Continuation of Services of Workman/Employees on full pay during the COVID-19 Lockdown

V. Siddharth & Abhishek Puri

Amidst the present COVID 19 pandemic, one issue which is likely to affect almost every strata of society, from the CEO of a multinational, to the daily wage labourer, is the issue of employment. During what is being referred to as the World’s biggest lockdown, it is seen that apart from a few exempted professions, “work from home” has gone from a term of art to a worldwide phenomenon. While certainly novel, it has to be kept in mind that such a luxury is only available to a small percentage of the population. For the majority of Indians, especially those operating in the manufacturing, production or construction sectors, the lockdown means a complete restraint on output, leading to a complete halt on revenue generation. As such, probably the first point of impact is on pockets of the employers, who, in the preceding financial year have in any event been looking at tightening the purse-strings in view of the much predicted economic slowdown gripping almost all industries. These employers are now facing an even more immediate concern following the diktats being issued by the government authorities to ensure that their employees/workers receive their salary/wages in full regardless of the fact that for the past fortnight, the employers have barely been able to utilize their services. In the present article, we shall be striving to understand the legal basis behind such measures being introduced, as also the consequences for such measures not being implemented.

Advisories and Orders Issues by the Central Government

Following the social distancing advisories issued by the Central Government beginning from around 10th March, it was quickly discernible that the same would result in closing of various workplaces, with employees/workmen being asked to work from home. Accordingly, the government was prompt in issuing advisories to deal with the consequential effects.

Vide Circular bearing D. O. No. M-11011/08/2020-Media dated 20.03.2020, the Secretary, Ministry of Labour and Employment issued an advisory to the Chief Secretaries of all the States/Union Territories stating as follows:

The World is facing a catastrophic situation due to outbreak of COVTD- 19 and in order to combat this challenge, coordinated joint efforts of all Sections of the Society is required. In view of the above, there may be incidence that employee’s / worker's services arc dispensed with on this pretext or the employee/worker arc forced to go on leave without wage / salaries.

In the backdrop of such challenging situation, all the Employers of Public/ Private Establishments may be advised to extend their coordination by not terminating their employees, particularly casual or contractual workers from job or reduce their wages. If any worker takes leave, he should be deemed to be on duty without any consequential deduction in wages for this period. Further, if the place of employment is to be made non-operational due to COVID-19, the employees of such unit will be deemed to be on duty.

The termination of employee from the job or reduction in wages in this scenario would further deepen the crises and will not only weaken the financial condition of the employee but. also hamper their morale to combat their fight with this epidemic. In view of this, you are requested to issue necessary Advisory to the Employers/Owners of all the establishments in the State.

Similar advisories were issued by the Ministry on 20.03.2020 and 23.03.2020 to Employers Associations and various other government departments, urging the aforesaid advise to be followed by employers falling under their domain. Thereafter, on 24.03.2020, the provisions of the Disaster Management Act, 2005 were called into action by the Central Government. By way of an order dated 24.03.2020, the National Disaster Management Authority (NDMA), constituted under section 3 of the Disaster Management Act, 2005 declared that it is satisfied that the country is threatened by the spread of COVID-19, and stated that it is necessary to take effective measures to prevent its spread across the country and for mitigation of the threatening disaster situation. The order further stated that there is a need for consistency in the application and implementation of various measures across the country. While invoking powers under section 6(2) (i) of the Act, the NDMA directed Ministries, Department of the Government of India, State Governments and State Authorities to take measures for ensuring social distancing so as to prevent the spread of COVID 19 in the country. The said order also intimated that necessary guidelines in this regard shall be issued immediately under section 10(2)(i) of the Act by the National Executive Committee (constituted under section 8 of the Act).

Accordingly, the Home Secretary to the Government of India, vide order dated 24.03.2020, acting in his capacity as Chairperson, National Executive Committee, issued guidelines to the Ministries, Department of the Government of India, State Governments and State Authorities, directing strict implementation of these guidelines. The said guidelines were further amended vide addendums dated 25.03.2020 and 27.03.2020, requiring all commercial and private establishments to be closed down, except for certain establishments which are considered as essential. The guidelines provided that all other establishment may work from home only.

