Home Legal News [Payment of wages] No coercive action against employers for non-compliance with MHA order mandating full payment of wages to employees: SC

[Payment of wages] No coercive action against employers for non-compliance with MHA order mandating full payment of wages to employees: SC

by Preeti Dhoundiyal
Ministry of home affairs (MHA)

Today, an interim order was passed by the Supreme Court stating that no coercive action should be taken against employers for failure to comply with the March 29 order of the Ministry of Home Affairs (MHA) for full payment of wages.The Court reserved orders on the petitions challenging the MHA notification and restrained coercive action till June 12.

A bench comprising Justices Ashok Bhushan, S K Kaul and M R Shah, ordered,”No coercive action will be taken against any employers pursuant to March 29 MHA order. Therefore, interim order to continue till June 12. All parties given liberty to file written submissions within three days.

ALSO READ – Plea in Supreme Court seeks action against employers terminating employees during COVID-19 Lockdown

 AG told in the case of payment of wages that MHA notification was to prevent human suffering. The direction was intended to prevent human suffering issued by the Ministry of Home Affairsamid the national lockdown, said Attorney General, KK Venugopal.

The AG in response to a batch of petitions challenging the order issued on March 29 invoking the powers under Disaster Management Act said that, “The notification is for preventing human suffering.”

The AG explained that”People were migrating in crores; they wanted the industries to continue. The notification was to keep the workers put; they would only stay put if they are paid“,

Submissions, that the National Executive Committee under the Disaster Management Act can issue the notification, as the Act gives it wide powers “lay down guidelines of any kind” to deal with disasters were provide by the AG.

Reservations were being expressed by the bench.

However, concerns were raisedregarding the viability of direction to pay 100% wages when the industries and establishments were forced to shut down by the bench comprising Justices Ashok Bhushan, S K Kaul and M R Shah.

Justice ashok bhushan
Justice Ashok Bhushan
sk kaul
Justice S K Kaul
payment of wages
mr shah
Justice M R Shah.

We are concerned with 29 March notification. It asks for 100 per cent payment and prosecution. We have reservations over this. Some discussion should be held to work out some solution for this period of time“, Justice S K Kaul observed.

 The fact that Government invoked Disaster Management Act, instead of the Industrial Disputes Act, and insisted that employers should pay 100% wages while considering payment of wages , was also pointed by the bench.

The question is do you have power to get them to pay 100 per cent and on their failure to do so, prosecute them…There is a concern that workmen should not be left without pay, but industry may not have the money to pay“, Justice Kaul remarked.

The government should play the role of a facilitator and negotiations with the industry should be done with respect to payment of wages, the bench replied.

The bench had also told the AG to find via media and give practical solution to the issue.

The Court should consider the background of humanitarian situation due to which the order was issued, insisted the AG.

The most appropriate thing would be to consider the humanitarian situation due to which this order was issued“, he said.

Prayers of some petitioners seeking to direct the Government to subsidize wages were also insisted to the AG by the Bench.The Government had already taken a decision to infuse Rs.20,000 crores into the MSME sector was given as a reply.

Stress onnegotiations with the employers was intended by the Bench.

Some negotiations have to happen between employers and workmen to iron out what to be done for the salary for these 54 days“, Justice Bhushan observed.

Justice S K Kaul while highlighting payment of wages added “On one hand you say you’re trying to put money in the pocket of worker, so now some negotiation is required for a solution“.

MHA affidavit contented that financial incapacity was not a ground to challenge the order.

Earlier, the MHA filed a counter-affidavit in the cases, defending the March 29 notification. Financial incapacity cannot be a reason to challenge the notification in the case of payment of wages , the MHA said.

Financial incapacity is a legally untenable ground to challenge a direction issued by a competent authority in the exercise of its statutory power“, stated the MHA’s counter affidavit.

The directions were a temporary measure to “mitigate the financial hardship of the employees and workers specially contractual and casual during the lockdown period.” MHA explained.

The Court was informed that the March 29 notification has ceased to have with effect from May 18 by the MHA.


The SC had passed an interim order in the petitions filed by Hand Tools Manufacturers Association and Jute Mills Association that that no coercive action should be taken against the petitioners for non-compliance of the MHA direction in case of payment of wages , On May 15.

The SC had issued extended the interim orders passed in the cases of Hand Tools Manufacturers Association and Jute Mills Association, On May 26.

On May 26, the petitions challenged the order issued by Home Secretary invoking powers under Section 10(2)(l) of the Disaster Management Act 2005, which directed as follows :

All the employees, be it in the Industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the lockdown

Since operations are completely shut down during the lockdown, it was impossible for the employers to continue to bear the burden of full payment of wages of employees and the MHA direction was challenged as unreasonable, arbitrary and as a violation of the fundamental right to trade and business of the employers by the petitioners.

The argument had also been raised by the petitioner(s) that the impugned direction was beyond the scope of powers conferred under the Disaster Management Act.

One of the pleas said,”Interpreting Section 10(2)(l) of the Disaster Management Act 2005 as conferring power on the Central Government to direct Private Establishment to make full payment of wages to the employees during the lockdown period is arbitrary and violation of Articles 14, 19(1)(g)and 300A of the Constitution of India“,

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