Employer Liability Towards Employee If Closing Company - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Christmohan
Group Hr Manager
BJ LAMBA
Formulation Of Policies
+1 Other

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Hi Seniors,
Please share your view about employer responsibility / liability legally to pay employees if closing / shutting down company without any prior notice ? in result of this all employees would be job less.
Also like to share you that in offer letter only notice period clause mention like, for probationer 15 days notice and for confirm employee 30 days notice.
Actually i want to know what is employees right in this condition ? what should employee do ? What employee can claim from employer ?
Waiting for revert, immediate response highly appreciated.
Thanks in advance.

one more thing i am asking about Pvt Ltd company. forget to mention in my thread.
one more thing, i am asking about Pvt Ltd company. forget to mention in my thread.
Closure of an Establishment

The detailed procedure for closure of the establishment:

1. Notice as per enclosed draft should be displayed in the Notice Board of the Site Office, simultaneously endorsing copies of the same to all the concerned authorities. Copies of Notice are to be served either by hand or by registered post with acknowledgment due and receipts are to be preserved.

2. The following benefits must be paid on the date preceding to the date of closure to all the workers who will be completing continuous service of one (01) year or more on the day immediately preceding the date of closure.

a. One month’s wage in lieu of notice.

b. 15 days average pay of every completed years of continuous service or any part thereof in excess of six months.

3. Notice of retrenchment in Form “P” (Copy enclosed) must be served by personal service or by registered post within 3 days of the date of retrenchment to the following authorities:

a. Secretary to the Government of West Bengal.

b. Labour Commissioner, Government of West Bengal.

c. Conciliation Officer, West Bengal.

d. Employment Officer, West Bengal, Purtha Bhavan, Salt Lake.]

4. Service Certificate in Form XV should be issued to all the workmen in the enclosed format.

** Please note that services of all the workmen employed for job……. should be terminated after paying the above benefits. In case, you require services of some of these workmen for other job, you can appoint them afresh.

• It is also advised that all the workmen should be retrenched on the same date.

Form P

(See Rule 76)

Form of Notice of Retrenchment to be given by an employer under clause (c) of Section 25-F of the Industrial Dispute Act, 1947.

Name of the employer: …………………………………………………………………….. ………………………………………………………………………………………………

Address:

……………………………………………………………………………………………… ………………………………………………………………………………………………

………………………………………………………………………………………………

Date the……………………………….day of ………………………..20…

To,

The Secretary to the Government of India,

Ministry of Labour,

New Delhi.

Sir,

Under clause (c), Section 25-F of the Industrial Dispute Act (14; of 1947), I/we hereby; inform you that I/we have decided to retrench* …………….workmen with effect from**…………..for the reason explained in the annexure.

2. The workmen concerned were given on the ** …….20….one month’s notice in writing as required under clause (a) of Section 25-F of the Act. Retrenchment is being effected in pursuance of an agreement, a copy of which is enclosed. The workmen were given on the ………………20…. One month’s pay in lieu of notice as required under clause (a) of Section 25-F of the Act.

3. The total number of workmen employed in the industrial establishment is ***……………….. and the total number; of those who will be effected by the retrenchment is given below:

Category and designation of workmen to be retrenched

(1) Number of Workmen

Employed To be employed

(2) (3)

5. I/we hereby declare that the workman/workmen concerned has/have been/will be paid compensation due to them under Section 25-F of the Act on **,…………/the expiry of the notice period.

CC to: (1) The Assistant Labour Commissioner (Central),

Govt. of India, Ministry of Labour, Chaibasa. Subghum (Near Court), Bihar.

CC: The Regional Labour Commissioner (Central),

Jagjivan Nagar, Dhanbad, Bihar.

CC to: Employment Officer, Employment Exchange

ABC Construction Limited.

CAMP:

P.O.:

Dist.:

Ref: Date.

NOTICE

The undertaking of the Company was set up at ……………………………………(put the location and address of place of work) for carrying out the construction work of ………………………………. (put the name of the work) at …………………………………………………………………………… (put the name of the place), in pursuance of a Contract Agreement arrived at by and between ABC Construction Limited and …………… (Put the name of the client). The work of construction so undertaken, in pursuance of the said contract agreement, having been completed, the service of the workmen employed at the above undertaking are no longer required.

In the above circumstance, notice is hereby given to all concerned that the undertaking set up for the construction work as aforesaid, will be closed with effect from…………….( put the date of closure) and the employment of the workmen employed in the above undertaking by the company whose names along with particulars of their dues are set out in the annexure attached and is being displayed along with the notice, will stand terminated with effect from…………….( put the date of closure).

The workmen whose employment stands terminated in terms of this notice will be paid all their legal dues including one month’s wages in lieu of notice and compensation in accordance with the provision of Section 25F read with Section 25FFF of the Industrial Dispute Act, 1947.

The disbursement of payment of all dues will be made on…………………….. (Put the date of payment which should be one day prior to the date of closure) between …………. and…………..(put the time of payment), at …………………….(put the place of payment).

The workmen concerned are advised to collect their payment accordingly.

For ABC Construction Limited.

Site-in-charge

Enclosure : as above.

Cc to: The Regional Labour Commissioner,

Bungalow No. B/2,

Doctor’s Colony,

Jagjivan Nagar,

Dhanbad-826002.

