News: Govt withdraws order directing companies to pay wages even during lockdown

Compensation & Benefits

Govt withdraws order directing companies to pay wages even during lockdown

On March 29, the home ministry had issued an order directing employers to pay of wages to workers without any deduction even while their businesses remain closed during the lockdown.
Govt withdraws order directing companies to pay wages even during lockdown

In its latest decision, the Indian government has withdrawn its earlier order directing companies to pay full wages to workers even when they are not in operation during the COVID-19-induced nationwide lockdown, which began on March 25.

This step from the government is expected to bring relief to many employers who were unable to pay full wages to their employees during the lockdown. On March 29, the home ministry had issued an order directing employers to pay wages to workers without any deduction even while their businesses remain closed during the lockdown.

"All the employers, be it in industry or shops and commercial establishments, shall make payment of wages of their workers, at their workplaces, on the due date, without any deduction, for the period their establishments are under closure during the lockdown," the order stated.

Post this order, numerous employers rushed to Supreme Court against the government’s order which allowed for action to be taken against those found in violation. The court had accordingly restrained the government from taking any coercive action against such companies.

Industry bodies had also opposed the MHA order citing their own cash flow issues as the reason behind their inability to make timely wage payments.

Businesses across the country are struggling to stay afloat due to the sudden halt in economic activity due to the nationwide lockdown to contain the spread of COVID-19. India has now entered the fourth phase of the lockdown, with fresh guidelines issued by the Centre in this regard.

On May 15 the Supreme Court had asked the central government not to take any coercive action for a week against companies and employers who are unable to pay full wages to their employees during the nationwide lockdown.

The court issued a notice on a plea of the Hand Tools Manufacturers Association, comprising of MSMEs seeking quashing of the order asking private establishments to pay full wages to their workers during the lockdown. The Association of Micro, Small and Medium Enterprises (MSMEs) said in its plea that the Ministry of Home Affairs had passed orders without due care and deliberation on the financial implications for employers.

The small industrial units warned that making full payments will lead to their closure, which, in turn, will cause permanent unemployment and adversely affect the economy. The current economic situation of the country is going through a rough phase and the government has announced various packages to help multiple industries. 

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Topics: Compensation & Benefits, Entrepreneurship, #COVID-19

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