Union Govt withdraws order directing companies to compulsorily pay wages during lockdown

Image Source: Quartz

The Union Government has withdrawn the order that directed employers to pay wages to employees, despite units being shut in the lockdown. Given the current state of the country, this comes as a huge relief to businesses.

The Ministry of Home Affairs (MHA) has released a new set of guidelines, applicable from Monday. The Union Govt has reversed the order dated March 29, 2020, on the compulsory wage payment during the lockdown.

Under Section 10(2)(I) of the Disaster Management Act, the MHA issued an order to all employers. This order stated that they must pay wages to employees on due dates, without any cuts. The order was applicable even if the establishment remained closed during the Lockdown.

Owing to cash crunches, the industry petitioned the government to withdraw its order on compulsory wage payment. Industrial bodies asked the government to pay wage bills of companies by grants. However, the government did not agree to this due to financial constraints.

Several companies moved to the Supreme Court contesting the constitutional validity of the order. the Govt was asked by the SC on Friday to not take strict action against private companies if they fail to pay wages.The order, termed as an “omnibus order”, was sent back to the government for re-examination.

Various trade union leaders have disapproved the step to withdraw the order. However, employers appreciate the step. The fact that the government refused grants to help pay wage bills, made this move crucial. Since many companies are running out of business, this withdrawal was key to keeping business afloat.

The labour and employment Ministry had issued advisories to the industry to not let go of workers and not reduce wages. These advisories came before the March 29 directive. Issued under the DM Act, the MHA order asked state governments to issue separate orders for smoother implementation. The DM Act held violations of the order punishable by law.

Nagareea Exports, in its petition to the apex court said that the payment of full wages during the Lockdown would lead to closure of numerous micro, small and medium scake enterprises. Considering production was zero or minimal during the Lockdown, permanent unemployment of workers would directly affect the economy. This effect would be harsh and of course, negative.

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