Coronavirus: Supreme Court upholds MHA order, employers will not be prosecuted for failure to pay wages

Supreme Court of India. Stock Image The SC has maintained the circular of the Ministry of the Interior that orders private companies to continue paying full wages during the shutdown.

Cut wages during closing: The Supreme Court on Friday suspended the operation of a government circular asking private companies, including MSMEs, to pay full wages to their employees during the coronavirus-induced shutdown. The court also asked the Center and states not to prosecute private companies, factories, and others for nonpayment until next week. The Center had sought the time of one week to present its response on the matter.

On March 29, the Interior Ministry issued a circular ordering all private companies to continue paying full wages during the shutdown. The order had also warned of the legal consequences if instructions for payment of full wages were not followed.

The Interior Ministry order was necessary after incidents involving companies that cut wages and fired people in view of the reduction in business and income due to the closure.

Previously, on March 29, the higher court had asked the MHA to explain why its order that private companies pay full wages without deductions should not be suspended.

The Supreme Court suspended the MHA order while listening to various petitions filed by companies, including the Ludhiana Hand Tools Association and Ficus Pax. They sought to reverse the MHA circular and blamed the government for approving such orders without due care and deliberation about the financial implications for employers. The petitioners warned that making such payments will lead to the closure of many of the units and that in turn will cause permanent unemployment and adversely affect the economy.

“The government has not taken any steps to have the workforce impose on employers the burden of paying full wages,” said the Ludhiana-based association of hand tool makers, which comprises 41 MSMEs. The petition added that an employer and an employee have reciprocal promises that an employee’s right to demand wages is reciprocal to that employee’s job performance. Furthermore, the petition stated that an employer has the right not to pay if no work is done.

They even stated that hundreds of millions of millions of unclaimed provident funds and the contribution of the State Employees Insurance Corporation are in banks that could be used by the government instead of being a burden on the private sector.