Financial losses cannot be offset on the weary shoulders of the labourer: SC Court quashes anti-worker notification by Gujarat government

09, Oct 2020 | Adeeti Singh

On October 1, 2020 a three-Judge Supreme Court Bench comprising Justices Indu Malhotra, DY Chandrachud and KM Joseph, quashed a Gujarat government notification exempting factories from paying overtime wages to workers and providing ideal working conditions to them amid the Covid-19 lockdown, on grounds of public emergency in Gujarat Mazdoor Sabha & Anr. v. State of Gujarat.

Mr. Sanjay Singhvi and Ms. Aparna Bhat represented the Gujarat Mazdoor Sabha and Trade Union Centre of India (Petitioners). Ms. Deepanita Priyanka represented the State of Gujarat (Respondent).

The court, under Article 142 of the Constitution also directed the Respondent to pay overtime wages to all workers who had been putting in additional labour since the issuance of the notification, i.e., April 17, 2020. Article 142 states that:

“The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or orders so made shall be enforceable throughout the territory of India in such manner as may be prescribed by or under any law made by Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe.”

Ms. Deepanita Priyanka, appearing for the Government submitted by the support of Mr. Tushar Mehta, Solicitor General of India that the notification issued invoking section 5 of the Factories Act, is not unconstitutional and that the Covid-19 pandemic is a ‘public emergency’ defined in Section 5 of the Act. She argued that this has caused “extreme financial exigencies” in the State and the lockdown caused a slowdown in economic activities, leading to an ‘internal disturbance’ in Gujarat within the meaning of Section 5 of the Act.

Section 5 of the Factories Act states that:

“In any case of public emergency the State Government may, by notification in the Official Gazette, exempt any factory or class or description of factories from all or any of the provisions of this Act except section 67 for such period and subject to such conditions as it may think fit: Provided that no such notification shall be made for a period exceeding three months at a time.”

The Court disagreed with her submissions and noted that even though they were conscious about the adverse financial circumstances of factories due to the lockdown, the onus cannot be shifted on to the labourers. The court ruled, “This Court is cognizant that the Respondent aimed to ameliorate the financial exigencies that were caused due to the pandemic and the subsequent lockdown. However, financial losses cannot be offset on the weary shoulders of the labouring worker, who provides the backbone of the economy”.

 

Background

The impugned notification exempted all factories registered under the Factories Act, 1948 from various provisions relating to weekly hours, daily hours, intervals for rest, etc of adult workers under certain provisions of the Act from April 20, 2020 to July 19, 2020 to provide “certain relaxations for industrial and commercial activities.” While granting such exemptions to factories, the Gujarat Government also put an end to the requirement of payment of double wages for overtime and allowed for overtime hours to be compensated at normal working wages per hour. At the lapse of this notification, the Government issued a similar notification on July 20, 2020 that extended the exemption granted to factories from July 20, 2020 till October 19, 2020.

Hence, this notification was challenged on the grounds that:

• The State had acted ultra vires the Factories Act. Section 5 of the Act only allows for exemption in cases of public emergency and that Covid19 has never been declared as one.
• Section 5 also allows exemption to one factory or class of factories owing to ‘exceptional pressure of work’ and not a blanket exemption.
• The notification does not categorically exempt the application of Section 59 of the Factories Act which mandates payment of double the wages for overtime and yet they make overtime wages proportionate to the existing wages. This violates the spirit of the Minimum Wages Act, 1948 and amounts to forced labour violating the workers’ fundamental rights under Article 23, 21 and 14.

The Supreme Court concurred with these arguments and stated, “Section 5 of the Factories Act could not have been invoked to issue a blanket notification that exempted all factories from complying with humane working conditions and adequate compensation for overtime, as a response to a pandemic that did not result in an ‘internal disturbance’ of a nature that posed a ‘grave emergency’ whereby the security of India is threatened. In any event, no factory/ classes of factories could have been exempted from compliance with provisions of the Factories Act, unless an ‘internal disturbance’ causes a grave emergency that threatens the security of the state, so as to constitute a ‘public emergency’ within the meaning of Section 5 of the Factories Act.”

