RSM India

Newsflash on Employer's Obligations under Payment of Wages & Other Labour Law during COVID Crisis

The entire world including India has been tormented by the novel corona virus Covid-19. The World Health Organization (WHO) has declared it as a pandemic on 11 March 2020 and it represents the biggest global Health, Economic and Financial challenge in recent memory. The H”ble Prime Minister Sri Narendra Modi announced a lockdown of the country in his address to the nation on 24 March 2020 which has now been extended until 3 May 2020. With this, the entire nation was shut under the provisions of the Disaster Management Act, 2005 ('DM Act').

The Home Secretary in the Ministry of Home Affairs, in exercise of the powers conferred under sec. 10(2)(l) of the DM Act, in the capacity of Chairperson of the National Executive Committee, issued various orders to the central and state/UT governments and various ministries and departments of the government on 24.03.20, 25.03.20, 27.03.20 29.03.20, 14.04.20 and 15.04.20.. The order dated 29.03.20 is of particular relevance to employers of any industrial or commercial undertaking since it instructs the employers to pay full wages to workers during the lockdown without any deduction by deeming the workers to be on duty.

The point (iii) of the said order reads as under – “iii. 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 due to the lockdown.”

This order of the MHA has raised a lot of issues as to the liability of the employers to pay the wages to their workers during the lockdown. This FAQs tries to address some of the issues arising out of this order and its interpretation. Apart from the DM Act, there is the Epidemic Diseases Act, 1897 enacted at Central as well as State level under which various state governments have also issued lockdown even before the national lockdown under the DM Act. Further, apart from the orders under the DM Act and the Epidemic Diseases Act, the Ministry of Labour and Employment, being a nodal agency for all labour related regulations, has issued various advisories over the last 2 weeks.

The FAQ mainly deals with the interpretation of the issues arising out of the MHA order dated 29th March 2020 for employers and other related aspects. Those establishments which fall within the definition of essential services or are otherwise exempted from the lockdown are not impacted by the MHA order and hence, this note may not be relevant to them.

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