MHA withdraws circular on compulsory wage payment to employees

On March 29, the Ministry of Home Affairs (MHA) a circular asking private entities and MSMEs to pay full salaries to their employees during the lockdown, irrespective of their presence at the workplace.

However, on May 17, a revised set of guidelines was issued following the Supreme Court’ s orders in its May 15 ruling, wherein the Centre has been asked not to bring legal proceedings against the private establishments over non-payment of salaries to their employees.

Now that the March 29 circular has been revoked, the revised guidelines have become effective in the fourth phase of the pandemic, starting Monday, May 18,2020 and to continue till May 31, 2020.

“Save as otherwise provided in the guidelines annexed to this order, all order issued by the National Executive Committee (NEC) under Section 10(2)(I) of the Disaster Management (DM) Act, 2005, shall cease to have effect from 18.05.2020,” said MHA in its latest order.

The March 29 order by MHA was issued following reports of private companies cutting wages and laying off people due to reduced business and revenues during the lockdown period.

Earlier on March 20, 2020, the Ministry of Labour & Employment issued an advisory to all chief secretaries of states and UTs, requesting them to take necessary action to ensure that employers and owners of all establishments in the state, do not deduct wages for the lockdown period, if any worker takes leave.

In response to this, the MHA issued a circular on March 29,  2020 stating that all employers— whether in factories or in shops or in any form of commercial establishments— will have to pay wages to their workers on the due date, without any deductions owing to the closure of the workplace.

This decision led to companies filing petitions to quash the circular and expressing fear that making such payments will lead to the closure of many of the units and will ultimately cause permanent unemployment.