The Bench appreciated the objective of the Factories Act to safeguard the health and safety of all workers serving as “a bulwark against harsh and oppressive working conditions.” They also agreed that the notifications issued stood in contravention of the Factories Act legislation by increasing the daily limit of working hours from 9 hours to 12 hours, weekly work limit from 48 hours to 72 hours, an interval of rest every 6 hours, as opposed to 5 hours and payment of overtime wages proportionate to ordinary rate of wages, instead of overtime wages at the rate of double the ordinary rate of wages as provided under Section 59.

In a significant breakthrough for the principle of a fair and dignified wage that are the cornerstone of labour rights, this judgment of the Supreme Court, recognises the constitutional rights of workers such as welfare of the people, eliminating unequal status, facilities and opportunities, right to an adequate means of livelihood, health and strength of workers, securing just and humane conditions of work including maternity relief and legislations ensuring a decent standard of life for all citizens. “The Factories Act is an integral element of the vision of state policy which seeks to uphold Articles 38, 39, 42, and 43 of the Constitution”, they said. The Bench also acknowledged that no Constitution has any meaning if its basic tenets dwindles a person’s dignity at the hands of economic pressure. “Ideas of ‘freedom’ and ‘liberty’ in the Fundamental Rights recognized by the Constitution are but hollow aspirations if the aspiration for a dignified life can be thwarted by the immensity of economic coercion,” observed the Bench. The pandemic has rendered the already vulnerable workers powerless and the impugned notifications delegitimises their demand for stable working conditions.

Constitutional Rights

Article 14 of the Constitution of India explains the concept of Equality before law. Judicial interpretations in the past have also expanded on this fundamental right to say that this right can be enforced in cases of unequal scales of pay through the principle of equal pay for equal work. The socio-economic structures of India draw a division between people who live comfortably and majority of them who live below the poverty line. Keeping this in mind, the framers of our Constitution crafted such provisions to offer equal protection. In M.G. Badappanavar vs. State of Karnataka (2001) 2 SCC 666, the Supreme court said “Equality is a basic feature of the Constitution of India and any treatment of equals unequally or unequal as equal will be violation of basic structure of the Constitution of India.”

On May 18, 2020 the Supreme Court judgment against a writ petition filed by Karnataka-based company Ficus Pax Private Limited, which had challenged the constitutional validity of government notifications mandating full wage payments during lockdown held that, “It is implicit in the fundamental right of an employer to trade or business that there is an obligation to pay when work is actually done and there is no obligation if no work is done.”

Article 21 of Constitution of India assures among other aspects, the right to live with human dignity and free from any exploitation. State has obligatory duty to protect all Indians irrespective of their social and economic background, from the violation of fundamental rights especially to the weaker section of the society. This is a mandatory and obligatory philosophy of the Constitution.

Article 23 of the Constitution of India, recognizes the fundamental right of the citizens of this country not be compelled to work without wages, a right emphasised by the Supreme Court in Ram Niwas vs Uoi & Ors, on February 15, 2010, W. P (C) No. 7415 of 2008.

Article 41 of the Constitution of India under the Directive Principles of State Policy lays down the principle of a dignified living wage. “The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want.”

Implications for other states

Excuses of financial exigency have led to other states like Himachal Pradesh, Rajasthan, Haryana, Madhya Pradesh, Assam, Goa, Uttarakhand, Uttar Pradesh issuing similar notifications revising maximum weekly work hours, maximum daily work hours, overtime pay, etc. Pankaj Kumar Yadav, a journalist from Jharkhand, filed a Public Interest Litigation through advocate Nirmal Kumar Ambastha in the Supreme Court seeking directions to quash these notifications issued by Gujarat, Uttar Pradesh and Madhya Pradesh on May 14, 2020.  Rajasthan, the first State to increase the work limit of labourers from 8 to 12 hours withdrew this order on May 24, 2020. Rajasthan Principal Secretary (Labour) Niraj Kumar Pawan, while justifying this move, told Business Standard, “The shortage of workers is no longer a concern with the revised lockdown guidelines by the Central government. Companies are no longer bound to cap workers in factories and many units have opened up in Rajasthan. There are no restrictions on the movement of workers, too. Hence, the order has been withdrawn”.

