being exempt, as "essential goods / services") have also raised challenges to the Order. Their basis for challenge may become increasingly relevant across organisations and industries as relaxations are introduced on the lockdown.
- In Align Components Pvt. Ltd Vs.
Union of India , theBombay High Court on30 April 2020 declined to intervene in a petition for relief from paying full wages on the basis that a similar issue is under consideration before the Supreme Court (see point 1 of this note). The petitioner had suggested payment of 50% of wages, as manufacturing activities have been restricted under lockdown. Notably, however, the Court stated that since the lockdown has been partially lifted for industrial activities in certain areas, employers are at liberty to deduct wages (subject to following procedure under law) for workers voluntarily remaining absent. This will also apply to areas where there may not have been a lockdown. -
Petition filed on
1 May 2020 (and currently pending) before the Supreme Court byTeknomin Construction Limited (work contractors for mine development) sought subsidization of 70% wages with funds from government schemes (ESIC,PM Cares Fund etc.). Highlights of the challenges to the Order are as follows:- Despite their lockdown exemption, securing workers for continued mining operations has been problematic. The PIL relies, and requests application of, the
Bombay High Court order (above) that allowed wage deduction of absentee employees in areas where restrictions are relaxed. -
The Order itself is challenged as violative of Articles 14 and 39 of the
Constitution , specifically the principles of "equal work, equal pay" and "no work, no pay", as it does not differentiate between workers who report to work during the lockdown and those who do not. - The DMA does not empower the government to enforce financial obligations upon private establishments. While under the DMA the government can requisition resources for rescue operations, this requires payment of compensation. The ultimate onus of any compensation towards workers under the DMA lies on the government and cannot be shifted to private employers.
-
It is the obligation of the state to provide financial assistance to workers during lockdown, as is the practice is several other countries. The Order violates Article 300A of the
Constitution by interfering with and dispossessing the employer of his property other than by procedure established by law. - The petitioner should be entitled to lay-off and retrench workers under the provisions of the IDA in the event of a natural calamity, and the government cannot legally override contracts between employers and contract labour and restrain termination of contracts.
- In fact, the amounts paid to workers cannot be treated as "wages" per the definition under the IDA - they are at most an advance payment adjustable against future wages or lay-off / retrenchment compensation.
- The Order was issued without inviting objections and not in a fair, reasonable and transparent manner, and the government accordingly acted unilaterally and arbitrarily without following the principle of natural justice.
- Despite their lockdown exemption, securing workers for continued mining operations has been problematic. The PIL relies, and requests application of, the
3. Public Interest Litigation by Employee Bodies
Media industry: Multiple journalist organizations have moved the Supreme Court with a PIL against media houses and trade bodies for wage cuts, unpaid leave, layoffs and closure of business in violation of the Order and labour ministry advisories in support of the Order. The PIL particularly cites that the media industry is exempt from the lockdown as an "essential service" and journalists are eligible to work through the lockdown. The PIL also claims violation of the retrenchment and business closure procedure under the IDA (which requires government approval, retrenchment compensation etc.), the Working Journalists Act, 1955 as well as their contracts of service.
The matter was heard on
IT/ITES/BPO sector: A
Takeaways
The petitioners across the various PILs have made compelling cases in respect of the legality and validity of the Order, and the economic burden that it imposes on struggling industries at a time when business is closed off.
From a strictly legal perspective, the DMA does not provide the government with the statutory scope to direct private employers to pay wages during a disaster, and the legality of the Order is also questionable from a constitutional perspective (being potentially arbitrary, discriminatory and violative of fundamental rights to equality, trade and property). Further, the Order also contravenes the special labour law - the IDA, which permits termination of employees upon following the established procedure (specifically including during a natural calamity). To that extent, this administrative issuance is on tenuous ground.
While the
That said, from a humanitarian perspective, the need to financially support workers through the pandemic is unquestionable (and perhaps the
The government, when placing its policy on record before the Supreme Court, should consider realistic avenues of discharging this financial obligation (such as via existing or new government schemes, wage subsidies and furlough, payroll loans etc.), rather than placing the burden squarely and solely on employers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
BTG Legal
BTG Legal
804 Lodha Supremus
Dr.E.Moses Road Worli
400 018
Tel: 222482 0801
E-mail: practicemanager@btg-legal.com
URL: www.btg-legal.com
© Mondaq Ltd, 2020 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source