Conundrums of Employers during COVID-19 lockdown By: Jayesh B. Dolia and RV Prabhat (Jayesh Dolia is an Advocate practicing before Madras High Court. He can be reached at doliajayesh@gmail.com; R.V. Prabhat is an Advocate practicing in Delhi High Court. He can be reached at rvprabhat9@gmail.com) During this ongoing COVID-19 crisis, many employers are facing queries as to whether they are obliged to pay salaries to their employees during the COVID-19 lockdown period and what are the repercussions if they do not do so.
By: Jayesh B. Dolia and RV Prabhat
(Jayesh Dolia is an Advocate practicing before Madras High Court. He can be reached at doliajayesh@gmail.com; R.V. Prabhat is an Advocate practicing in Delhi High Court. He can be reached at rvprabhat9@gmail.com)
During this ongoing COVID-19 crisis, many employers are facing queries as to whether they are obliged to pay salaries to their employees during the COVID-19 lockdown period and what are the repercussions if they do not do so.
In view of the peculiar situation prevailing in the world and in our country, on 24.03.2020, the Government of India has invoked the provisions of the Disaster Management Act, 2005 (hereinafter referred as “DMA”) and Epidemic Diseases Act, 1897 (EDA)and has declared a nationwide lockdown for 21 days from 25.03.2020 to 14.04.2020 and further extended the same till 03.05.2020. Under the said advisory dated 20.03.2020, the Ministry of Labour and Employment by D.O No. M-11011/08/2020-Media dt. 20.03.2020, stated that all the employers of public/private establishments may be advised to extend the coordination (cooperation) by not terminating their employees(include casual/contractual workers) or reduce their wages and if any worker had taken leave, he should be deemed to be on duty without any consequential deduction of wages for the period. Further, if their place of employment is made non-operational due to COVID-19, the employees of such unit shall be deemed to be on duty. The Government further directed all the Chief Secretaries of States/UTs to issue necessary advisory to the employers/owners of all the establishments within the States/UTs.
Further, vide Order No. 40-3/2020-DM-I(A) dt. 29.03.2020, there is a direction to deal with the situation and for effective implementation of the lockout measures and to mitigate the economic hardship of the migrant workers, the Government in exercise of its powers conferred under Section 10(2) (l) of the DMA, 2005 has directed the respective States/UTs to take necessary action for providing additional measures :
i) …..
ii) …..
iii) All the 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;
iv) …..
v) …..
In the event of violation of any of the above measures, the respective State/UT Govt. to take necessary action under the Act and empowered the District Magistrate/DC and Senior Superintendent of Police/Superintendent of Police/DC of Police to effectively implement the above orders and lockdown measures.
Vide Order No. 40-3/2020-DM-I(A) dt. 15.04.2020, the Ministry of Home Affairs issued a Consolidated Revised Guidelines on the measures to be taken by Ministries/Departments of Government of India, State/UT Governments and State/UT authorities for the containment of COVID-19 across the country, while extending the lockdown measures till 03.05.2020.
For the above purpose, it is necessary to refer to the relevant provisions of the DMA, 2005.
Section 51 to 60 of the DMA 2005 provides for various punishments for violating without reasonable cause any of the measures mentioned therein.
What is relevant is the offences by companies under Section 58 under which if any offence is committed by any company or body corporate, every person who at the time the offence was committed, was in charge of, and was responsible to, the company, for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. The explanation to the provision also makes it clear that for the purposes of this provision the term ‘body corporate’ includes in its ambit ‘a firm or other association of individuals’ and ‘director’ in relation to a firm, shall mean ‘Partner’ in the firm.
No doubt true, that no court shall take cognizance of an offence under the DMA 2005 except on a complaint made by a) the National Authority, the State Authority, the Central Government, the State Government, the District Authority or any other authority or officer authorised in this behalf by Authority or Government, as the case may be; or b) any person who has given notice of not less than 30 days in the manner prescribed, of the alleged offence and his intention to make the complaint to the National Authority, State Authority, the Central Government, the State Government, the District Authority or any other authority or officer authorised as aforesaid.
