In March 2020, when the Covid-19 Pandemic truly set foot in India, a nationwide lockdown was announced, resulting in the shutting down of almost all factories, offices, shops, and establishments. However, a lockdown of such magnitude, which brought the economy of more than 2.8 Trillion U.S. Dollars to a grinding halt, was bound to hurt all, including the workers employed in these establishments. The Government of India, therefore, anticipating these effects on the workers issued several Notifications and directions.
Need for Welfare Measures in India
The present lockdown, even though necessary, has led to the earning capacities of almost all establishments diminish substantially and, in many cases coming to naught. In such situations, establishments are expected to kick start their contingency plans. However, sustaining employee welfare for very long despite the best of such plans in the long-run would be next to impossible for all, especially the smaller establishments that are already facing the crunch.
It is a foregone conclusion that the cascading effect of the present situation would be that the livelihood of workers all over India would be severely affected, and workers, especially in the private sector would be in a very vulnerable position and at the mercy of their employers.
It is in times like these that the Government being an embodiment of the Principles of a Socialist, Secular, Democratic ,Republic State, as enshrined in the Constitution of India is expected to step in and initiate its welfare measures and play a significant role in protecting the Interest of the 'workmen' and other sections of society.
It is in the said spirit that the Government has come out with numerous directions and notifications, one of them being the Notification dated 29.03.2020 by the MHA.
Notifications issued by the Government
The MHA has equated the present scenario with nothing less than a disaster of immense magnitude and has, therefore, invoked the Disaster Management Act, 2005, and issued a notification dated 29.03.2020 under Sec 10(2)(l) of the Act.
The said Act had come into effect after the assent of the President of India on 23.12.2005, which provides for the effective management of disasters and for matters connected therewith or incidental thereto and has passed various directions. The Act defines Disaster under Sec 2(d) as a 'catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or human-made causes, or by accident or negligence which results in substantial loss of life or human suffering or damage to, and destruction of, property, or damage to, or degradation of, environment, and is of such a nature or magnitude as to be beyond the coping capacity of the community of the affected area;".
Sec 10(2)(l) of the Act grants power to the National Executive Authority formed under the Act to lay down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of India, the State Governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster.
The Notification dated 29.03.2020 gave the following directions:
"i. State/Union Territory Governments shall ensure adequate arrangements of temporary shelters and provision of food et al. for the poor and needy people, including migrant laborers, stranded due to lockdown measures in their respective areas.
ii. The migrant people who have moved outreach their home states/home towns must be kept in the nearest shelter by the respective State/Union Territory Government quarantine facilities after proper screening for a minimum period of 14 days as per standard health protocol.
iii. All the employers, be it 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 ;
iv. Where ever the workers, including the migrants are living in rented accommodation, the landlords of those properties shall not demand payment of rent for a period of one month;
v. If any landlord is forcing labourers and students to vacate their premises, they will be liable for action under the Act."
Thus, amongst other things, the Notification emphasized on the need for employers to pay their workers wages on due dates without any deductions.
In addition to the above other notifications have also been issued by various Branches of the Government such as the Ministry of Labour advisory to Chief Secretaries of States & U.T.'s dated 20.03.2020, advisory by Min of Housing and Urban Affairs dated 23.03.2020, an advisory by theDepartment of Public Enterprises dated 20.03.2020 wherein they have been asked to advise the Employers of Public/ Private Establishments not to terminate their employees, particularly casual or contractual workers from the job or reduce their wages. That further, if any worker takes leave, he should be deemed to be on duty without any consequential reduction in wages for the period of this pandemic. That further, if the place of work is made non-operational due to Covid-19, the employees shall be deemed on duty.
Who is a Workman?
In the present Article, we are repeatedly using the term Workman, and therefore at this point, it is relevant to know the Legal Definition of the term. Even though it is defined in many Statues, the Industrial Dispute Act 1947 defines Workman as:
2(s) "workman" means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person-
(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer or other employee of a prison; or
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who, being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
Workers can be categorized into a regular, casual, contract, and daily wage rated. A considerable number of these workers are deployed in numerous Industries, Shops, and Establishments across the length and breadth of our country. The rights of such workers are protected under the Statutes such as the Industrial Disputes Act 1947, The Shops & Establishment Act 1953, The Factories Act 1948. The method of payment to such workers is also covered under the legislature viz. Payment of Wages Act 1936, Employees Provident Fund Act 1952, The Employees State Insurance Act 1948.
What are Wages?
