What is legal rule and what can we do
11th August 2019 From India, Pune
"Shut Down", "Suspension of Operations" and many more terms like these according to possible fanciful phraseology are modern terms coined and used by some employers to circumvent the provisions relating to "Closure" of industrial Establishments under the Industrial Disputes Act,1947.
As per your post, the plant was closed before two years and now only the affected 600 employees are "shifted" to some other Plant of the same Company and the Company refuses now to pay wages for the entire 2-year period of non employment based on the principle of "No work-No wages". Am I right?
It is a clear case of violation of the provisions of sec.25-O of the ID Act,1947 by the Company and the closure itself is illegal. Therefore, the affected 600 workmen are entitled to full wages with continuity of service for the entire period of their non employment. The proposed move of the management to approach the appropriate Government for ratification of the illegal closure now so as to escape the statutory liability of payment of wages to the workmen for the period of such illegal closure will not be certainly fruitful.
Because of the application of Chapter V-B of the ID Act,1947, the Company can go in for retrenchment only after obtaining prior permission from the Government. The previous 2-year period of non employment of the 600 workmen due to the closure in violation of the relevant provisions would certainly make it impossible.
If the reasons for the alleged illegal closure and the proposed retrenchment are genuine and actually beyond the capacity of the Company, my suggestion would be that both the employer and the workmen/trade unions can hold direct negotiations to sort out the issues of back wages for the closure period and right sizing the number of employees by means of any voluntary separation scheme so that unnecessary and protracted litigation can be avoided in the interest of both the employer and the workmen.
11th August 2019 From India, Salem
I think I had no been explain clearly.
I try again -
As I say 600 employee from other plant to transfer in our plant before 2 years.it is situation of my company currently.in our plant situation is also going worst because we have 1100 employee and other 600 came from that plant so total permanent employee has been more and more.
Now my concern is start
Company saying that
1)we have too much production in next year so we will aproch to government to permission for reduce employee payment
2) company is also going to permission for no work no payment (if this happen we don't have more than 8 month production In next year) by government.
3) company is also going for retrenchment.
I want to know that can company do these all thing if yea than what is legal safety for us and how can we protect him self, because I my think if those 600 employee implement here than we have sufficient production for 1100 employee meen theese all situation create by company.
12th August 2019 From India, Pune
Procedure for calculation of retrenchment compensation
While effecting retrenchment of the workmen, it is obligatory on the part of the employer to pay retrenchment compensation at the rate of 15 days wages (for every completed year) to be calculated at the last drawn salary of an employee. The calculation of compensation is to be based from the date of appointment and in case an employee has completed 240 days, he will be entitled to 15 days retrenchment compensation besides one month’s notice or salary in lieu thereof as if he has worked for one year. 240 days includes Sundays or off days as well as festival or national holidays.
In case an employee has worked for more than one year, the procedure is that in case the subsequent period of one year is less than six months then it will be counted as one year for calculation of compensation. While making calculations the period of notice is also to be taken into consideration.
Provisions related to retrenchment
Now that the law is settled on what retrenchment is, let us proceed to the provisions contained in the Industrial Disputes Act, 1947, regarding the procedure to be followed in cases of retrenchment.
Condition precedent to retrenchment
Section 25F provides the conditions precedent to retrenchment. According to this section the employer must satisfy the following conditions before retrenching an employee employed for a period of continuous period of not less than one year -
(a) the workman has been given one months notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice:
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days average pay [for every completed year of continuous service] or any part thereof in excess of six months;and
(c) notice in the prescribed manner is served on the appropriate Government [or such authority as may be specified by the appropriate Government by notification in the Official Gazette].
Calculation of average pay is done by dividing the last drawn monthly salary by 25 and then multiplying the dividend by 15 for every completed year of continuous work.
Section 25N also lays down the conditions precedent to retrenchment -
1) No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until,-
(a) the workman has been given three months notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; and
(b) the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereafter in this section referred to as the specified authority) has been obtained on an application made in this behalf.
(2) An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner.
(3) Where an application for permission under sub-section (1) has been made, the appropriate Government or the specified authority, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.
(4) Where an application for permission has been made under sub-section (1) and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
Procedure of retrenchment
Section 25G lays down the procedure of retrenchment. Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman. The employer is also required to maintain a seniority list of the workmen. The system of last in first out is to be followed in retrenching workmen.
Anil Kumar KT
13th August 2019 From India, Bangalore