Is the SC directed industry-worker negotiation plausible?

Many questions have been raised on how this large-scale exercise will pan out and how the Centre will be able to keep a check on the same


The Supreme Court has issued directions to effectuate negotiations between industry/company and workers on the issue of full payment of wages. The court said that the negotiations should be carried out without considering the MHA notification dated March 29. Many private establishments had approached the court questioning the validity of this order where directions were issued that all the employers be it in the industries or in the shops, commercial establishment, shall make payment of wages of their workers, at their workplace, on the due date, without any deduction, for the period their establishments are under closure during the lockdown.

Petitioners’ contentions

The MHA order was challenged for being arbitrary, illegal, irrational and unreasonable as well as violative of Article 14 [right to equality] and 19(1)(g) [freedom to practise any profession, or to carry on any occupation, trade or business] of the Indian constitution. It was also challenged for being contrary to principles of Equal work Equal Pay and also No work No pay. The petitioners further stated that section 10(2)(1) of the Disaster Management Act does not empower the Central government to impose financial obligations on the private sector such as payment of wages.

It was also asserted by the petitioners that the ultimate onus for any compensation towards workers shall ultimately be of Government and the said liability cannot be shifted upon the employers in the Private establishment.

The petitioners had also suggested that the respondent should utilise the funds collected by Employees State Insurance Corporation (ESIC) to make periodical payment to the workers. It was also pointed out that all industries and private establishments have different financial capacity, circumstances and all establishments cannot be grouped in one category for issuing a direction to pay wages to its employees during lockdown period and in possibility cannot be directed by any executive action. Some petitioners even agreed to pay 50% wages to their workers and some had already started negotiating with their employees on this issue.


Several intervention applications were filed by different employee unions and few other employees’ organisations whereby they have stated that under Disaster Management Act, 2005, the Central Government has full authority to issue such directions. They have also stated in their respective applications that right to wages is a pre-existing right which flows inter alia from the contract of employment as well as broader constitutional and statutory scheme flowing from Article 14 and 21 of the Constitution and existing laws such as Payment of wages Act, Minimum Wages Act, The Contract labour (Regulation and abolition) Act and the Industrial Disputes Act, 1947.

Government’s submissions

The government refuted these assertions made by the petitioners and said that the direction, which was made in public interest, was a temporary measure to mitigate the financial hardship of the employees and workers especially contractual and casual workers during the lockdown period as also to prevent perpetration of financial crisis within the lower strata of the society, labourers and employees.

Court’s findings

The bench comprising Justices Ashok Bhushan, SK Kaul and MR Shah directed the government to file a detailed counter affidavit within 4 weeks, rejoinder to which shall be filed within a week. The court extended the earlier order of no coercive action against employers for not complying with the impugned MHA order.

The court held that the lockdown measures had an equally adverse effect on the employers as well as on employees. The bench pointed out that while some industries may bear the financial burden of payment of wages or substantial wages during the lockdown period, others may not have the financial capacity to bear the same and there was a need to strike a balance. The bench said, “For smooth running of industries with the participation of the workforce, it is essential that a via media be found out.”

The bench found negotiation to be an effective measure and held that, “No Industry or establishment can survive without employees/labourers and vice versa. We are thus of the opinion that efforts should be made to sort out the differences and disputes between the workers and the employers regarding payment of wages of above 50 days and if any settlement or negotiation can be entered into between them without regard to the order dated 29.03.2020, the said steps may restore congenial work atmosphere.”

The court issued the following interim directions:

1.       The private establishment, industries, employers who are willing to enter into negotiation and settlement with the workers/employees regarding payment of wages for 50 days or for any other period as applicable in any particular State during which their industrial establishment was closed down due to lockdown, may initiate a process of negotiation with their employees organization and enter into a settlement with them and if they are unable to settle by themselves submit a request to concerned labour authorities who are entrusted with the obligation under the different statute to conciliate the dispute between the parties who on receiving such request, may call the concerned Employees Trade Union/workers Association/ workers to appear on a date for negotiation, conciliation and settlement. In event a settlement is arrived at, that may be acted upon by the employers and workers irrespective of the order dated 29.03.2020 issued by the Government of India, Ministry of Home Affairs.