The remuneration given to such workers is in the form of wages, which is defined under various statutes. However, the Industrial Disputes Act, 1947 Section 2(rr) defines wages as :
" all remuneration capable of being expressed in terms of money, which would, if the terms of employment, expressed or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment, and includes-
(i) such allowances (including dearness allowance) as the Workman is for the time being entitled to;
(ii) the value of any house accommodation, or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food-grains or other articles;
(iii) any travelling concession;
(iv) any commission payable on the promotion of sales or business or both;]
but does not include-
(a) any bonus;
(b) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the Workman under any law for the time being in force;
(c) any gratuity payable on the termination of his service;]'
The Government of India is taking a proactive role in helping both the Workers and their employers and therefore, the ESIC issued circular dated 16.04.2020 informed that the Ministry of Labour and Employment has set up 20 Control Rooms under the office of Chief Labour Commissioner (Central) to address wage-related grievances of workers employed in the central sphere and to mitigate problems of migrant workers in coordination with state governments. Further, a Notice dated 16.03.2020 was issued by ESIC, which states that the ESIC has relaxed the time for filing of returns by the employers. The EPFO has issued a Press Release dated 09.04.2020, saying that it would allow members to withdraw up to 75 percent of their balance in the fund or three months' wages, whichever is lower, as an emergency measure to tide over any difficulties arising from the coronavirus pandemic.
A Press Brief dated 26.03.2020 issued by EPFO has also informed that the Central Govt. has launched the Pradhan Mantri Garib Kalyan Yojana (PMGKY) on 26.03.2020 to help poor fight the battle against Corona Virus. As part of the PMGKY package, intending to prevent disruption in the employment of low wage-earning EPF members and support EPF covered establishments employing up to one hundred employees, the Central Govt. proposes to grant relief in the form of a credit of EPF & EPS contributions (24% of wages) for three months in UANs of contributory EPF members, earning monthly a wage of less than Rs.15000/-. The latter are already employed in EPF covered establishments/factories employing up to one hundred employees with 90% or more of such employees earning a monthly wage of less than Rs.15000/-. It further stated that the employer, concerning any eligible establishment, shall disburse wages for the month to all employees of the establishment and file Electronic Challan cum Return (ECR) with required certificate and declaration to avail of the benefit under the Scheme.
What if an establishment fails to comply with the directions issued in the Notification dated 29.03.2020?
All the notifications issued by the Government and its agencies so far are mostly in the form of advisories to employers and establishment, and only the Notification dated 29.03.2020 carries with itself the force of law and punishment for non-compliance of directions mentioned in it.
If an establishment fails to comply with the directions mentioned in the Notification dated 29.03.2020, the respective State/U.T. Government has been directed to take necessary action under the Act. By Act here we mean the Disaster Management Act 2005 and a perusal of the same shows that Sec 51 deals with scenarios of non-compliance of directions passed therein :
Sec 51 States that:
'Punishment for obstruction, etc.- Whoever, without reasonable cause-
(a) obstructs any officer or employee of the Central Government or the State Government, or a person authorised by the National Authority or State Authority or District Authority in the discharge of his functions under this Act; or
(b) refuses to comply with any direction given by or on behalf of the Central Government or the State Government or the National Executive Committee or the State Executive Committee or the District Authority under this Act,
shall on conviction be punishable with imprisonment for a term which may extend to one year or with fine, or with both, and if such obstruction or refusal to comply with directions results in loss of lives or imminent danger thereof, shall on conviction be punishable with imprisonment for a term which may extend to two years. '
Further, Sec 52 to 60 of the Act deal with punishment, penalties, and cognizance of offences.
It is also relevant that the Notification dated 29.03.2020 basically deals with the payment of wages which as per settled law can only be refused/deducted by an employer if the employee willfully refuses to work or indulges in strikes, go-slow or absence from duties(Sec 7 Payment of Wages Act 1936), a situation not applicable in the present scenario at all wherein place of work have been closed due to Government directions and due to safety reasons leaving minimal scope for an employer to refuse wages and the employees have been directed to be treated as on duty.
Also, Contract Employees work and are paid as per their contract, and at present, they cannot be faulted for not working and would have to be treated as on duty. The only exception being if the contract expires due to the efflux of time in the period of lockdown and is not renewed.
In addition to the above if any employer illegally terminates a worker or takes any other illegal action against them, it is necessary to keep in mind that Workers already have much other welfare legislation in place in case they are maltreated such as the Industrial Disputes Act, Payment of Wages Act, Factories Act. and can approach the appropriate forum for their grievances to be redressed.
Legal Sanctity of Notification dated 29.03.2020
Whether the action on the part of the Government in invoking the Disaster Management Act 2005 and therein issuing various directions are legally sustainable or not has to be seen from the provisions of the Act itself.