As noted above, majority of industries / establishment are not in a position to implement a “work from home” protocol, by the very nature of the work to be performed. As a result, in effect, the lockdown measures directly impeded manufacturing and production of “non-essential goods”, construction work and other physical work. As expected, employers started turning away its workmen, unable to utilize their services. Resultantly, as covered in the media a large exodus of migrant workers from the metropolitan cities began from the 26th of March, which went directly contrary to the objective behind the lockdown measures.

In order to meet such a situation, and in an apparent effort to curb such migration, the National Executive Committee issued an order on 29.03.2020 wherein it has been directed as follows:

Whereas, in exercise of the powers, conferred under Section 10(2)(1) of the Disaster Management Act, the undersigned, in his capacity as Chairperson, National Executive Committee, has issued an Order of even number dated 24.03.2020, followed by Addendum Orders of even number dated 25.03.2020 and 27.03.2020 to the Ministries / Departments of Government of India, State/Union Territory Governments and State/ Union Territory Authorities with the directions to implement lockdown measures annexed to the said Orders for the containment of spread of COVID-19 in the country;

Whereas, movement of a large number of migrants have taken place in some parts of the country so as to reach their home towns. This is a violation of the lockdown measures on maintaining social distance;

Whereas, to deal with the situation and for effective implementation of the lockdown measures, and to mitigate the economic hardship of the migrant workers, in exercise of the powers, conferred under Section 1 0(2)(1) of the Disaster Management Act 2005, the undersigned, in the capacity as Chairperson, National Executive Committee hereby directs the State/Union Territory Governments and State/ Union Territory Authorities to take necessary action and to issue necessary orders to their District Magistrate/ Deputy Commissioner and Senior Superintendant of Police/ Superintendant of Police/ Deputy Commissioner of Police, to take following additional measures:

(i) **

(ii) **

(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 during the lockdown;

(iv) **

(v) **

It is further directed that in case of violation of any of the above measures, the respective State/UT Government, shall take necessary action under the Act. The District Magistrate/ Deputy Commissioner and Senior Superintendant of Police/ Superintendant of Police/ Deputy Commissioner of Police will be personally liable for implementation of the above directions and lockdown measures issued under the above mentioned Orders.”

As may be seen, although the said order is based upon the exigent circumstances of migrant workers, the direction contained at Sl. No. iii is general, and would appear to be applicable to all employers, regardless of whether their workforce consists of migrant workers or not. Such a direction, if required to be implemented, will ensue grave economic hardship to employers who require revenue generated from sales/output in order to meet expenses of salaries and wages to employees and workmen. Under such circumstances, although the employers are unable to generate revenue due to non-operation, they are still required, under this order, to make payments to the employees/workmen. However, it may be noted that the said order, in contrast to the advisories issued beforehand, does not appear to prohibit retrenchment of employees/workmen.

Supreme Court Observations and Directions

On 31.03.2020, the Central Government filed a status report before the Hon’ble Supreme Court in W.P. (C) 468/2020 which had been filed seeking redressal of the issues being faced by migrant workmen. In the said status report, at the Central Government has stated as follows:

"50. It is also directed that those migrant workers who have moved and were due to reach their respective States / home towns, must be kept in the nearest shelter of respective States/home towns in a quarantine with proper screening of minimum period of 14 days as per the standard health protocol."

With a view to ensure that there is no further problem faced by migrant workers and other poor sections of the society, directions are issued in exercise of powers under the Disaster Management Act, 2005 that all employers, be it in the industry or in the shops and /or other commercial establishments, shall make payment of wages to their workers at their work places on the due date without any deduction for the period of such establishments are under closure during the lockdown.

