Arushi Anthwal
Maharashtra National Law University, Mumbai
The Covid-19 pandemic in India has created such rifts in our personal and professional spaces, which are not only becoming increasingly harder to bridge but are also delaying the hope to perhaps open doors to normalcy once again.
As we continue to strive to manage the unprecedented situations arising therefrom, the policy vacuum or practical difficulties in the available judicial or governmental solutions is hitting us in waves of uncertainties and chaos. Recently this chaos has birthed the debate between the clash of two fundamental rights: the private employer’s freedom to carry out trade/business and the employee’s right to life, livelihood and fair remuneration.
It comes as no surprise that the corona virus-induced lockdown has had a serious impact on the business which has led to a sudden surge in salary-cuts as well as lay offs for employees in various industries in both organized and unorganized sectors leaving many in an uncertain and unfortunate state.
Controversial relief—MHA order mandating payment of full wages for the lockdown period (50 days) and the subsequent directives of the Apex Court:
The Ministry of Home Affairs issued an order dated 29.03.2020 with stipulations that appeared to come to the rescue of the workforce including private employees. The order stated that “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 workplaces, on the due date, without any deduction, for the period their establishments are under closure during the lockdown.”
What may be called an obvious response in the current climate; the private employers challenged the order immediately before the Supreme Court contending violation of Article 19(1)(g) as well as contravention of the principles of ‘Equal work Equal Pay’ and ‘No work No pay’.
Though the Supreme Court’s final decision in terms of the validity of the MHA order is pending, the court did direct several interim measures, which have so far been heavily in favour of the employers:
- The Court has as of now stayed the MHA order and held that “no coercive action, against the employers, shall be taken pursuant to notification dated 29.03.2020.”
- On 14th June 2020, the court passed another order which attempted to balance the two conflicting rights by observing that, “both Industry and Labourers need each other” and therefore private establishments/employers who are willing to negotiate with workers regarding payment for the said 50 days or any other period during which the establishment was closed due to lockdown, may initiate such negotiation process. In case the parties are unable to settle by themselves a request may be submitted to the concerned labor authorities to conciliate the dispute between them.
Challenges Ahead: Collective Laisezz Faire and Balancing Rights:
It is safe to say that the safety blanket handed over by the MHA has been for the time being tucked away beyond the reach of the employees. With the next date for the hearing in the case set for the last weeks of July the clock is ticking the employees into despair as they maneuver pay cuts and even lousy settlement offers.
It is true that private employers cannot be compelled to perform obligations with respect to their employees beyond the terms and conditions of their employment agreements and as such the MHA order to the extent that it decided to cover private establishments as well as an unwarranted imposition. Moreover, different private establishments will have different financial capacities and in that context, they can’t all be categorized in one box with a blanket direction for payment of wages during the lockdown period.
However, the contention remains that the Central Government’s power to “take all measures deemed necessary and expedient for the purpose of disaster management” under section 35 of the Disaster Management Act, 2005 allowed the government to offer such a safety blanket despite its absurdity as perceived by the private players.
The plight of the employees who have been on the receiving end of pay cuts and terminations also paint a grim image and prompts one to question how far will the SC order protect the interests of the employees and how far is it practical to apply? This leads us to the following legitimate counter concerns of the employees:
- Though the Court has stipulated ‘negotiations’ as the captivating solution to the ensuing clash of fundamental rights how these negotiations will play out for private employees in establishments without employee unions and the power dynamics being strictly in favor of the employers is troublesome. Will such ‘collective laisezz faire’ then work to the benefit of the employees at all?
- When the Court says that those “willing” to negotiate may initiate such process it is hard to believe that this observation was the court’s way of balancing the two conflicting interests because it patently favours the employer by leaving such negotiations in an absolutely discretionary realm.
- With such discretion, needless to say, there may arise convenient arbitrariness. So far, one of the convenient ‘way-out’ devised by some private employers is to change the company policy regarding the ‘notice period’ thereby significantly reducing the notice period before terminating the employees, which ultimately reduces the amount they are to receive upon their termination. Disturbingly, such changes are made unilaterally, with immediate effect and without the consent of the employees leaving several with minuscule settlement amounts and no job prospects for at least the coming year.
- Viewed from a lens of proportionality it is also fair to note that while the employee loses his job and also loses a fair scope of bargaining power in context with his employer, the employer, on the other hand, may not necessarily face grave consequences for providing payment of full salary for the given period of the order only i.e. 50 days. The employer is not forced to retain the employee and continue paying regular salaries instead the employer is only directed to pay full salaries for a fixed period of 50 days from 29.03.2020 when the order was passed till 18.05.2020 when the government withdrew the order.
Of course, it is a legitimate concern that not all employers have the same financial capacity and for some, the blanket imposition for payment of full wages even for the 50 days may prove to be burdensome. To this extent, the balancing of not just the rights of the employees and employers but also the rights of different employers against each other requires adequate consideration.
Clearly, the government cannot shift all liability on the employers for sustaining employees during an unprecedentedly difficult period for all businesses. The government’s stipulation of collateral-free loans up to Rs. 3 lakh crores for MSMEs may help allow more players to be able to cover employee wages however the eligibility criteria for availing the extra credit in the implementation of the scheme also reduces the pool of companies that will be able to take this benefit.
Moreover, it is also difficult to imagine employers availing loans to pay salaries to employees for a period when the business was closed and employee contribution was nil. It is all the more difficult to imagine employers acting in fear of retaining the same employees post the pandemic given our unemployment rates and a proclaimed labour intensive economy, leaving no fear of lack of employees to fill in positions when the situation improves.
There is no doubt that the current executive and judicial reliefs provided so far fail to adequately balance between the conflicting rights of the employers and the employees and better criteria is required to be devised at least to ascertain wages due during the 50 day period as well as a fair settlement amount for those terminated that will give enough cushion for the coming adversities. Moreover, even if the SC decides to tilt in favor of the employees the greater question then will be what about the period beyond the stipulated 50 days? Where would the liability end and how much of the unemployment insurance can the government bear or compel the private establishments to so bear?
