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Relief for businesses as Home Ministry invalidates order mandating payment of wages during lockdown

In what may come as a major relief to businesses across the country, it is now no longer mandatory for employers to pay their workers wages during the period of the Covid-19 lockdown. 

The Union Ministry of Home Affairs (“the MHA”) issued an order dated May 17, 2020 (“the May 17 Order”) laying down the new guidelines and SOPs to be adhered to during Lockdown 4.0, which will be in effect from May 18, 2020 to May 31, 2020.

The May 17 Order countermands all orders previously issued by the National Executive Committee (NEC) under the Disaster Management Act, 2005 w.e.f. May 18, 2020. The May 17 Order reads, “save as otherwise provided in the guidelines annexed to this Order, all Orders issued by NEC under Section 10(2)(1) of the Disaster Management Act, 2005, shall cease to have effect from 18.05.2020”.

Annexure I to the May 17 Order lists six sets of Standard Operating Procedures (SOPs) – mostly related to the movement of persons – that will continue to remain in force. MHA Order dated March 29, 2020 (“the March 29 Order”), that mandated payment of wages to workers during the lockdown period,  fails to find mention thereunder. 

Vide the March 29 Order, the MHA, in an attempt to mitigate the economic hardship of migrant workers, had directed State authorities to issue orders and ensure, among other things, that “all 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 during the lockdown;”.  

The March 29 Order would, however, be applicable for the period preceding May 18, 2020, unless the Supreme Court decides otherwise. The March 29 Order has been challenged in several petitions filed before the Supreme Court for being “arbitrary, illegal, irrational, unreasonable and contrary to the provisions of law including Article 14 and Article 19(1)(g) of the Constitution of India.

The termination of employment and the payment of wages shall now be in accordance with the applicable labour laws in the respective States, and may not be uniform across the country. This is because labour is a subject in the Concurrent List under the Seventh Schedule of the Constitution of India, whereby both Union and State governments are competent to enact legislations on the subject. State governments may, therefore, enact separate legislations on the issue which can be in contravention of MHA Orders.

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