51. It is submitted that these directions issued under the Disaster Management Act are mandatory to be implemented for which the District Magistrate and Senior Superintendent of Police/Deputy Commissioner of Police of each District are made personally liable for strict compliance with such directions. They are also under a mandate to enforce one more directive of the Central Government i.e. to ensure that the migrant workers and other poop (sic) people who are living in rented accommodation shall not be compelled to pay rent by their landlords. If any landlord flouts this direction, they shall be liable for action under the Disaster Management Act.” (emphasis supplied)

In the order dated 31.03.2020 passed by the Supreme Court pursuant to the filing of the aforesaid status report, it is seen that the Hon’ble Court has not directly expressed any views on the specific direction relating to payment of salaries and wages to workmen, but has expressed overall satisfaction with the steps taken by the government. The Hon’ble Court has further made the following observations and directions, which may be relevant for the present issue:

“Disobedience to an order promulgated by a public servant would result in punishment under section 188 of the Indian Penal Code. An advisory which is in the nature of an order made by the public authority attracts section 188 of the Indian Penal Code.

We trust and expect that all concerned viz., State Governments, Public Authorities and Citizens of this country will faithfully comply with the directives, advisories and orders issued by the Union of India in letter and spirit in the interest of public safety”.

As such, it may be seen that the Supreme Court has given a general direction that all stakeholders are required to abide by the “directives, advisories and orders” issued by the Central Government. He order dated 29.03.2020, thus, can be viewed as having received, at the least, implicit backing by the Apex Court. It may also be noted that although the order dated 29.03.2020 does not stipulate a prohibition against retrenchment of the workmen/employees, the earlier advisories of the Ministry of Labour and Employment, do prohibit the same. Although ordinarily “advisories” are not be enforceable in a court of law, not having the force of law, on a reading of the aforesaid order of the Apex Court, a view can be taken that noncompliance with the aforesaid advisories could result in prosecution under section 188 of the IPC.

The aforesaid MHA order dated 29.03.2020, directing payment of full wages has now been challenged before the Hon’ble Supreme Court. As per reporting in Bar & Bench, the Supreme Court on 27.04.2020 has issued notice on the challenges and has given two weeks to the Central Government to put its policy on record regarding such directions. Outcome of these challenges would therefore bear extreme relevance to the issue at hand.

Analysis of the Provisions of the Disaster Management Act

Since the Centre has invoked provisions of the Disaster Management Act, 2005, it may be fruitful to analyse the same. Section 10(2)(i) of the Act, provides as follows:

10. Powers and functions of National Executive Committee.—

(1) The National Executive Committee shall assist the National Authority in the discharge of its functions and have the responsibility for implementing the policies and plans of the National Authority and ensure the compliance of directions issued by the Central Government for the purpose of disaster management in the country.

2) Without prejudice to the generality of the provisions contained in sub-section (1), the National Executive Committee may—

(a - g) ***

(i) evaluate the preparedness at all governmental levels for the purpose of responding to any threatening disaster situation or disaster and give directions, where necessary, for enhancing such preparedness;

(f to q) ***

Under Section 2(d) of the Act, “disaster” is defined as a “catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or manmade causes, or by accident or negligence which results in substantial loss of life or human suffering or damage to, and destruction of, property, or damage to, or degradation of, environment, and is of such a nature or magnitude as to be beyond the coping capacity of the community of the affected area”.

Under section 2(m), preparedness is defined as the “state of readiness to deal with a threatening disaster situation or disaster and the effect thereof”. Interestingly, the phrase “threatening disaster situation” is not defined, but is contrasted with the term “disaster” by virtue of “or” being used in the said provision.

In any event, upon a conjoint reading of section 10(2)(i) along with the aforesaid definitions, it appears that the National Executive Committee has the powers to give directions to enhance the readiness to deal with a disaster (or threatening disaster situation) and the effects thereof. However, in view of the opening words of section 10(2)(i) it appears that the power is limited while assessing the preparedness at “all government levels”. As such, prima facie, it does not appear that the said provision gives power to the National Executive Committee to issue directions directly to the private employers.

