ABSTRACT
This article endeavors to explain the ongoing inconsistency between the Labor Law Provisions of Industrial Disputes Act, 1947 regarding the payment of wages/salaries in case of ‘lay offs’ arising out of uncertain events with the directions given by The Ministry of Home Affairs pursuant its powers to regulate the outbreak of the Corona havoc entitled under the Disaster Management Act, 2005 (DMA). This article further analyses the non-obstante clause of the Disaster Management Act, 2005 and it’s capacity to override any inconsistent Law and how it’s questioned in case of the issue in hand. The essay finally concludes by analyzing possible steps India can take in order to strike a harmony between welfare of both the employees and employers amidst this crisis and strengthen it’s foothold in this war against Coronavirus without majorly affecting it’s economic affairs.
LABOR LAWS AMIDST THE ‘CORONA CHAOS’
COVID–19 apart from having a catastrophic impact on Human lives and unanticipated enhanced pressure on the Medical sector, has taken the strongest economies around the globe with a storm paving way to what is seen as the most unprecedented economic crisis the world has ever witnessed. Indian Economy in a similar fashion has undergone a stand still state since the pronouncement of the nationwide lockdown wef. 25th March, 2020. Most industries are now dependent on ‘work from home’ in order to keep their operations in function. However, a lot of these industries involve manual labor or other varied nature of work which can’t be supported by the concept of ‘work from home’ and hence implying zero revenue. Willis Towers Watson Covid-19 India Readiness Survey 2020 speculates that 57% firms say they may face negative impact in next six months which shall be followed by a prolonged recovery period causing further stretch in this crisis.
The point of concern over here is that ‘how are these Industrial Establishments/Companies/Employers’ are expected to react in this havoc? And, ‘how will they strike a balance between ensuring regular remuneration, employment of their employees and prevent draining out their cash reserves not supported by any further revenue’.
Answering these concerns, The Ministry of Labour and Employment issued an advisory dated March 20, 2020, which read, “In the backdrop of such challenging situation, all the Employers of Public/Private Establishments are advised to extend their coordination by not terminating their employees, particularly casual or contractual workers from job or reduce their wages. If any worker takes leave, he should be deemed to be on duty without any consequential deduction in wages for this period…” This was further reiterated by The Ministry of Home Affairs order dated March 29, 2020, pursuant powers contained in Section 10(2)(l) of the Disaster Management Act, 2005 which read “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;…”
The directions issued by the Labor Ministry and Ministry of Home Affairs (MHA) ensured welfare of employees however allegations are such that these directions are taken at the cost of financial stability of employers and without giving due consideration to the grievous impact of the Pandemic on cash flow position of these firms. The directions further over looked the existing Labor Laws dealing with the situations like pandemic or other natural disasters and already stipulates an appropriate Legal Action Plan which shall be discussed in depth in further sections.
OVERRIDING PROVISIONS OF THE DISASTER MANAGEMENT ACT, 2005
The directions issued by MHA were merely an exercise of powers conferred under section 10(2)(1) of the Act in the capacity of The Chairperson of National Executive Committee (implementing the policies and plans of disaster management). However, the applicability, supremacy and immunity of these directions against any other existing Law can be better understood under the purview of Section 72 of the Act ‘a non-obstante clause’ which states that “The provisions of this Act, shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act…”
Section 72 clearly stipulated that Directions of Ministry of Home Affairs shall override anything contained in The Industrial Disputes Act 1947 or any other relevant enactment to this matter. However, there are conflicting views in regard to this situation in Law which contends that the Disaster Management Act merely prescribes powers and responsibility to the State for taking preventive measures in order to curb the unavoidable and unforeseen situation a Disaster poses. However, there’s no such clause under the Act which grants authority to the Government of any State or India to direct the payment of wages by employers/corporates/industries etc. Thus, the Government can impose duties as far as migration of daily wage laborers can be subdued or any other factor impacting the management of Corona outbreak directly is concerned, however, mandatory payment of full wages is too vigorous in this regard and no where remotely clarifies it’s effectiveness in curbing the ill effects of the pandemic.
WHAT DOES THE INDUSTRIAL DISPUTE ACT STIPULATE?
The provision of ‘lay off’ in Industrial Dispute Act, 1947 most suitably explain the current chaos and directs the appropriate action an employer can resort to in a situation of Natural Disaster (Corona Pandemic). Lay Off under the Act “means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.”
‘Right of workmen laid-off for compensation’ or the compensation payable by employer under the action of Lay Off is further stipulated under Section 25C of the Act according to which, a laid-off workman “… whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid-off, whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid-off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty percent. of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid-off” This provision of Law reduces the mandatory compensation to be paid during this period to 50% (of basic wages and dearness allowance) contrasting to what is stipulated under MHA directions. This provision further absolves the employer from the responsibility to pay further compensation after completion of first 45 days of lay off, if there’s any agreement between employer and employee in this regard.
THE HARMONIOUS CONSTRUCTION (CONCLUSION)
The Honorable Supreme Court of India is currently dealing with petitions filed before it in this regard seeking a harmonious applicability of both the provisions of Industrial Disputes Act and directions of MHA and a combined effort by the Governments and Employers to ensure financial stability of both the firm and it’s employees. One such petition is Nagreeka Exports Ltd. vs. Union of India, WP (C) No. 471/2020.
The concerned authorities and the judiciary should seek to establish a harmonious balance between the welfare of both the employees and the employers amidst this difficult situation. India shall if required adopt an approach of a ‘Wage Subsidy Scheme’ as done in New Zealand based on its financial potential which ensures ‘supports for employers adversely affected by COVID-19, so that they can continue to pay their employees, and supports for workers to ensure they continue to receive an income, and stay connected to their employer, even if they are unable to work’ to effectively combat this war against Covid-19.
About author –
Tarun Tripathi is currently a first-year student at School of Law, CHRIST (Deemed To Be University), Ghaziabad pursuing B.B.A LL.B (Hons) and is an avid reader and learner in the matters concerning Corporate Law, Sevice/Labor Laws and major policy decisions or changes in the external environment impacting the working of Businesses in the country.
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