2020 (6) TMI 840 - SC - Companies Law

Supreme Court encourages negotiated settlements between employers and employees for wage payments during lockdown period

The SC addressed challenges to orders under the Disaster Management Act, 2005 regarding wage payment during lockdown. While the contested order dated ... Legality of orders issued under Disaster Management Act, 2005 - vires of Section 10(2)(l) of Disaster Management Act, 2005 - violation of Article 14, Article 19(1)(g) of the Constitution of India - reinforcement of pre-existing right of the worker to get their wages without any reduction - HELD THAT:- It is true that the orders dated 29.03.2020 which was passed in exercise of power under Section 10(2)(l) of the Disaster Management Act, 2005, stood withdrawn by subsequent order dated 17.05.2020 w.e.f. 18.05.2020. The consequence of the subsequent order dated 17.05.2020 is that the obligation cast on the employer to make payment of wages of their workers at their workplace, without any reduction, for the period their establishments are under closure during the lockdown is no longer in operation. However, the issue regarding obligation of the employer as per order dated 29.03.2020 when it remained in force is still to be answered especially when the petitioners challenges the order as ultra vires to Disaster Management Act, 2005, as well as violative of Article 14, 19(1)(g) and Article 21. It cannot be disputed that the lockdown measures enforced by the Government of India under the Disaster Management Act, 2005, had equally adverse effect on the employers as well as on employees. Various Industries, establishments were not allowed to function during the said period and those allowed to function also could not function to their capacity. There can be no denial that lockdown measures which were enforced by the Government of India had serious consequences both on employers and employees. The period of Unlock having begun from 01.06.2020 and even prior to that some of the industries were permitted to function by the Government of India by different guidelines, most of the industries and establishments have re-opened or are re-opening, require the full workforce. All industries/establishments are of different nature and of different capacity, including financial capacity. Some of the industries and establishments may bear the financial burden of payment of wages or substantial wages during the lockdown period to its workers and employees. Some of them may not be able to bear the entire burden - For smooth running of industries with the participation of the workforce, it is essential that a via media be found out. The obligatory orders having been issued on 29.03.2020 which has been withdrawn w.e.f. 18.05.2020, in between there has been only 50 days during which period, the statutory obligation was imposed. Thus, the wages of workers and employees which were required to be paid as per the order dated 29.03.2020 and other consequential notification was during these 50 days. 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 is opined that efforts should be made to sort out the differences and disputes between the workers and the employers regarding payment of wages of above 50 days and if any settlement or negotiation can be entered into between them without regard to the order dated 29.03.2020, the said steps may restore congenial work atmosphere. The private establishment, industries, employers who are willing to enter into negotiation and settlement with the workers/employees regarding payment of wages for 50 days or for any other period as applicable in any particular State during which their industrial establishment was closed down due to lockdown, may initiate a process of negotiation with their employees organization and enter into a settlement with them and if they are unable to settle by themselves submit a request to concerned labour authorities who are entrusted with the obligation under the different statute to conciliate the dispute between the parties who on receiving such request, may call the concerned Employees Trade Union/workers Association/ workers to appear on a date for negotiation, conciliation and settlement. In event a settlement is arrived at, that may be acted upon by the employers and workers irrespective of the order dated 29.03.2020 issued by the Government of India, Ministry of Home Affairs. List in last week of July. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the orders issued under the Disaster Management Act, 2005, mandating employers to pay full wages during the lockdown period, are ultra vires the Constitution, specifically Articles 14, 19(1)(g), and 21.Whether Section 10(2)(l) of the Disaster Management Act, 2005, can be interpreted to confer authority on the Central Government to direct private employers to pay full wages during the lockdown.Whether the notifications violate the principles of 'Equal work Equal Pay' and 'No work No pay.'Whether the financial obligations imposed on private employers by the notifications are justified under the Disaster Management Act, 2005.Whether the Government should use funds from the Employees State Insurance Corporation (ESIC) or other government schemes to subsidize wages during the lockdown.Whether the withdrawal of the impugned notifications renders the adjudication of their validity an academic exercise.Whether a balance should be struck between the interests of employers and employees in light of the economic impact of the lockdown.2. ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:The legal framework primarily involves the Disaster Management Act, 2005, particularly Section 10(2)(l), which empowers the Central Government to issue directions for disaster management. The constitutional provisions under Articles 14, 19(1)(g), and 21 were also pivotal in assessing the validity of the orders.Court's interpretation and reasoning:The Court recognized that the orders mandating full wage payments were issued under the Disaster Management Act, 2005, as a temporary measure to mitigate financial hardship during the lockdown. The Court noted that these orders were withdrawn, but the legal questions regarding their validity during the period they were in force remained pertinent.Key evidence and findings:The Court acknowledged the economic hardship faced by both employers and employees due to the lockdown. The withdrawal of the orders by the government was noted, but the Court emphasized the need to address the legal challenges posed by the orders when they were active.Application of law to facts:The Court examined the application of Section 10(2)(l) of the Disaster Management Act, 2005, in issuing the wage payment orders and considered the constitutional challenges raised by the petitioners. It also considered the financial capacity of different industries and the need for a balanced approach in resolving wage disputes.Treatment of competing arguments:The Court considered arguments from both sides, including the government's justification for the orders as a public interest measure and the petitioners' claims of constitutional violations and financial hardship. The Court also considered the role of ESIC funds and other government schemes in alleviating wage burdens.Conclusions:The Court concluded that while the orders were withdrawn, the issues raised required a comprehensive resolution. It directed the government to file a detailed counter affidavit and encouraged negotiations between employers and employees to reach settlements on wage payments.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning:'We are of the view that all issues raised by the petitioners and the respondents have to be decided together and the piecemeal consideration is not warranted.'Core principles established:The Court emphasized the need for a balanced approach in addressing the economic impact of the lockdown on both employers and employees.The importance of negotiation and settlement between employers and employees was highlighted as a means to resolve wage disputes.The Court recognized the necessity of government intervention in providing economic relief measures during the lockdown.Final determinations on each issue:The Court directed the Union of India to file a detailed counter affidavit addressing the legal challenges to the orders. It also encouraged negotiations between employers and employees to reach settlements on wage payments for the lockdown period. The Court scheduled the matter for further hearing, indicating that the interim measures and negotiations should be pursued in the meantime.