Industry likely to seek subsidy to provide wages for workers during lockdown

Trade and industry associations are likely to represent the authorities in central and state governments over the issue of wages to workmen for the lock down period due to the COVID-19 epidemic.

Jeetender Gupta, Advocate-On-Record, Supreme Court has recommended that industry should represent the government without linking it with any other benefits and concessions that they expect from the government.

Some of the suggestions given by Gupta include a wage subsidy of 75 per cent of wages for all workers by the Government of India, especially for the MSME Sector. The government may cap the subsidy benefit to applicable minimum wages.

He also suggested the extension of EPF contribution benefit be extended to all establishments irrespective of the number of employees. The government may cap the benefit to that of applicable minimum wages.

It is also suggested that liberty be granted to employers to reduce salary for those employees which are not covered under definition of workman or worker under the Industrial Dispute Act or whose salary exceeds minimum wages.

The government may fix the subsistence allowance for all categories of employees to applicable minimum wages for the lockdown period and/or may permit layoff in accordance with law.

The government relief should include immediate financial assistance with reduced rate of interest, no collateral and an interest-free moratorium period to take care of employer liability towards wages and salaries.

Gupta said these measures can result in a level playing field for all stakeholders - government, workers, employees and employers while minimizing future litigation.

On the scope  of "workers" for the purpose of payment of wages as mandated under the lockdown by the Home Ministry, Gupta concludes that based on various advisories and orders issued by Central Government/State Governments, the scope of payment of wages shall extend to regular, casual & contractual workers.

"Workman" as defined under the Industrial Disputes Act 1947 will broadly include any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, but excludes those employed mainly in a managerial or administrative capacity.

Also excludes those employed in a supervisory capacity drawing wages exceeding Rs 10,000 a month (Ten thousand Rupees) per month. The limit of Rs 10,000 pertains only to those employed in supervisory capacity.

The term "Worker" or "Workman" does not find any mention in Payment of Wages Act 1936. Gupta says that therefore, any person who has been employed mainly in administrative, managerial or supervisory capacity and earning more than Rs 24,000/- per month would neither be regarded as a worker under Industrial Disputes Act 1947 nor will qualify for wages under Payment of Wages Act, 1936.

On the issue of whether employees be laid-off or terminated, Gupta said that presently, the various orders/advisories are against termination or retrenchment of employees.

"Lay-off" as per Industrial Disputes Act 1947 ("ID Act") includes failure or inability of an employer on account of natural calamity or for any other connected reason to give employment to a workman (Section 2 (kkk) of ID Act).

However, due process of law needs to be followed (Chapters VA and VB of ID Act) and should be considered as last resort, and that too only after the lock-down period is over after examining the financial implications of lay off / retrenchment etc. The laid off workmen shall be entitled for a compensation equal to 50% of salaries. (Section 25(C) of ID Act), Gupta said.

In a webinar presentation, K Varadan, Chief Consultation Officer, Aparajitha Group said that all the employers, be it in the industry or in the Shops and Commercial establishments, shall make payment of wages of their workers, on the due date, without any deduction, for the period their establishments are under closure during the lockdown.

On the termination of employees, he said that the Industrial Disputes Act and The Industrial Employment (Standing Orders) Act deal about lay-off. Temporary inability of an employer to provide work/employment could be treated as lay-off but the Disaster Management Act shall prevail over the above said Acts.