2.       Those employers’ establishments, industries, factories which were working during the lockdown period although not to their capacity can also take steps as indicated in direction No.(i).

3.       The private establishments, industries, factories shall permit the workers/employees to work in their establishment who are willing to work which may be without prejudice to rights of the workers/employees regarding unpaid wages of above 50 days. The private establishments, factories who proceed to take steps as per directions (i) and (ii) shall publicise and communicate about their such steps to workers and employees for their response/participation. The settlement, if any, as indicated above shall be without prejudice to the rights of employers and employees which is pending adjudication in these writ petitions.

4.       The Central Government, all the States/UTs through their Ministry of Labour shall circulate and publicise this order for the benefit of all private establishment, employers, factories and workers/employees.

5.       In event, any settlement is entered between the employers and employees in the establishments which are before us, an affidavit giving details shall be filed by next date of hearing.

Debate over the order

Gautam Bhatia, a legal expert, while commenting on this interim order said, “This is a classic case of judicial evasion. The court refrained from answering the legal questions before it, but its refusal to answer created a status quo where on party benefitted at the expense of the other.”

Anshul Prakash, partner at Khaitan & Co, told the Business Insider, “Since no coercive action can be taken against the private companies, they have a good bargaining power to enter into negotiation for payment of wages at a reduced rate for the lockdown period and settle disputes”.

Some have even highlighted how this large scale mammoth exercise of negotiations will take place, since the court is talking about not just one sector or one industry but all private establishments. The plausibility of implementation of this order is questionable and will most likely not turn out to be in favour of the employees.

Anurag Saxena, general secretary of Centre of Indian Trade Unions (CITU), said that while it was “welcoming” of the Supreme Court’s refusal to honour the ‘no work, no pay’ principle, however, by saying that the matter would be decided through negotiations, the court “has not benefitted the unorganised workers – who are the majority in the country,” he said. “Those who are unionised will be able to settle the issue; but others, including contractual staff, temporary workers and daily wagers will be disadvantaged since they are not collectivised,” he added.

Shyam, of the Automobile Industry Contract Workers Union (AICWU) said that such negotiations are not a practical solution, “We are witnessing the brunt of the lockdown being passing onto the workers across the country – who, in most cases, are already in vulnerable positions; engaged in production with no job security,” Shyam told NewsClick.

Gautam Mody, General Secretary of New Trade Union Initiative (NTUI), in a statement said that the apex court’s order holds no one responsible for livelihood of the working class. The statement points out that the court did not get into the details of the enormity of the workers’ crisis, not dealing with the question of those on low wages or even just the minimum wage. He also states that the court evaded the complex situation of workers willing to work but not being allowed to attend work because of the lockdown or being able to attend work being locked in in containment zones, non-availability of public transport and the various restrictions to ensure physical distancing. Further the statement highlights how the court ignored the fact that concessions have been granted to industry through the Rs. 20 lakh crore package of the Prime Minister while no provisions for wage payment or even wage subsidy has been made for workers.

The court observation that the lockdown has equally affected the employers and employees did not go down well with NTUI and Mody said that this point of view of the court, “merely confirmed that Supreme Court judges choose selectively to suspend their knowledge of reality while failing to ensure the protection of people’s fundamental rights provided for in the constitution”. The statement further says, “The Supreme Court has used this perceived equality to undervalue and dilute the right to life, provided under Article 21 of the constitution.  If the Supreme Court was silent for two months on the issue of non-resident workers now it has expressed its unambiguous opinion as to which side it is on.” The statement further talks about the effect of the unlocking of the lockdown, “in fact as the pandemic intensifies the so called ‘unlocking’ will be an easy time for employers while workers are victim to non-payment of wages, layoffs, redundancies and closures.”

It may be deduced that the Supreme Court order has majorly favoured the private establishments as they have gained an upper hand in the negotiations and they can draw out the terms without considering the employees opinions since they are not even liable to face coercive action as had been stipulated by the MHA order; a win-win situation for private establishments.

The complete order may be read here.





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