Employers Won’t Be Prosecuted For Non-Payment Of Wages: Supreme Court stays MHA order


Salary cut during Lockdown: The Supreme Court on Friday stayed the operation of a government circular asking private companies including MSMEs to pay full salaries to their employees during the coronavirus-induced lockdown. The supreme court also asked the centre and states not to prosecute private firms, factories, companies and all others over non-payment till next week. The Centre had sought a week’s time to file its reply in the matter.

The MHA (Ministry of Home Affairs) had on 29-March-2020 issued a circular directing all private enterprises to continue payment of full salaries for the duration of the lockdown. The order had also warned of legal consequences if the directions for payment of full salaries were not complied with.

The order by the MHA was necessitated following incidents of companies cutting wages and laying off people in view of reduced business and revenues due to the lockdown.

Earlier on March 29, the top court had asked the MHA to explain as to why its order directing private enterprises to pay off full wages without any deductions should not be stayed.

The SC stayed the MHA order while hearing various petitions filed by companies including Ludhiana Hand Tools Association and Ficus Pax. They sought the quashing of the MHA’s circular and blamed the government of passing such orders without due care and deliberation on the financial implications for the employers. The petitioners warned that making such payments will lead to the closure of many of the units and which in turn will cause permanent unemployment and will adversely affect the economy.

“Government has not taken any steps for workforce instead put the burden on employers to pay full wages,” Ludhiana-based association of hand tools manufacturers, comprising of 41 MSMEs, said. The petition added that an employer and employee have reciprocal promises whereby the right of an employee to demand salary is reciprocal to performance of work by such employee. Besides, the petition said, that an employer has a right not to pay if no work is done.

They even stated that hundreds of crores of unclaimed provident fund and Employees State Insurance Corporation contribution lie in banks that could be used by the government rather than putting burden on the private sector.

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