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I need information on this immediately
If an IT software company having 98 employees want to have redundancy in workforce due to non availability of work like reduce their employee strength by 10-20 people permanently is it called a layoff.
What procedure one need to follow to reduce the work force of 10-20 people together
What kind of law is their for redundancy
what compensation a company has to give
Should company intimate employees prior or just on the same day. What is the general procedure followed.

From India
Cite Contribution

In IT , performance record remains the best guidance. You can also identify the skill sets that you are no-longer using.
However, when these talents were hired, didn't you optimise workforce management? How was the bilability calculated? Guess that can be the third parameter.
Looking forward to hear from you.

From India, Mumbai
Jhuma Tiwade

If you closed your appraisals you may use bell curve rating system to identify the bottom 10% and act accordingly. Please note bell curve is not very famous nowadays but since you want to retrench you may use the same. Also prepare a fair and employee friendly pink slip policy and ensure that even if people have to go they are taken care of. You can't ask people to go in on day. They are earning member of their families. IT sector has the highest dead ratio in corporate. Insurance industry has taken a conscious decision not to provide Insurance services to IT sector as per recent news. So this is going to be sensitive issue.
All the best.

From India, Mumbai

Since the downsizing is a permanent arrangement, it cannot be called as lay off but it is retrenchment. Retrenchment can be effected only after following section 25F of the Industrial Disputes Act. Since the number of employees in the establishment is less than 100, the Chapter VB of the Act will not be applicable and hence you need not get permission from the govt. in order to retrench the employees. However, you have to send a notice (preferably in form P or other relevant form as per your state Rules) to the Govt. informing of your intention to retrench employees.

All the employees who are terminated should be given one month notice before they are terminated and they should also be compensated by paying retrenchment compensation at the rate of 15 days pay for every completed year of service. This compensation is not required for employees who have not completed one year of service with the company.

There should not be any termination of employment based on performance but it should be purely based on 'last come first out' basis. That means it should be the last employee joined in a particular kind of work who should be retrenched first. Similarly it should be on one condition that those terminated should be given employment once you restart the functions or start recruiting people. This clearly shows that the management shall not exercise this right conferred under the ID Act as an opportunity to get rid of non performing employees.

In respect of employees who have supervisory rights and to whom other employees report, nothing mentioned above will be applicable.


From India, Kannur

Follow the advice of Madhu T K. Retrenchment is the only solution to avoid further complications.
Check my blog at

From India, Kolkata

This redundancy is because company has some financial issues and company has to reduce the headcount.
I want to know what process should be followed, how to announce those who will be affected by this layoff.
Should it be a letter or an email.
what is the general procedure followed.

From India
Jhuma Tiwade

Please do some research on the procedure followed as you would know the mindset of your staff. If they are aware of the company's financial problem they would have started searching. Have a one to one meeting with each of them and then hand over the letter. Take acknowledged copies for your future records. Compensate atleast a month's notice pay if you are reducing immediately and/or offer them some time to look out for another job.
Finally put a mail to all explaining on the retrenchment since this will have an impact of your existing staff too.

From India, Mumbai

Hi Rasba,
Laid off is 45 days in 12 month and 50% of basic and dearness allowance is paid as per sec-25C of ID Act 1947.
In case of retrenchment you may follow as suggested by Madhu T K .
As your firm is IT company then you may clear on ID Act is it applicable or not.
Specially in your case organization handles by two way
1. Retrenched employees on performance base and
2.Make good Retrenchment Package.

From India, Bangalore

Dear Sir,
You have to prepare category wise seniority list of the employees and start retrenchment on the basis of last come first go, for this you have to pay 15 days salary for every completed year of service or part thereof and one months salary towards notice pay. You need to inform the authorities about retrenchment. But first of all you need to put up a general notice setting out the reasons for the retrenchment. Because if it is challenged in the court of law, you should be able to justify your action before the court with evidences in support of the retrenchment, so you need to have proper paper work and documents also in place. It is necessary that your total strength of workmen in previous calendar year from date of proposed retrenchment does not exceed 100, otherwise government permission is reequired for retrenchment. This aspect needs to be examined strictly, because any action in violation of this provision will render your action redundant by law.

From India, Pune

Thanks to you all for you advice. I consulted a local lawyer our company falls in Punjab. He said only a notice of 45 days is enough to the redundancy and no information to government is required.
Is he correct i am confused from different advice, which is the best and most trusted way to get an advice on this matter
I don't want to put my organization in legal issues.

From India
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