Even if the aforesaid directions contained in the order dated 29.03.2020 are considered to be directed only towards the “Ministries, Department of the Government of India, State Governments and State Authorities”, it is unclear as to the power available with such authorities to ensure the “strict implementation” or to direct the private employers to follow the mandate of retaining the services of employees and to make full payment of salaries/wages. Admittedly, the penal provisions contained in sections 51 and 58 can be called into action to punish persons/entities disobeying orders given under the Act. However, the provisions of the Act do not appear to directly provide the authorities with the power to require private persons/entities to disburse monetary amounts, whether as salaries/wages or otherwise, in order to respond to a Disaster situation.

We have seen section 65 of the Act, which provides the National Executive Committee, State Executive Committee or District Authority or any officer that may be authorized in this behalf to requisition resources, provisions, vehicles etc. for rescue operations. Subsection 3 of Section 65 provides an inclusive definition of “resources” stating that it includes “men and material resources”. However, in the absence of any clarification from the government, it is unclear whether a direction, as contained in the order dated 29.03.2020, would fall within the meaning of requisition of “resources” i.e. that the government has decided to requisition the money available with the employers in order to give a “prompt response” to the situation by directing payments to the employees/workmen. However, since any requisition under section 65 requires to be made an “order in writing”, at the moment, it may not be possible to assume such action to be under section 65, since the order dated 29.03.2020 is silent on application of section 65.

It is further observed that although requisition has not been defined under the Act, by its very nature, unlike the phrase acquisition, it is of temporary nature and does not have an element of permanence. Further, section 66 of the Act provides for compensation for requisition. It may be noted that although section 66 explicitly only provides for compensation for requisition of “premises” and “vehicles”, if requisition of “resources” is not compensated, the provision itself could be liable to be challenged on the grounds of violations of fundamental rights.

Further, if such measures are considered as mitigation or rehabilitation efforts, payments for the same are required to be made from the National Disaster Response Fund or the State equivalent, and not by directing private persons to make such payments. [See sections 6(2)(g), 18(2) (f), 35(c), 38(d), 46 to 49].

In view of the above, it is unclear as to whether the directions contained in the aforesaid order dated 29.03.2020, have any legal backing within the confines of the Disaster Management Act, 2005 and it remains to be seen as to how the State Authorities implement the order dated 29.03.2020.

Situation in Delhi and the Provisions of The Epidemic Diseases Act

The situation is slightly more complicated in the NCT of Delhi. Even before the imposition of the nation-wide lockdown, vide Notification bearing No. F.51/DGHS/PH-IV/COVID-19/202-215, the Lt. Governor of Delhi has issued “The Delhi Epidemic Diseases, COVID-19 Regulations 2020” (“Delhi COVID Regulations”), under section 2, 3 & 4 of the Epidemic Diseases Act, 1897. Since the Delhi COVID Regulations appear to be the temporary regulations which are contemplated in Section 2(1) of the Epidemic Diseases Act, 1897, by virtue of section 3 of the said Act, it appears that contraventions of the Delhi COVID Regulations would attract penalty and such person disobeying the regulation would be deemed to have committed an offence punishable under section 188 of the Indian Penal Code [S. 188 IPC: Disobedience to order duly promulgated by public servant; Cognizable, punishment of up to six months imprisonment and or fine of Rs. 1,000 if such disobedience causes or tends to cause danger to human life, health or safety].

Under the Delhi COVID Regulation, Regulation 15 provides as under:

15. All advisories issued / to be issued by the Government of India on COVID-19 will ipso-facto be treated as directions under this Act in NCT of Delhi.

As aforesaid, vide circulars dated 20.03.2020 and 23.03.2020, the Central Government through the Ministry of Labour and Employment had issued “advisories” to employers and the governments of all States/UTs to advise employers of Public / Private Establishments to extend their cooperation towards combating COVID 19 by not termination their employees, particularly casual or contractual workers from job or reduce their wages. It was further advised that if any worker takes leave, he should be deemed to be on duty without any consequential deduction in wages for this period.