A joint reading of Sec 2(d) and Sec 10(2)(l) of the Disaster Management Act would show that the present situation does fit the bill of a disaster as defined under Sec 2(d) of the Act and the National executive Authority under Sec 10(2)(l) can lay down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of India, the State Governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster.
Further Sec 2 (e) of the Act defines "disaster management" which means a continuous and integrated process of planning, organizing, coordinating and implementing measures which are necessary or expedient for- (i) prevention of danger or threat of any disaster; (ii) mitigation or reduction of risk of any disaster or its severity or consequences; (iii) capacity-building; (iv) preparedness to deal with any disaster; (v) prompt response to any threatening disaster situation or disaster; (vi) assessing the severity or magnitude of effects of any disaster; (vii) evacuation, rescue, and relief; (viii) rehabilitation and reconstruction; (i) "mitigation" means measures aimed at reducing the risk, etc.
The Hon’ble Supreme Court in the matter of N.D. Jayal and Anr. Vs. Union of India (UOI) and Ors. (2004)9SCC362 had observed that
"Disaster Management means all aspects of planning, coordinating and implementing all measures which are necessary or desirable to prevent, minimize, overcome or to stop the spread of a disaster upon the people or any property and includes all stages of rescue and immediate relief. It is a proven fact that a lot of human suffering and misery from a large number of disasters can be mitigated by taking timely actions, planning, and preventive measures. It is possible only through a well-functioning disaster management framework. This will enable us to minimize, control, and limit the effects of the disaster and will streamline the disaster management exercises. Our present relief centered re-active approach after the striking of disaster need to be changed into a preparedness oriented pro-active attitude. This is the aim of pre-disaster preparations. Disaster Management Plans have to play an integral role in this exercise. They are blueprints for the management of disasters. The Disaster Management Plans should contain the aspects of disaster prevention and of ways for its management in the untoward occurrence of a disaster. A proper plan will place the disaster management exercise on a more firm foundation. Disaster Management activities should be integrated with developmental activities. Incidentally, this is also the resolve of the Yokohama Strategy of the United Nations International Decade of Natural Disaster Reduction, to which India is a party. There is an affirmative obligation on the part of the State to preserve and protect human life and property. This obligation is an integral element in fulfilling developmental endeavors. Therefore, disaster management cannot be separated from sustainable development."
Further, Sec 35(1) of the Act also grants powers to the "Central Government to take measures.- (1) Subject to the provisions of this Act, the Central Government shall take all such measures as it deems necessary or expedient for the purpose of disaster management. ....."
Also, the question as to whether the Act at present can override the provisions of various other Acts such as the Indian Contract Act,1872 can be taken care of by Sec 72 of the Act which states that:
"72. Act to have overriding effect.- The provisions of this Act shall have an effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any law other than this Act."
Hence, the action on the part of the Government in issuing such directions have the force of law behind it.
However, having said that whether the Notification dated 29.03.2020 or, for that matter, any notification of similar nature issued recently is legally valid is yet to face the test of judicial scrutiny. The validity of the Notification dated 29.03.2020 has been challenged in numerous cases before the Hon'ble Supreme Court of India on the ground of it being ultra vires of Article 14, 19(1)(g) of the Constitution of India. As being arbitrary and illegal, the said Notification has not been set aside by the Hon'ble Apex Court. Prima facie the Hon'ble Supreme Court has refused to stay the operation of the said Notification in the cases pending before it. Thus, as on date, the Notification is in operation.
Similar steps are being taken around the Globe amidst the Covid-19 pandemic.
Not only India but other countries such as the United States because of the COVID -19 Pandemic have invoked their emergency powers under the Disaster Management authorities, which allow a change in the legal landscape and coordinative efforts in both the Public and Private Sectors. The Governors of various States in the U.S. due to this can make emergency regulations waive and suspend laws. The United States also possesses the Defense Production Act, which, when invoked, allows the U.S. government to harness private industries to produce whatever the Government needs.
Similar is the position in the European Union, which depending on the type of legislation involved, under European law may impose obligations on private individuals and bodies for Disaster Management. One such directive No. E.C. Directive 2003/88/EC concerning certain aspects of the organization of working time is intended to lay down the minimum requirements regarding the safety and health of all workers in the E.U. in all sectors of activity, both public and private. It applies specifically to (a) minimum periods of daily, weekly, and annual rest/leave and (b) certain aspects of night work, shift work, and work patterns.
Therefore, such action on the part of Governments is not illegal and not that uncommon around the world.
What steps can the Employers take for protecting their interests?
Even though Notification dated 29.03.2020 and other welfare measures are necessary at present for workers, one cannot also shy away from the difficulties the employers will face shortly or, in some cases, are already facing. Quite a few establishments will face a severe shortfall in their earning in the coming months despite the Government and the Reserve Bank of India coming to their aide.
