Unpaid salaries despite 44 labour laws

By Shankkar Aiyar| Published: 05th May 2019 04:00 AM
Jet Airways employees stage a protest over delay in their salaries at jantar mantar in New Delhi (Photo | Shekhar Yadav)

Last week, Shailesh Singh, 45, jumped off the parapet of his residential apartment in Mumbai and committed suicide. Singh, suffering from cancer, was an employee of Jet Airways. He had not been paid his salary for months. Like Singh, over 16,000 employees have not been paid their salaries. It is estimated that the airline owes its employees more than Rs 450 crore in dues. The employees, struggling to run homes, educate children, pay home loan EMIs are now faced with a new challenge —they must pay medical bills from their own pocket as the airline has not paid the premium for the group medical policy employees were covered by.

The Jet Airways saga is a tragic sequel of what happened when Kingfisher Airlines was grounded. Over 3,000 employees were left high and dry by the company.  In a letter to the prime minister, the employees stated that the airline owed them salary, gratuity as also compensation, and sought his intervention.  The employees, who were unable to access their PF (Provident Fund), thanks to the mess of litigation, were faced with notices of income tax unpaid by Vijay Mallya. 

Earlier this month, around 100 workers at the ongoing Pune metro project, MahaMetro, went on strike over unpaid dues of five months. Often protesters get only part of the payment, an unsecure promise and face the risk of being issued pink slips. In far off Ethiopia, Indian employees of the shadow bank IL&FS, which went bust following shady deals, were held hostage by locals who had not been paid wages since November. 

The bitter irony is that the narrative on labour reforms, in political and policy discourse, has been about the Industrial Disputes Act— about hiring and firing. And for decades now political parties have shied away from instituting reforms in labour laws under the guise of protecting workers’ interests. Fact is the landscape is littered with cases of abject failure of the laws, rules and regulations in protecting the rights of the employees. Employees with small and large enterprises are forced to fend for themselves amidst systemic failure in the absence of real-time redressal mechanisms.

India’s labour laws stem from the promises made on dignity of labour and safeguarding of interests articulated in the Constitution (Articles 16, 19, 23 and 24) and in the Directive Principles of State Policy (Articles 39, 41, 42, 43, 43A and 54)—the intent is, however, failed by the antiquity of the law and inadequacy of institutional framework. There are a total of 44 Central laws covering issues of employee interests and industrial matters. Just on wages and emoluments there are four Central laws—the Equal Remuneration Act, 1976, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Payment of Wages Act, 1936.

The Payment of Wages Act was born to address exactly the situation that employees are facing—to regulate and ensure payment of emoluments. In 1926, the Government of India asked local governments about the delays in payment of wages to employees. The investigations culminated in the appointment of the Royal Commission of Labour in 1929.

The Payment of Wages Act was drafted and passed in 1935 and received assent on April 23, 1936. Over 83 years later, notwithstanding a plethora of rules, regulations and amendments to the statute, and a series of commissions, employers are able to leave employees high and dry. And what is the penalty for non-payment of wages?  It is possible for the employer to get away with a fine—of Rs 1,500, which may extend to Rs 7,500. 

What can the employee do? The employee can approach the labour commissioner and file a case under Section 33C of the Industrial Disputes Act if the salary is under Rs 18,000—those with higher salaries or on contract can approach a civil court. The process itself is not easy—not for someone struggling to make ends meet—and is time-consuming. 

Consider the queue of cases just in the Central Government Industrial Tribunal—every year, over 13,500 cases are listed. Between 2013-14 and 2017-18, over 67,700 cases of industrial dispute were filed at the CGIT. The Insolvency and Bankruptcy Code is another route.

Employees have had to take their employers to the NCLT, initiating bankruptcy proceedings to recover salaries. That queue is not short either—as of December 2018, there are over 15,040 cases before the NCLT. If the company goes into liquidation, the employee has a prior claim, but must queue up with other creditors.

It cannot be the case that the government cannot corral the resources of sick enterprises like Jet Airways and Kingfisher to pay outstanding dues. The government has claimed that the assets seized from Vijay Mallya are nearly twice the value of the default. Mallya has claimed that Rs 1,280 crore deposited in 2013 with Karnataka High Court is earning interest and could be used.

Bankers dealing with Jet Airways cite a cache of Rs 450 crore in a private subsidiary—perhaps the money Naresh Goyal offered to bring in. Similarly, companies in the debt recovery process or under liquidation have assets that can be monetised to pay up. Why must this be so?  It is time the narrative of labour reforms is recast. The terms of engagement require delineation of rights and obligations, and a balance of social security and economic productivity. A $2.8 trillion economy, the world’s largest democracy, can surely do better.

Shankkar Aiyar 
Author of Aadhaar: A Biometric 
History of India’s 12 Digit Revolution, and Accidental India

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