No Action Against Companies For Non-Payment To Workers: Top Court Tells Centre

The bench said there shall be no coercive action against any of these companies for failing to pay full wages to its employees till next week.

No Action Against Companies For Non-Payment To Workers: Top Court Tells Centre

Small companies may not be earning and therefore unable to pay, the top court observed.

New Delhi:

The Supreme Court on Friday asked the government not to take any coercive action till next week against the companies and employers who are unable to pay full wages to their employees during the nationwide lockdown due to the coronavirus pandemic.

There may be small companies which are not earning and therefore unable to pay, the top court observed.

A bench of Justices L N Rao, S K Kaul and B R Gavai, hearing multiple petitions on the issue through the video conferencing, observed that the Ministry of Home Affairs (MHA) circular of March 29, directing companies to make payment of full wages to workers, was an omnibus order and there was a larger question involved which needs to be answered.

The top court issued notice on a plea of Hand Tools Manufactures Association, comprising of MSMEs seeking quashing the order asking private establishments to pay full wages to their workers during the ongoing lockdown.

Solicitor general Tushar Mehta, appearing for the Centre, said that he had a conference on the issue and needs to file a detailed response on the pleas.

The bench said there may be small industries, which are affected due to the lockdown as they can sustain for say 15 odd days but not more and if they cannot earn, how are they going to pay their workers.

"This is an omnibus order (March 29). There is a larger question involved and government has to find an answer to it," the bench observed and posted the matter for next week.

It added that if the government does not help these small companies, then they will not be able to pay to their workers.

Senior advocate Jamshed Cama, appearing for the association, said the companies are going out of work as they do not have orders for production of goods and they are being prosecuted due to the government circular.

He said the government must hold hands of these companies and help them but they cannot be prosecuted.

The bench said there shall be no coercive action against any of these companies for failing to pay full wages to its employees till next week.

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.

They have said that such a blanket direction for payment of full salaries is arbitrary, unconstitutional and unsustainable.

The association further contended that during this unprecedented situation, various governments across the globe have taken measures for the benefit of workers/ employees, but the Centre without taking any such step has put the entire burden on the employers/owners to pay full wages.