On March 15th 2020, Government of India announced a nation-wide lockdown with immediate effect in the country with the outbreak of COVID-19 around the world. The pandemic spared none. However, the major issue looming on the minds of the working population was a possible reduction in pay. The Government took several measures. It issued orders and notifications with a view to protect the interests’ of employees.
However, the Government fell short-sighted in failing to notice the adversities of employers. While some employees did not receive salary, some received reduced salary. But the pandemic had also caused an economic impact on employers and hampered their business revenue as well. In this blog post, we try to find out whether the affected employees can claim their salary withheld in covid. Since the pandemic has now slowly trickled towards its end and there are predictions of new variants and a subsequent fourth wave.
Table of Contents
Order dated 20.03.2020: Salary not to be withheld
The Joint Secretary, Ministry of Labour and Employment, issued an an advisory dated 20th March 2020 in the interests of casual and contractual workers. It advised all employers of public/private establishments to extend their coordination (in light of COVID-19). The coordination also asked for not terminating their employees or reducing their wages. This order advised the employers that: “if establishment is made non-operational due to COVID-19 or if a worker takes leave then no reduction in pay will be made and the workers will be deemed to be on duty.”
Order dated 29.03.2020: Direction to pay full salary
The Ministry of Home Affairs issued an order on 29th March 2020 under the Disaster Management Act, 2005. This order directed that for the period their establishments were closed in lockdown the employers shall pay full wages to employees. It stated as follows: “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.”
However, establishments or industries which were providing essential goods and services were not under the purview of this order. Such establishment were operating during the lockdown vide order issued on 24th March 2020.
The order of 29th March provided for necessary actions against employers in case of violation by the State Govt and Union Territories. Many public interest litigations were filed against this order. In B4S solution Private ltd. and & Ors Vs. Union of India & Ors, Ficus Pax (P) Ltd. Vs. Union of India, Aditya Giri Vs. Union of India & others, Chamber of Small Industry Associations & Ors Vs. Union of India & Ors. The order was withdrawn on 17th May 2020 by a subsequent order.
Supreme Court’s stance on payment of due salary in Covid
In Ficus Pax (P) Ltd. Vs. Union of India, the Supreme Court agreed with the fact that the pandemic has affected the employees and the employers both. Its evil has spared none.
The validity of Order issued on 29th March 2020 was challenged. Grounds were:
- It violated the principle of “equal pay for equal work” and “no pay, no work”.
- It did not draw any distinction between the employees who are working and who are not due to establishments which were operated at lesser capacity.
Court’s Decision on salary withheld in Covid
The Court stated the effect of subsequent withdrawal of the 29th March order, on 17th May as: it would be compliance of the order for a period of 50 days during which it had remained operative. Then, it examined the question regarding its challenge for the period it had remained operative.
Validity of the 29th March Order
The Court held that it cannot be disputed that both industry and labourers need each other. No industry or establishment can survive without employees/labourers and vice versa. It stated that efforts should be made to settle the disputes for payment of wages between the workers and the employer. If any settlement is reached then it would restore favourable work atmosphere.
Measure issued by the court
The Court issued following interim measures by way of its interim order dated 12th June 2020:
i) The employer, industries and private establishments can enter into negotiation and settlement with the workers/employees. This negotiation is regarding payment of wages for 50 days.
ii) If no settlement is reached then a request can be submitted to labour authorities entrusted to reconcile disputes. These authorities may call the employees to appear for negotiation/settlement or conciliation.
iii) Negotiation or settlement can be resorted to by establishments who were working but not to their full capacity.
Opinion in favour of employers
The Court opined that all industries/establishments are of different nature and of different capacity, including financial capacity. Only some establishments can bear the financial burden of payment of wages during the lockdown period to its employees. Some of them may not be able to bear the entire burden. Further, a balance shall be struck between these two competitive claims.
The Court ordered that-
- No Coercive action against employers who failed to pay full wages to their employees.
- The State Government shall make endeavours to reach an amicable solution.
- Employers and employees can negotiate between themselves to arrive at a solution.
Can one claim his/her salary withheld in covid?
An employee cannot claim his/her salary withheld in covid. The courts have not yet passed any ruling on this question.
But, in light of the order passed in the case of Ficus Pax Ltd.:
- Employees can enter into any negotiation, settlement or conciliation with the employer if salary was withheld for the period between 29th March to 17th May 2020. Such settlement is for those 50 days only.
- Employees shall submit a request to labour authorities if they fail to reach any settlement.
- Such authorities shall assist in reaching a negotiation.
Mandatory Paid Leave
A government employee can avail paid sick leave of 20 days if she/he contracts Covid-19. This is as per the directions of Central Government. State governments also introduced mandatory paid leaves for employees infected with COVID-19. Uttar Pradesh Government ordered 28 days paid leave on submission of a medical certificate.
With respect to private employees, the order dated 29th March 2020 is a guiding book. The order mentions that:
- The employees can avail leave for the period they have contracted COVID-19.
- Employees can avail leave without any deduction in salary.
- Private employees entitled to pay for the leave period.
- Payment of salary would be for 50 days. For the period the order remained in force 29th March to 17th May 2020.
Additionally, for employees covered under the Employees’ State Insurance Act, 1948 (ESI), the Karnataka Government ordered 28 days’ mandatory leave to COVID-19 infected employees. As per Section 15(3) of Karnataka Shops and Establishment Act, 1961 employees not covered under ESI can avail a paid sick leave of 28 days. Rajasthan Government has also ordered a quarantine leave for COVID-19 infected employees for a period of 30 days.
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