PAYMENT DURING THE LAY OFF - CiteHR
Madhu.T.K
Industrial Relations And Labour Laws
Saswatabanerjee
Partner - Risk Management
Couvery
Consultant
Niraj.imb
Project Manager
Bhartimakawana@gmail.com
Hr / Administrative Executive
+1 Other

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Dear Sir/Madam,
I am working as a HR Executive in one textile company.my company wants 4 days close entire production dept due to excess of finish goods.now in this lay off case,what will be the compensation of workers? all workers are permanent and they have fixed salry.not per day basis.
Please guide me.
Awaiting for your reply.
Bharti Makawana
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Hi,

Please find the excerpt from Industrial Disputes Act, 1947 .

1) Any workman whose name is borne on muster rolls and who presents himself for work on any day and is not given employment with in 2 hours shall be deemed to have been laid - off for that day.

2. If a workman not given employment is asked to present himself during second half of the shift and given employment then, he shall be deemed to be laid off only for 1/2 of that day.

3. If he is not given employment even after so presenting him self, he shall not be deemed to have been laid off for second half of the shift, and shall be entitled to full wages and dearness allowance for that part of the day.

Important interpretation:

-The muster roll is a record of only those workmen who are employed on a regular basis.

-Lay off means to discontinue work or activity, to dismiss/discharge temporarily.

-Definition clause does not confer any power on the management to lay off

workers, Held in Workman V Firestone Tyer & Rubber Co. (1976) I. LLJ 493.

Regards,

Niraj Sharma
Lay off compensation is equal to 50% of basic salary and dearness allowance. It is payable to all employees who have completed at least one year of service with the company. Total of 240 days of work including paid holiday, paid leaves and leaves due to employment injury shall constitute a year of service.
The right of employees above mentioned is applicable only to establishments employing 50 or more workers. That means if an establishment employing less than 50 employees declare lay off, all employees who are so laid off are to be paid full wages as was decided in Workmen Vs Firestone Tyre & Rubber Co [1976(1)LLJ493 SC]
Right to lay off is not a common right available in all cases which can be exercised in difficulties but it is restricted to such situations, like, inability of employer to give employment to workmen due to shortage of raw materials, power, accumulation of stock, break down of machinery or natural calamity.
Madhu.T.K
Dear all,
I think in cases where the number of workmen is less than 50, the applicability of lay off will depend on the applicable Standing Orders. Where no such order is there, then as per terms of employment it is to be decided. Or else full wages to be paid as was decided in Workmen Vs Firestone Tyre & Rubber Co [1976(1)LLJ493 SC].
I am new to this forum, so if I am wrong then seniors please correct me.
Hi Bhakti
In case of layoff, you are required to pay 50% of wages to the workers.
Depending on the size of the work force, you may need approval of the labour department
The department is not likely to give the approval as it makes the industrial scenario look bad.
What many companies have started to do is opt for a block closure.
This is a move negotiated with the union, where the company agrees to close the plant for 4 days (may be more), they agree to pay salary for half the days and the workers apply for leave for the remaining half days. In effect the cost is the same, but you avoid actually doing a layover. For the workers it is a little better as there is no pay cut that layoff involves.
See of that works for you.
There is no scope for certified standing orders for an establishment employing less than 50 workers.
Taking approval for laying off is applicable to establishments employing not less than 100 employees. For establishments employing 50 or more, only an intimation is required to be given to labour department. At the same time, nothing in these will apply to establishments employing less than 50 workers. The earlier interpretation was that since sections pertaining to lay off, retrenchment and closure are not applicable to establishments employing less than 50 workers, no compensation was payable. However, the decision in Firestone Tyre's case became a landmark judgement which ruled that a small establishment should not go for lay off and if workers are laid off they should be given full wages.
Madhu.T.K
Oh ! Small forms can not do layoff ? Didn’t know that aspect
Applicability of lay-offs depends on many factors like size of company, number of employees, duration of working or working periods of employees, compensations as well as also subject to employment agreement.
Dear Ms.Madhu,
Thank you so much for reply.but still i have confusion.
If Gross salary of one technician is 10000 p.m,what will be the payment in case of lay off period( 4 days close in a week)?
Awaiting for your reply.
Bharti Makawana

Lay off wages will be 50% of his basic and DA. If consolidated pay, take the whole amount as lay off qualifying salary. Lay off pay is not to be paid for days on which the factory is closed due to holidays or weekly closing day/ off day.
Madhu.T.K
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