Employers will feel the need to reduce their workforce in the coming months when the situation gets back to 'normal' to keep their operations afloat. The law also provides for such situations for the Employers and the employers can 'layoff' employees through a proper procedure if an employer cannot sustain his Workman then he can layoff them after the present pandemic is over, and the notifications stop being in effect.
Sec 2(kkk) of the Industrial Disputes Act, 1947 defines layoff as
"the failure, refusal or inability of an employer on account of the shortage of coal, power or raw materials or the accumulation of stocks or the break-down of machinery 44[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."
Sec 25C of the Industrial Disputes Act 1947 mentions the procedure for lay off.
Employers can also properly retrench workers, as mentioned in Section 25F of the Industrial Disputes Act 1947.
Section 2 (oo) of the Industrial Disputes Act, 1947 defines retrenchment thus:
" the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include (a) voluntary retirement of the Workman, or
(b) retirement of the Workman on reaching the age of superannuating if the contract of employment between the employer and the Workman concerned contains a stipulation in that behalf; or
(bb) termination of the service of the Workman as a result of the non-removal of the contract of employment between the employer and the Workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or
(c) termination of the service of a workman on the ground of continued ill-health;'
For the removal of Contract workers, the Employers can exercise the Clauses in their contract or simply not renew their agreements when they come to an end.
As far as Daily wage workers are concerned, they can be appropriately retrenched by following the 'Principle of Last Come First Go.'
Is the Notification dated 29.03.2020 applicable to the Private Sector?
That a perusal of the Notification dated, 29.03.2020 would show that it does not specify anywhere that it is only applicable to the Public Sector. However, the Notification draws its powers from the Disaster Management Act 2005, more specifically Section 51, for its compliance. The said Section begins as :
Punishment for obstruction, etc.- Whoever, without reasonable cause- ........."
According to the Shorter Oxford English Dictionary, Vol. 2, p. 2543, 'whoever' means 'anyone who, any who.' The meaning is given in Webster's Comprehensive Dictionary, International Edn., Vol. 2, at p. 1437 is 'anyone without exception' 'any person who.'[Rai Bahadur Seth Shreeram Durgaprasad Vs. Respondent: Director of Enforcement (1987)3SCC27]
A joint reading of the above would show that the Notification itself does not draw a distinction on its applicability and applies to both Public and Private entities.
It is also important to note that the Private sector in India also has to function within the statutes and the constitutional framework and cannot claim immunity from such directions. Even otherwise, it is the social responsibility of the establishments to look after the welfare of their workers as much as possible.
How should Employers deal with cases of Workman who have migrated back to their home town?
Due to the current lockdown, quite a large number of workers have migrated back to their home towns. As per the advisory of the Ministry of Labour and Employment to various ministries dated 20.03.2020, all the public/private employers were advised that if any worker takes leave, he should be deemed to be on duty without any consequential reduction in wages for the period of this pandemic. That further, if the place of work is made non-operational due to Covid-19, the employees shall be deemed on duty. Therefore, the workers migrating back to their home town,ought to be paid there wages in full.However, the employers in cases of such workers who have migrated to their native places are also expected to act a little compassionately even after the lockdown is lifted so that they have ample opportunity to come back to their workplace. Any illegal activity on the part of the employer in such cases can be dealt with in terms of the Legislations in place.
Also, as per MHA Notification dated 29.03.2020, the employer shall have to pay full wages to its workers, be it in industries, shops or any commercial establishment, without deductions, assuming that the establishment is closed, and the work is not being carried out hence, the workers would have to be paid are regardless of them migrating to their home towns or not.
In this scenario, while the most category of workers would be protected, however, the situation for daily wagers might still, be bleak as it is the majority of this category of workers that have migrated back to their home towns, their incomes were not fixed but was dependent upon the work done by them daily, and now when there is no work their employers can easily refuse payment to them or terminate them as most of the times, there is no proper record maintained by such employees.
Even though the Central and State Governments have taken numerous steps to help the enormous working class in India by initiating several welfare measures. It is imperative that the Central Government also aids the establishments as much as possible by providing various reliefs such as tax breaks, moratoriums on payment of loans, ensuring steady cash flow as in the long run it is these establishments that have to support the workers. It is also the responsibility of the Government to ensure that the impact of instant notifications can be absorbed as much as possible by both Public & Private establishments. Even otherwise, it is quite commendable that most of the establishments big or small, public or private are abiding by the directives of the Central Government and are paying the wages to their workers while keeping a balance of mitigating their losses.
The Author of this aticle is Mr. Vaibhav Kalra, Managing Partner and Founder of Kalra & Co.