By virtue of Regulation 15 of the Delhi COVID Regulations, the advisories issued by the Central Government, through the Ministry of Labour and Employment, can be considered as directions applicable to the NCT of Delhi under the Epidemic Diseases Act, 1897. Therefore, it is conceivable that an employer in Delhi, who does not follow the advisory issued by the Ministry of Labour and Employment, can be considered as having violated a direction under Regulation 15 of the Delhi COVID Regulations and thus liable to penalty under Section 3 of the Epidemic Diseases Act, 1897.

However, it must be noted that the language of section 2(1) of the Epidemic Diseases Act, 1897 requires the State Government to apply its mind on the regulations required to meet the spread of the disease. As such, a blanket regulation, such as Regulation 15, especially if it treats the advisories issued by the Ministry of Labour and Employment as directions to the private employers, can possibly be challenged on the basis that there has been no application of mind by the State Government on whether such measures actually will combat the spread of the disease.

Furthermore, the Government of NCT of Delhi had also issued an order bearing F. 51/DGHS/PHIV/COVID-19/2020/prsecyhfw/3064-3163, notifying the lockdown in the whole of territorial jurisdiction of NCT of Delhi from 0600 Hrs on 23.03.2020 to midnight of 31.03.2020. From the text of the order, it is observed that the lockdown and the attached stipulations have been notified by the Government of NCT of Delhi in exercise of its powers under the Epidemic Diseases Act, 1897. Para 5 of the said order reiterates as follows:

5. The employees of private establishments (including emporary / contractual / outsourced etc.) required to stay at home in view of this order shall be treated as “on duty” and be paid in full.

Further para 7 of the said order states that any person found violating this order shall be prosecuted as per the relevant provisions of law. Para 20 provides that the regulations shall come into force immediately (i.e. on 12.03.2020) and shall remain valid for a period of one year from the date of publication of the notification.

Thus it may be seen, that the order dated 22.03.2020, purporting to be an order under the Epidemic Diseases Act stipulates that employees not being able to attend office due to the lockdown shall be treated as “on duty” and paid in full, and any violation thereof shall be prosecuted in accordance with law, presumably under section 3 of the Epidemic Diseases Act, 1897.

It is to be kept in mind that the legality of the aforementioned orders/regulations would have to be tested on the anvil of whether such directions can be issued under section 2(1) and if such regulations/orders could have been deemed necessary to prevent the outbreak of such disease or spread thereof. It is conceivable that the Govt. of NCT of Delhi can argue that in the absence of such regulation/orders, workers would have to attend to work for fear of reduction in salary/wages or termination of their services and thus increase the risk of spread of the disease. In doing so, the Govt. of NCT of Delhi can also rely upon the advisories issued by the Government of India wherein it is being constantly reiterated that “The termination of employee from the job or reduction in wages in this scenario would further deepen the crises and will not only weaken the financial condition of the employee, but also hamper their morale to combat their fight with this epidemic.”

However, as stated hereinabove, the above steps would entail huge costs for employers, who are required to make full payments, even though their output and profits may be hampered on account of the lockdown. It is observed that under section 2(1) of the Epidemic Diseases Act, 1897, the State Government has the power to “determine in what manner and by whom any expenses incurred (including compensation if any) shall be defrayed”. However, from a perusal of the Delhi COVID Regulations, as also the order dated 22.03.2020 issued by the Govt. of NCT of Delhi, it does not appear that the Govt. of NCT of Delhi has made any such determination on even whether such expenses incurred are to be compensated or not. From a reading of section 2(1) of the Epidemic Diseases Act, 1897, in the facts of the present situation, it appears that a direction to continue the services of employees at full salary/wages, may necessarily also require a determination by the State Government on how such expenses incurred by employers are to be compensated, otherwise the same could lead to a wide-scale adverse economic impact. Therefore, the Govt. of NCT of Delhi, if it deems fit to issue directions for continuation of services of employees, should also determine methods of compensating employers for the same, failing which such directions to continue services of employees can be challenged in a court of law, again on the grounds that such directions violate the fundamental rights of the employers, and are against public interest on account of the adverse economic impact. In this regard, the government of Delhi, through the Chief Minister, in his public press conferences, has repeatedly assured that the employers would be compensated for such payments to workers/employers, but so far, no formal orders/legislations have been passed in this regard.

