No action against employers for not paying wages: Supreme Court
What's the story
Giving a big relief to cash-strapped factory owners, the Supreme Court on Friday junked a circular from Ministry of Home Affairs, which pressurized them to pay full wages to workers, even during the lockdown.
The apex court said the Centre can't persecute firms if they are unable to pay salaries.
The coronavirus-necessitated lockdown has adversely affected the MSME sector and the workers.
Context
MHA order was termed arbitrary by employers
On March 29, MHA had passed an order directing industry, shops and commercial establishments, to pay salaries to workers, without any COVID-19 deductions.
Subsequently, a plea was filed against the directive, with employers saying this diktat violates Article 14 of the Constitution, pertaining to Right to Equality.
The move was also called arbitrary before a three-judge bench.
Plea
Obligation to pay, but no obligation to work, asked plea
The plea filed by companies including Nagreeka Exports Limited and Ficus Pax Private Ltd. read, "It is implicit in the fundamental right of an employer to trade or business that there is an obligation to pay when work is actually done and there is no obligation if no work is done."
They said an employee and employer have reciprocal promises.
Details
Companies also suffered since the lockdown started
Nagreeka, which deals with the manufacturing and export of cotton yarns, fabric, and textiles, said it incurred losses of Rs. 1.5 crore, since the lockdown started.
"The right of an employee to demand salary is reciprocal to performance of work by such employee. The employer has a right to not pay if no work is done," the plea went on.
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Centre has been asked to file a response
Passing an interim order on the matter, the bench, including NV Ramana, Sanjay Kishan Kaul and BR Gavai, said no coercive action must be taken against employers. This order will be valid till Centre files a reply on the pleas challenging the MHA directive.
Looking back
In the first tranche, Sitharaman said MSMEs would get relief
Meanwhile, on Wednesday, Finance Minister Nirmala Sitharaman said collateral-free loan up to Rs. 3 lakh crore will be given to MSMEs.
For MSMEs that are doing viable business and want to expand, the government set a Rs. 50,000 crore "Fund of Funds" to infuse equity into them.
The definition of MSMEs was changed to help extend the benefits to more firms.