On May 15, Uttar Pradesh withdrew its notification in response to a Public Interest Litigation in Allahabad High Court challenging the validity of the same. The Hindu reported that after the court issued the State a notice in the matter, Suresh Chandra, Principal Secretary, Labour Department, in an order dated May 15, 2020 directed the Chief State Counsel to inform the court that the notification to increase work hours was withdrawn.

Since the Madhya Pradesh notification is still in operation, the PIL is not entirely infructuous. On May 20, 2020, another PIL was filed by a law student, Nandini Praveen through Advocate Nishe Rajen Shonker, assailing relaxation of labour laws in the states of Rajasthan, Gujarat, Punjab, Himachal Pradesh, Uttarakhand, Haryana, Madhya Pradesh, Uttar Pradesh, Goa and Assam, for having been issued without any authority of the law and contended that Central labour laws cannot be abridged by way of executive orders issued by the states.

In the light of the judgment delivered on October 1, 2020 the workers could benefit manifold. With the Supreme Court quashing a similar notification in Gujarat, the workers hailing from other states could be compensated for all the additional labour they’ve been putting since the lockdown and not suffer at the hands of their employers. The three-Judge Bench has already taken it upon themselves and claimed, “Judges must constantly remind themselves of its value through their tenures, if the call of the constitutional conscience is to retain meaning. The ‘right to life’ guaranteed to every person under Article 21, which includes a worker, would be devoid of an equal opportunity at social and economic freedom, in the absence of just and humane conditions of work.”

An important precedent has been set where the Judiciary recognizes the need to balance a public health crisis and labour welfare. The State cannot be allowed to make alterations in welfare legislation unless they can establish a link between inequity in the workplace and security of the state. “It cannot be interpreted to provide a free reign for the State to eliminate provisions promoting dignity and equity in the workplace in the face of novel challenges to the state administration, unless they bear an immediate nexus to ensuring the security of the State against the gravest of threats,” they observed.

The unemployment rate shot up to 27.1 per cent in the week ended May 3. This is the highest unemployment rate so far and the unemployment rate in the month of April 2020 was 23.5 per cent.[1] The CMIE report paints a grim picture of what lies ahead for India and 100 million Indians are being pushed back below the poverty line due to the impact of the unscheduled lockdown and pandemic. The Government is expected to step in with welfare measures like Africa where attention is being paid to programs like universal basic income amongst other multilateral institutions and global NGOs focusing on poverty reduction and inequality in low income countries especially in Sub Saharan Africa, as reported by Quartz Africa.[2]

On March 23, 2020 the German Government announced a comprehensive economic package of 750 billion euros. This included subsidies for small companies and freelancers, stabilisation measures for large companies, and welfare measures for families. The government recognized the economic pain that its people would have to endure in the fight against the virus, and it was willing to even go into debt to help as reported by Observer Research Foundation.[3]

The decision officials of the Supreme Court that empowers workers and their rights to a wage and a dignified wage is not just part and parcel of humane governance but is enshrined in the Indian Constitution and their rights enshrined under various labour statutes. This can be done by assuring them of stable working conditions, minimum wages and payment for the extra labour they dispense. Desperate groups, under unfavourable monetary situations have a tendency to provide service at lower rate. The Apex Court, in Peoples Union for Democratic Rights v Union of India 1982 AIR SC 1473, stated that “the compulsion of economic circumstance which leaves no choice of alternatives to a person in want and compels him to provide labour or service” was no less a form of forced labour than any other, and its remedy lay in a constitutional guarantee of the minimum wage.

Reasserting a similar importance of the unorganized sector through labour welfare legislations and appropriate judicial decisions will go a long way in protecting the flag bearers of economic activity.

The complete judgment may be read here.

 

Related:

SC quashes Gujarat notification extending work hours without overtime pay

Battle against dilution of labour laws to culminate in Supreme Court?

Labour laws and rights in peril in India?

 

References:

[1] Available at: https://www.cmie.com/kommon/bin/sr.php?kall=warticle&dt=2020-05-05%2008:22:21&msec=776

[2] Available at: https://qz.com/africa/1872046/african-countries-offer-cash-relief-covid-19-welfare-programs/

[3] Available at: https://www.orfonline.org/research/the-good-the-bad-and-the-ugly-germanys-response-to-the-covid-19-pandemic-66487/