Ludhiana association moves Supreme Court against direction to pay full wages during lockdown

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Published: April 24, 2020 2:50 AM

The association also said hundreds of crores of unclaimed provident fund and employees state insurance corporation contribution lie in banks attracting interest.

MSMEs have also argued that the Centre lacked the power to direct payment of wages.

Ludhiana-based association of hand tools manufacturers, comprising 41 MSMEs, has moved the Supreme Court seeking quashing the government’s March 29 order asking private establishments to pay full wages to their workers during the Covid-19 lockdown.

Stating that the Ministry of Home Affairs passed orders without due care and deliberation on the financial implications for employers, it warned that making such payments will lead to the closure of many of its units, which, in turn, will cause permanent unemployment and adversely affect the economy. Such a blanket direction for payment of full salaries is arbitrary, unconstitutional and unsustainable, MSMEs said.

The association alleged that during this unprecedented situation, various governments across the globe are taking measures for workers/employees, but the Centre has not taken any step, and instead has put the entire burden on employers/owners to pay full wages.

Last week, Mumbai-based textile exporter Nagreeka Exports had challenged the orders issued by the MHA and the Maharashtra government asking companies to pay full salaries to workers during the lockdown. The association also said the MHA order violated the private companies’ right to carry on any occupation, trade or business guaranteed under Articles 19(1)(g) of the Constitution.

MSMEs have also argued that the Centre lacked the power to direct payment of wages, as the provisions of the Disaster Management Act 2005 cannot “impinge upon express provisions of the Industrial Disputes Act, 1947 and take away the right to lay off workmen during times of natural calamity”.

It is irrational to treat all private establishments alike irrespective of profit, loss, debt or turnover, the petition said, adding that a blanket direction by the MHA is akin to a tax without any statutory backing.

gGovt has not taken any steps for workforce, instead put the burden on employers to pay full wages,” the petitioner said, adding that employers and employees have reciprocal promises whereby the right of an employee to demand salary is reciprocal to performance of work by such employee. Besides, the petition said, an employer has a right not to pay if no work is done.

Private employers should completely be exempted from paying their workmen during the lockdown as the one-sided implementation of contract alone is not permitted, it argued. The association also said hundreds of crores of unclaimed provident fund and employees state insurance corporation contribution lie in banks attracting interest, and the government can utilise these funds rather than burdening the private sector.

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