Situation in Maharashtra

Pursuant to the advisories issued by the Union Ministry of Labour and Employment on 20.03.2020, the Office of the Commissioner of Labour, Government of Maharashtra issued a circular on 20.03.2020 itself, addressed to the various intra-state labour authorities, with the subject “Not to terminate the employees/workers from job or to reduce their wages in view of outbreak of COVID 19 pandemic”. The said circular reproduced the language of the advisories issued by the Union Ministry and directed the labour authorities to issue necessary advisory to the Employers/Owners of all establishment in their respective jurisdictions.

Thereafter, the lockdown notice dated 23.03.2020, was issued by the Government of Maharashtra through the Department of Revenue and Forest, Disaster Management, Relief and Rehabilitation. As per the notification, the lockdown has been imposed in “exercise of the powers conferred under section 2 of the Epidemic Diseases Act, 1897, read with all other enabling provisions of the Disaster Management Act, 2005, 2005” The notification further prescribes regulations including Regulation 7 which mandates all shops, commercial establishments, offices and factories, workshops, godowns etc. to close their operations. However, there does not appear to be any direction/regulation for continuation of services of employees on full salary/wages while such operations are shut.

However, keeping in view the order of the National Executive Committee dated 29.03.2020, and the Supreme Court’s observations/directions passed in the order dated 31.03.2020 in WP(C) No 468/2020, it appears that non-compliance with the requirement to pay full wages/salaries to employees and workmen, or non-termination of their services on account of COVID 19 could attract penal action even in Maharashtra under section 188 IPC read with the provisions of the Disaster Management Act, 2005.

Conclusion

The above discussed measures, relating to payment of salaries/wages, are inherently measures which would interfere with private contracts between employers and workers, and thus will lead to questions as to the legality of such measures.

So far, the Central Government has invoked provisions of the Disaster Management Act, 2005, whereas the Delhi Government has invoked provisions of the Epidemic Diseases Act, 1897, in order to give statutory backing to measures to ensure that workers/employers are paid full salary/wages. Being a welfare state, and in view of directive principles contained in the Constitution, as also with support of the provisions of the Disaster Management Act and Epidemic Diseases Act, the respective governments can argue that such measures are necessary and essential towards curbing the spread of COVID-19. The Supreme Court, vide its order dated 31.03.2020 in W.P(C) 468/2020 has also passed general directions that all stakeholders, including government authorities and citizens are required to comply with the directives, advisories and orders passed by the government authorities.

However, at the same time, none of the regulations/directions of the authorities make any provision for compensation to employers for the adverse impact on their financials caused by these measures. Further, as discussed hereinabove, the provisions relied upon by the authorities may not give sufficient backing to the measures being imposed by them. In view thereof, any entity/person, who’s economic survival and solvency is gravely prejudiced by such measures could possible challenge them on their legality and constitutionality. It is perhaps also possible to argue that, in the absence of any provision of compensation, the measures discussed hereinabove ought to be construed as “directory” rather than “mandatory”, as the authorities, both at Centre as also State Level, have failed to provide for compensation, and thus have not fully complied with the requirements under law while issuing such advisories/orders.

In the meantime however, since the Order dated 29.03.2020 of the MHA, specifically directs the various police authorities to ensure strict compliance of the directions contained therein, it does appear that at this stage, non-payment of full wages/salaries to employees/workmen could be penalised by the Police Authorities under section 188 of the IPC. Further, with respect to retrenchment, the Supreme Court order dated 31.03.2020 read with the advisories issued by the Central government, can perhaps authorize the Police to take action against any employer if workers/employees are retrenched.

In the meantime, the outcome of the challenges to such directions, pending before the Supreme Courts, would give much needed clarity to the present situation.

It may also be noted that the present situation is dynamic with day to day updates, affecting the position in law. In view thereof, it would be advisable for employers to take appropriate legal advice before taking any action with respect to reduction of salaries/wages of their employees or while considering retrenching such employees.