Madhu.T.K
Industrial Relations And Labour Laws
Kumaran Praveen
Hr-executive
[email protected]
Sr. Manager Ir
+1 Other

Its about the lay off of a plant with 65-70 workers. The plant has not been on the progress mode for last 10-12 months & incurring losses continuously even after due care & efforts. Every month, we have been investing Rs.10+ lacs towards the wages & management wants to arrest this expenditure by laying off immediately.
So, what is the due procedure & formality to lay off in a legal way? My understanding on lay off is as under.
# 30 days notice to workers
# Government approval is not necessary in this regard as workers strength is below 100
Requesting your inputs on any other formalities & precautions in this regard.
Thanks
Raghavendra

From India, Bangalore
It is true that you need not get any permission from the Govt. for declaring lay off in your company as the number of workers is less than 100 and as such Chapter VB of the Industrial Disputes Act is not attracted. But since the number of employees is more than 50, you have to intimate the government of your decision to lay off showing the reasons for lay off. Now coming to reasons for lay off, I would say that it should be reasons as provided in section 2(kkk) of the Act which says that lay off means failure to give employment due to shortage of raw materials, coal, power, breakdown of machinery due to natural calamity or any connected reasons or accumulation of stock. It does not speak about financial loss of the company. In Workmen of Dewan Tea Estate Vs Management (1964 AIR 1458), it was decided that financial loss could not be considered as a reason on the ground of which employees could be laid off. In this case, the reference was also made to the Certified Standing Orders of the Tea Estate which stated that “any reason beyond the control of the management shall be taken as a reason for lay off”. The court ruled out the significance of the Standing Order also.

Therefore, before proceeding further, please conduct a home work as to whether the reasons for lay off is genuine or not

Madhu.T.K

From India, Kannur
Hi Mr.Raghavendra,

I think you talking about retrenchment but you mentioned layoff.

Meaning:

Layoff refers to inability/failure on the part of employer to provide employment to the employees whose names are in the muster roll due to lack of power, raw material, accumulation of stock etc

Retrenchment means termination of employment other than the following reason

1. Retirement 2.Voluntary Retirement 3.termination due to disciplinary action 4.Due to disablement 5.Non renewal of contract.

As you mentioned 30days of notice period will come under the retrenchment and not lay off.

Retrenchment Procedure:

If your organization employing more than 50 workers but below 100 workers than the following procedure will apply

1. You have to give 30 days notice period for workers who completed continuous service of 240 days.

2. If you want to retrench workers soon than pay one month salary in lieu 30 days notice period.

3. Than compensation for retrenched employees in 15 days salary of each completed years of service.

4. Next, you have to inform the Ass. labour commissioner or commissioner about the number of workers retrenched by your organization.

5. Settled the Full & Final settlement for retrenched workers.

With regards

Mr.thumbs Up

From India, Chennai
Agreed with Mr. Madhu. But in this case, you can retrench workmen instead of Layoff. Govind Pawar Cell-9823411433
From India, Mumbai
Yes, you can go for retrenchment. But while doing so, you cannot pick and chose the employees but it should be the last one employed in a particular division or category who should be retrenched first. For retrenchment, obviously, one month notice and retrenchment compensation at the rate of 15 days pay for every year of service should be paid to each employee who has completed at least one year of service with the company. Similarly, intimation to Labour Officer should also served.
Madhu.T.K

From India, Kannur
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