Employer Vs Employee: Balancing Of Competing Equities

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Life seemed normal till COVID 19 struck the globe. Who could have imagined that in the 21st century, the world would suffer a pandemic for which there would be no cure, no vaccine and even the world’s top most doctors would express their helplessness. The virus was first identified in Wuhan, China sometime in December 2019 and slowly engulfed the entire globe. As per the BBC reports, more than 100 countries implemented lockdown in various forms and with varying degrees to contain the spread of the virus to protect their citizens. 

In order to combat the challenge of COVID 19, the Ministry of Labour & Employment first issued a D.O. dated 20.03.2020 vide which all employers of the public/private establishments were inter alia advised not to terminate their employees, particularly casual or contractual workers from jobs or reduce their wages. It was further advised that if the place of employment is to be made non-operational on account of Covid-19, the employees would be deemed to be on duty. This was followed by an Order bearing no. 40-3/2020-D dated 24.03.2020 by the Ministry of Home Affairs under Section 6 of the Disaster Management Act, 2005 vide which all government/public offices, commercial and private establishments, industrial establishments, educational institutions were to remain closed and services like transport and hospitality were to remain suspended. The lockdown was extended from time to time till it was substantially relaxed save as in containment zones. The nationwide lockdown and the resultant closure of the workplace created an unprecedented situation directly affecting the sustenance and livelihood of crores of employees/workers pan India. 

The Ministry of Home Affairs issued another Order dated 29.03.2020 under section 10(2)(1) of the Disaster Management Act, 2005 (the “Act”) which dealt with  inter state movement of large number of migrants. It was stated that in order to mitigate the economic hardship of the migrant workers, certain additional measures were required to be taken by the local authorities to ensure, amongst other, that “All the employers, be it in the industry or in the shops or commercial establishment, 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 said order dated 29.03.2020 was subsequently withdrawn by the Ministry with effect from 18.05.2020. 

It is important to note that by virtue of Section 72 of the Act, the provisions thereof have an overriding effect on all other enactments and instruments in force at the time the Act came into force. As per section 10(1) of the Act, the National Executive Committee, constituted under the Act, shall assist the National Authority in the discharge of its functions and have the responsibility for implementing the policies and plans of the National Authority and ensure the compliance of directions issued by the Central Government for the purpose of disaster management in the country. Section 10(2)(1) of the Act gives power to the National Executive Committee to “lay down guidelines for or give directions to the concerned ministries or departments of the Government of India, the state governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster”. Non-compliance with the directives issued under the Act is made punishable with fine and/or imprisonment as per Section 51(b) of the Act.

Several petitions were filed by the Employers both before the High Courts of various states as well as the Supreme Court challenging the Orders dated 20.03.2020 and 29.03.2020 of the government as being unreasonable, arbitrary, irrational, illegal and contrary to Article 14 and 19(1) (g) of the Constitution of India. The employers while questioning the vires of section 10(2)(1) of the Act stressed on the fact that provisions of the Act could not have been invoked to impose financial obligations on private sector for payment of wages when it is the duty of the state to provide relief to the workers. Another PIL was filed espousing the cause of both employers as well as employees which sought  the framing of a policy to mitigate the problem of the employees in the private sector as well as of the employers who are not in a financial position to maintain the employees.             

The employees also filed intervention applications supporting the stand of the government. It was  canvassed on behalf of the employees that the right to wages is a pre existing right flowing from the contract of employment as well as broader constitutional and statutory scheme flowing from Article 14 and 21 and encompassing various labour legislations. 

The issues thus brought before the apex Court no doubt involve interesting questions of law which are yet to be adjudicated upon. While the final decision on inter alia, the legality and constitutionality of the Orders passed by the government are yet to be determined, the apex Court in Ficus Pax Private Limited &Ors. v. Union of India & Ors  passed two orders to meet the exigencies faced by the employers and employees. In an order dated 04.06.2020, apex Court, much to the relief of the employers, directed that “no coercive action, against the employers, shall be taken pursuant to notification dated 29.03.2020.” However, in its order dated 12.06.2020, the apex Court observed that “It cannot be disputed that both Industry and Labourers need each other. No Industry or establishment can survive without employees/labourers and vice versa”. The Court noticed the fact that on account of the withdrawal of the order dated 29.03.2020 by the government w.e.f 18.05.2020, the controversy between the parties regarding the total number of days for which the wages/salaries had to be paid to the employees under the said order dated 29.03.2020 was limited to only fifty (50) days i.e. from 29.03.2020 till 17.05.2020. However to find a via media, the Court was of the view that efforts should be made to resolve the disputes and differences between the parties for payment of wages for 50 days and if any settlement could be arrived at, it would restore congenial atmosphere. 

The apex court therefore directed as an interim measure that private establishment, industries, employers desirous of entering into negotiations with their employees may do so and enter into a settlement and in the event of being unsuccessful may also take the assistance of the labour authorities who are entrusted with an obligation under various statutes to conciliate between the parties. The Court made it clear that settlement if any would be without prejudice to the rights and contentions of the parties in the pending writ.

Analyzing the stand taken by the rival parties before the apex court, it cannot be disputed that wages, being the source of livelihood of a worker, is part of the right to life and in view of Article 21, cannot be taken away except by authority of law. The Kerala High Court in a writ petition  while deciding the constitutionality of an executive order dated 23.04.2020 issued by the State Government observed that salary is a statutory as well as vested right of an individual and that right to receive salary every month was part of the service conditions emanating from Article 309. T.H.  Marshall, a renowned British sociologist in his essay titled “Citizenship and Social Class: And Other Essays: Cambridge (Eng.: University Press, 1950)” wrote that the social responsibilities of a state to its citizens are “from [granting] the right to a modicum of economic welfare and security to the right to share to the full in the social heritage and to live the life of a civilized being according to the standards prevailing in the society”. 

However, from the employers’ perspective it can be said that they too have a right to practise any profession, or to carry on any occupation, trade or business under Article 19(1)(g) of the Constitution and cannot be saddled with a huge financial liability when it is a known fact that no business was transacted during the lockdown period. Further the principle of “equal pay for equal work” and “no work no pay” also leans in favour of the employer. In the present circumstances, while there are countries which announced subsidies up to 70-80% of the average earnings, Indian government chose not to provide any wage subsidies to the employers pushing some of them to the brink of insolvency. Government of India while passing the Order dated 29.03.2020 also did not consider that all industries and private establishments are not on an equal footing financially and therefore cannot be grouped in one category for issuing directions to pay wages to its employees during lockdown period.  

It now remains to be seen as to how the apex court would balance the equities in order to provide succour not only to the employees alone but also to the employers while examining the constitutionality, legality and validity of the orders passed by the government. 

The Author is the Managing Partner of Jurisperitus Law Offices.

The post Employer Vs Employee: Balancing Of Competing Equities appeared first on India Legal.

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