No coercive action against employers unable to pay full wages: SC

NEW DELHI: In a huge relief to private companies, the Supreme Court on Friday said no coercive action can be taken against employers who fail to pay full wages to employees during the lockdown that was implemented to control the spread of covid-19.

The courts asked employers and employees to negotiate on wage payments for the 54-day lockdown period. The bench observed that both labourers and the industry need each other and should make efforts to solve the dispute mutually.

The court gave a slew of directions to states' labour departments to facilitate these negotiations. State governments needs to facilitate, initiate the process of settlement and submit a detailed report to the labour commissioners regarding this.

The Center has been given four weeks to file its reply on the question of legality and validity of the home ministry's 29 March notification that “all employers" have to pay full wages to their employees during the lockdown period.

The notification had said “employers, be it in the industry or in the shops and commercial establishments, shall 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."

The judgement was pronounced by a three-judge bench comprising Justice Ashok Bhushan, SK Kaul and MR Shah on a batch of petitions filed by more than 15 micro, small and medium enterprises (MSMEs) against the Centre's order.

On 4 June, the court had granted interim protection to private companies and said no coercive action will be taken against them.

Attorney general KK Venugopal had apprised the bench that the 29 March notification was a temporary measure. Since people migrated in crores, the notification was to mitigate their suffering and stop the workers from leaving, Venugopal added.

The top court said, “Your notification compelled the payment of 100% of salaries... It can be around 50 to 75%. So the question is, do you have the power to get them to pay 100%, and on their failure to do so, prosecute them?"

The bench had observed that some discussions should be held to find solutions, after negotiations with industries, and government should play the role of facilitator.

The petition filed by the MSMEs, challenging the 20 March advisory by the labour ministry and 29 March notification by the home ministry, said they should be allowed to pay the employees 70% less. They argued that the government should take care of the rest by utilizing the funds collected by the Employees’ State Insurance Corporation or the PM Cares Fund.

The petitioners said their business had been hit because of the lockdown and that being forced to pay workers in full caused extreme financial and mental stress on them.

(To be updated once court order is uploaded on the website)