Industrial Relations And Labour Laws
Kella Durga Rao
Facility Manager

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Some one can clarify the procedures for downsizing, as according to factory act.
Under Factories Act there are only formalities connected with reducing the connected power. but what is more important is the formalities of reducing the manpower for which you have to follow the formalities as mentioned in Industrial Disputes Act. There are two separate formalities as applicable to factories with less than 100 workers and more than 100 workers. In the case of factories with less than 100 workers, you can do the formalities of retrenchment of workers without getting the approval from the Govt, whereas in the case of establishment with more than 100 workers, you should wait for the approval from the government. Accordingly you have to send letters to the Labour Officer informing the reason for retrenchment, the names of persons to be retrenched, and date of its effect. A copy of this should be given to the workers who are going to lose their job.
You cannot pick and chose the workers to be retrenched but for this you have to consider the dates of entry into service of workers and obviously, the last employee in a particular department or function who should be retrenched first. Of course, those who have not worked at least for 240 days during the twelve months immediately preceding the date of retrenchment need not be given any notice.
The next formality is to arrive at the retrenchment compensation. The retrenchment compensation will be equal to fifteen days' wages for every year of service and fraction of more than six months. In case you wish to make immediate retrenchment without giving one month advance notice, one month salary in lieu of that notice should also be given to the workers. In the case of establishments employing more than 100 workers, the notice or salary required to be paid in lieu of notice is three months.
As stated above,in case you don't have 100 employees,you can proceed with payment of retrenchment compensation and relieve the workers.In case you wait for one month notice period is over.
In the case of establishment wherein trade unions are present, the process will also involve taking the unions into confidence. This is the only practical way of retrenchment whatever be the law. In such scenario the compensation will be decided in negotiation and not as per the formula of 15 days pay for every completed year of service.

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