Legal experts argue that Supreme Court is protecting employers and not unpaid employees

• The Supreme Court, on June 12, diluted the government’s order that mandated companies to pay wages to employees without deductions during the coronavirus lockdown.
  
• The employer and the employees should ‘negotiate’ to resolve the matter, the court said.
  
• This has stirred a debate on how the law protects the employers more than the employees.

In a major development, the Supreme Court, on June 12, diluted the government’s order that mandated companies to pay wages to employees without deductions during the coronavirus lockdown. And that has turned the order in favour of the employers — at least for now.

The apex court said that the government should not take any coercive steps against those private companies who haven’t paid their employees. In fact, the employer and the employees should ‘negotiate’ to resolve the matter, the court said. However, the next hearing is scheduled for end of July.

SC order gives a ‘bargaining power’ to employers

This has stirred a debate on how the law protects the employers more than the employees. “This is a classic case of judicial evasion. The court refrained from answering the legal question before it, but its refusal to answer created a status quo where one party benefitted at the expense of the other,” said Gautam Bhatia, who has published nearly 20 scholarly papers.

According to Anshul Prakash, partner at a corporate law company Khaitan & Co, “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.”

However, in that case, the companies should obtain a ‘no claim letter’ from the workers pursuant to making such payment, added Prakash.

Despite the orders…

Many companies have already implemented pay cuts and laid off staff. A recent survey of CEOs, that included over 50 Indian startups, shows that one in four startups in India already announced pay cuts. And, a third of them are considering doing so. Goibibo and redBus also slashed employee salaries.

There is an extent to which industry can fund unemployment insurance

On the other hand, though a few organisations can safeguard their employees from bearing the brunt of the pandemic they will not be able to take the hit for a long time since there is uncertainty around Covid-19 and its possible impact.

According to a recent ET report, nearly 50,000 contract employees at Bharat Sanchar Nigam Limited (BSNL) were left unpaid despite the government order on payment of wages. Meanwhile, startups like Droom Swiggy, Zomato, MakeMyTrip (MMT), ixigo axed jobs too amid the lockdown.

“Some organisations can give away the salaries if they have deeper pockets. However the question is, for how long and are they willing? There is an extent to which industry can fund unemployment insurance. In the long run, organisations cannot afford to bear the burden of unemployment insurance fully,” Rituparna Chakraborty, Co-founder of TeamLease Services told Business Insider in an earlier interview.

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