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Covid-19: Payment of Wages in India - INs and OUTs


In the wake of Covid-19 outbreak, many countries across the world have put total lockdown in place, meaning thereby, the establishments or industries shall remain closed during the lockdown period. India, too, has already announced a 40 days lockdown in phases in order to implement social distancing. The non-essential factories, industries, business units as well as wholesale or retail shops are closed since 24th March, 2020. The employees working in these establishments had to face major sustainability hardships in absence of payment of wages. However, the Centre and state governments had come to their rescue by putting into place certain directions in this regard. In this article, we shall be going through the sequence of events in context of payment of wages to labour, following the lockdown caused due to outbreak of pandemic coronavirus.

Initially, on dated March 20, 2020, an advisory note was issued by the Ministry of Labour and Employment, India, vide which all public and private sector employers were asked to bear with their employees and workers by not terminating them and reducing their wages. However, the said note being a mere advisory and not in the form of direction or order, was not legally binding upon the private establishments or institutions.

Later, Ministry of Home Affairs, India, exercising its power under Section 10(2) (l) of The Disaster Management Act, 2005, passed an order on March 29, 2020, issuing various directions to State/Union Territory governments and authorities concerned. As per the said order, amongst other directions, specific direction was issued to the respective governments and authorities to make sure that all the employers shall make payment of wages to their workers. Notably, the word “employer” in the present context, was irrespective of it being an industry or any kind of shop or commercials establishment, thereby bringing all kind of employers under its realm. It further specifically stated that payment of such wages has to be done on the due date and shall under no circumstances any deduction from the same shall be made by the employer. The order further stated that this payment of wages by the employer shall be for the period of closure of establishment/shop etc during the lockdown as decided by the government.

The said order was immediately put into compliance by various state governments like West Bengal, Punjab, Uttar Pradesh, who issued advisory notes in this context asking the employers of industries, shops and commercial establishments not to terminate their employees and to treat them as if they are present on their respective duty and to make timely payment of their wages, referring order mentioned above.

However, the order passed by Ministry of Home Affairs has not gone down well with many industries and establishments, who have approached Supreme Court challenging the constitutional validity of said order by filing writ petitions, pleading therein that it is not possible for them to make payment of such wages as directed in the order as already the industries/establishments are under closure and running into losses. Hon’ble Supreme Court has sought reply from Centre Government in two weeks’ time.

Some states like Punjab and Himachal Pradesh, have asked the Union Ministry of Labour and Employment to allow the use of funds collected under the Employees’ State Insurance (ESI) scheme, to cover wages or part of the wages for employees during the lockdown period. They have raised concern that industries which are mostly in the micro, small and medium sector, are facing difficulty in making payment of wages as their establishments are under closure and there is no revenue generation. However, no decision in this regard has yet been taken by the Centre Government.

Conclusively, the order dated March 29, 2020, passed by Ministry of Home Affairs, stays operational and employers across the country have to abide by the same in order to avoid legal predicaments. However, the said order is silent in regard to lay-off and retrenchment, meaning thereby, the employers may exercise these options, but in that event too, we shall see surge in labour related litigation post lockdown.

Links to relevant documents:


The author is a B.Com, LL.B (Hons), LL.M, Advocate, practicing at District Courts, Ludhiana. He can be reached at kalia.advocate@gmail.com. Views expressed herein are personal views of author.

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