So, there is a remedy in law for workers/employees to lodge a complaint to the respective authorities by giving 30 days’ notice failing which they can proceed for seeking necessary directions from the Court for effective implementation of the measures provided under the Government Orders dated 20.03.2020, 29.03.2020 and 15.04.2020. The High Courts are well within their powers to exercise the writ jurisdiction in order to direct for effective implementation of the guidelines/measures.
Further, in the event of the disobedience of the above orders the power under Section 188 of IPC, 1860 can also be invoked. Complaint can be made by any employee/workmen to any of the authorities as mentioned in the Order/Directives issued on 29.03.2020 or 15.04.2020.
Section 188 of IPC prescribes as follows:
“Disobedience to order duly promulgated by public servant – Whoever, knowing that, by an order promulgated by a public servant lawfully empowered to promulgate such order, he is directed to abstain from a certain act, or to take certain order with certain property in his possession or under his management, disobeys such direction, shall, if such disobedience causes or tends to cause obstruction, annoyance or injury, or risk of obstruction, annoyance or injury, to any person lawfully employed, be punished with simple impris¬onment for a term which may extend to one month or with fine which may extend to two hundred rupees, or with both; and if such disobedience causes or trends to cause danger to human life, health or safety, or causes or tends to cause a riot or affray, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.”
Therefore, the Government is armed with all the powers under the Act read with provisions of other enactments to proceed against any wilful violator under DMA 2005.
Further, using the term “for the period” , the order directs the employers to pay full wages during which the establishments are under closure during the lockdown. For the aforesaid reason, wages are payable for the entire period of lockdown and not for a ‘month’, like the non-levy of rents by landlords.
Therefore, it is quite clear that the Companies/Firms have no choice but to pay the wages for all the employees till 19.04.2020 and for such of those employees who are not called upon to join duty on and after 20.04.2020 till the end of the lockdown period. It is not as if workers/employees are not interested to continue their employment. They are not being allowed to join duty in view of the lockdown measures and various orders of the Government.
The principle “no work no pay” cannot be invoked in the present circumstances, as neither the employers are able to offer work nor the workers are able to join duty in view of the various Government orders under DMA 2005. Further, COVID affected workers are rendered ineligible to work as it further endangers other co-workers.
There are further legal conundrums as to what is the status of the staff (administrative, supervisory and management cadre) with regard to payment of salaries.
It is observed that there cannot be any difference between workmen and management/administrative cadre as the both are governed under the orders issued by the Government under the DMA 2005. The DMA 2005 or other orders issued by Ministry of Labour and Employment or Ministyr of Home Affairs makes no such distinction between the two categories of employees. There cannot be any differentiation in treatment as that will offend Article 14 of the Constitution between two sets of similarly situated workforce.
For the aforesaid reasons, even employees including administrative, supervisory and management cadre who are not reporting to work would also have to be paid the full wages/salary and the principle of “no work no pay” cannot be invoked by the Companies/Firms.
This will create lot of trouble for the employers/companies/firms as many of them especially MSMEs may not be in a position to comply with the government orders. Further, none of the notifications legally restrains employers from firing workers, however, with respect to the industries falling under the definition of “industry” under the Industrial Disputes Act, 1947, the provisions laid therein would kick-in against actions of laying off or terminating employment.
When small firms/companies including MSMEs are generating no revenues and are at the verge of the collapse as they operate on thin margins, the Government without reimbursing or compensating such firms/companies cannot expect them to pay wages/salaries for such prolonged durations of lockdown. Further, for those companies which are already at various stages under IBC proceedings, this will be an additional burden on them.
In view of this, the Government while forcing the employers to pay the wages, is also expected to come to their rescue in the form some stimulus package or subsidy so that small companies/firms can weather this storm.
