MHA withdraws order on compulsory payment of wages during lockdown

In what has come as a major relief to businesses and a cause for concern for salaried employees, the government on Monday withdrew its order mandating establishments to make timely and full payment of wages to workers. 

The order was withdrawn as part of the new guidelines issued for the fourth phase of national lockdown. 

In case of startups, multiple companies including ride-sharing platform Bounce, budget hospitality brand OYO, and ad-tech platform InMobi among others have announced salary-cuts in view of stalled business due to the Covid-19 pandemic. Information technology industry body Nasscom (National Association of Software and Service Companies) also made a representation to the government in April to pay only minimum wages and entitlements to bench employees in business process management (BPM) and global capability centres (GCC). 

The initial order issued by the Ministry of Home Affairs (MHA) on March 29 under the Disaster Management Act, 2005 listed measures to mitigate economic hardships on migrant workers, including payment of wages without deductions, relaxation on payable rent for a period of one month and provisions by the state government for temporary shelter and provision to feed poor and needy people. Workers, including those working in shops and commercial establishments, were expected to get full payments for the period of lockdown.

The new set of guidelines issued by the MHA on May 17 state that, “..save as otherwise provided in the guidelines annexed to this Order, all Orders issued by the National Executive Committee (NEC) under Section 10 (2) (I) of the Disaster Management Act, 2005, shall cease to have effect from 18.05.2020.”

The annexure to the order issued on May 17 does not include the previous order directing employers to pay wages in full. On Monday, the Supreme Court overturned the order by MHA and ordered the government to not take any coercive action against private companies unable to pay their employees full salary during the period of the lockdown. This was in response to a writ petition filed by Bengaluru-based company Ficus Pax Private Limited and Nagreeka Exports which challenged the constitutional validity of the order.

With the relaxations provided as part of the lockdown 4.0, multiple businesses and on-demand platforms including e-commerce, cab aggregators, retailers and offices have resumed operations in limited capacity.