Cc to: The Asst. Labour Commissioner (C) and Conciliation Officer,

Govt. of India,

Ministry of Labour, Chaibasa,

Singbhum (near court), Bihar.

Cc to: The Employment Officer,

Employment Exchange,

Jamshedpur/Chaibasa,

Bihar.

XYZ Construction Limited.

CAMP:

P.O.:

Dist.:

Ref: Date.

NOTICE

The undertaking of the Company was set up at ……………………………………(put the location and address of place of work) for carrying out the construction work of ………………………………. (put the name of the work) at …………………………………………………………………………… (put the name of the place), in pursuance of a Contract Agreement arrived at by and between ABC Construction Limited and …………… (Put the name of the client). The work of construction so undertaken, in pursuance of the said contract agreement, having been completed, the service of the workmen employed at the above undertaking are no longer required.

In the above circumstance, notice is hereby given to all concerned that the undertaking set up for the construction work as aforesaid, will be closed with effect from…………….( put the date of closure) and the employment of the workmen employed in the above undertaking by the company whose names along with particulars of their dues are set out in the annexure attached and is being displayed along with the notice, will stand terminated with effect from…………….( put the date of closure).

The workmen whose employment stands terminated in terms of this notice will be paid all their legal dues including one month’s wages in lieu of notice and compensation in accordance with the provision of Section 25F read with Section 25FFF of the Industrial Dispute Act, 1947.

The disbursement of payment of all dues will be made on…………………….. (Put the date of payment which should be one day prior to the date of closure) between …………. and…………..(put the time of payment), at …………………….(put the place of payment).

The workmen concerned are advised to collect their payment accordingly.

For ABC Construction Limited.

Site-in-charge

Enclosure : as above.

Cc to: The Asst. Labour Commissioner (C) and Conciliation Officer,

Govt. of West Bengal,

Ministry of Labour,

New Secretariat, 1 Kiran Sankar Roy Road,

Calcutta.

Cc to: The Employment Officer,

Employment Exchange,

Purta Bhawan, Salt Lake

Calcutta.

Dear Mukesh,
Hope that you would take in good stead whatever I say before answering your question. Whenever you wish to get a complete answer for legal questions like this you should furnish the complete details as well as the cicumstances giving rise to the question.So, please answer the following:
1) What is your company? a manufacturing concern/ service industry/ IT company/ trading company?
2) How many people are employed - category wise - managers, executives,supervisors, clerical staff, workmen, watch and ward?
3) What is the age of the company?
4) What are the reasons for closure?
5)Whether any trade union functioning for the workmen?

Dear sir,
Please find my revert on ur query.
1) What is your company? a manufacturing concern/ service industry/ IT company/ trading company? -
Ans - It is basically a service industry
2) How many people are employed - category wise - managers, executives,supervisors, clerical staff, workmen, watch and ward?
Ans - Total strength of employees are around 80 to 90, break up given below...
Managers - 15
Executives - 25
Clerical staffs - 25
office assistant - 7
others - 15
3) What is the age of the company?
Ans - 4 Year old Company
4) What are the reasons for closure?
Ans - May be the reason behind is that company is not making profit.
5)Whether any trade union functioning for the workmen?
Ans - NO
looking forward for ur revert, thanks

Dear Mukesh,

Since the total strength of workmen falls below 100, Chapter V-B of the I.D Act is not applicable to you and as such you need not seek prior permission u/s 25-O of the Act from the Appropriate Govt.

Excluding managers your strength of the work force comes to 72. Therefore,

(1) You have to issue 60 days' notice to the app.Govt of your intention to close down the undertaking u/s 25 FFA of the I.D Act. Refer your State I.D Rules for connected details.

(2) All the affected workmen should be paid retrenchment compensation as per the provisions contained in clause (b) of Sec.25 F before the date of closure mentioned in the Notice of Closure.That is they shoul be paid compensation @ 15 days' average pay for every completed year of service.Notice pay as per cl (a) does not arise as the copy of closure notice is already given to the workmen.

(3) In addition to the above closure compensation the workmen are entitled to receivve all other dues like unpaid wages if any, proportionate bonus till the date of closure, leave salary in respect accumulated leave, if any at their credit etc..

(4) On receipt of notice, the Govt Labour Dept may arrange for conciliation and in that event both the mgt and the workmen attend the talks and explain the circumstances leading to closure and the willingness of the workmen in this regard.

(5) On the expiry of the 60th day mentioned in the notice, the establishment can be closed down after paying all the dues to the workmen.

Hi Seniors in HR
Please clarify the Doubt
While we closing down the Organization as per the ID Act- Sec- 25 -O & 25FFA we have to give Compensation of workmen 15 days of average pay my query Staff and Managers are also eligible. Because of Sec-25 FFA mentioned as Workmen more than 240 days.
We have to give Compensation to Staff & Managers those who worked more than 240 days?
S.Mohan
Manager-HR
94430 42311

No, Mohan; managers would be covered by the terms of exit contained in their contract of service or appointment orders only. Members of Staff falling within the ambit of the definition of " workman " as per Sec.2(s) of the Industrial Disputes Act,1947 would be covered.
Thanks a Lot to you Mr.Umakandhan to given a clearance to my Query regarding the Compensation while closure down the Organization. S.Mohan Manager-HR Coimbatore Mob : 94430 42311

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