Supreme Court refuses to stay MHA order directing Private Enterprises to pay Full salaries during Lockdown

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On Monday, the Supreme Court refused to allow interim protection to the Indian private sector, particularly MSMEs that moved the Apex Court, by not allowing a stay of the Ministry of Home Affairs (MHA) order directing payment of full salaries.

On March 29, MHA had passed an order directing all private enterprises to continue payment of full salaries for the duration of the lockdown. The MHA order had warned of legal consequences if the directions for payment of full salaries were not complied with.

In April, the Ludhiana Hand Tools Association, comprising of 41 MSMEs, had moved the SC seeking quashing of the MHA order, and in the interim, seeking a stay of the directions for payment of full wages.

The Apex Court today, nonetheless, has agreed to hear the plea by MSME association. The Supreme Court has issued a formal notice to the Centre, seeking a reply on the implementation of the MHA order seeking payment of full wages. It has also allowed the center two weeks’ time to reply to concerns raised by the MSMEs in their petition.

The plea in SC had argued that when the economy is in lockdown and business revenue is at zero, it was impossible for employers to continue making payments to workers. The plea also warned that faced with such impossible circumstances, making such payments will lead to the closure of many MSME units, will, in turn, would cause permanent unemployment and would adversely affect the economy.

As an alternative, the plea submitted that the Provident Fund Department has several thousand crores in unclaimed Provident Fund Deposits. The plea suggests that these funds should be employed to provide relief to workers, instead of burdening the private sector.

The plea also red-flagged legal concerns pointing out that under the Disaster Management Act, Centre lacks the powers to direct private establishments to pay full wages irrespective of work done. The plea also argued that payment of full wages, in these unprecedented times, was akin to a tax, but without any statutory backing.

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