We have 69 people working in the company , out of that 29 are workmen and balance are admin / engineers / managers / accountants . does CHAPTER VA - LAY-OFF AND RETRENCHMENT of Industrial Dispute act applies ?

As per definition it says doesn't apply to "Industrial establishments in which less than fifty workmen on an average per working day have been employed in the preceding calendar month"

In this case total employees are 69 and out of that workmen are 29.


From India, Bengaluru
Labour Law & Hr Consultant
Partner - Risk Management


Dear Jagannatha rao,

When the provisions of lay-off are not applicable to an industrial establishment by virtue of its workmen strength falling below the threshold prescribed under sec.25-A of the Industrial Disputes Act, 1947, such establishment cannot resort to lay them off at all unless there is an enabling clause in the contract of employment. If done so on the contrary, such laid off workmen are entitled to compensation of full wages.

It is the ratio decidendi of the judgment of the Supreme Court in Workmen of M/S Fire stone tyre & Rubber Co. Ltd v. Firestone Tyre & Rubber Co. Ltd [ 1976 AIR 1775 ].

From India, Salem

Hello Sir ,

Thanks for your Input , to give clarity of the issue . Company has 69 total employees out of that 29 are workmen performing work on components and balance or engineers , supervisors , accounting and managers . All of them have been issued Appointment Letters which was accepted by them , Appointment Letter says 1 month notice or 1 month pay in lieu of relieving by employee by employer ,

My question is the definition of Chapter VA of ID act says workmen , when company has 69 and out of that only 29 are workment , will this section applies ?

Thanks again , If I repeated some points I am sorry about that.

From India, Bengaluru

This is an interesting point.
I assume you are asking whether you need to give them retrenchment compensation in addition to the notice pay that is due to them.

I would be very much interested in Umakhanta Sir's opinion on this

From India, Mumbai

Dear Jagannatha Rao,

For the purposes of section 2-A, Chapters V-A and V-B, the IDA,1947 takes into account only those employees who fall within the ambit of the definition of the term " workman " as defined u/s 2 (s) of the Act.

Even if an engineer is predominantly employed to do a technical nature of work without no one under him to exercise any supervisory control, he would be a ' workman' u/s 2 (s) of the Act, irrespective of his salary or designation.

Appointment with a termination clause of a certain minimum period of notice or notice salary in lieu thereof is in vogue particularly in respect of higher management cadre employees. As per the ratio decidendi of the Central Inland Water Transport Corporation v Brojonath Ganguly (1986 SCR(2) 278 ) such a termination clause was held to be unconscionable and opposed to public policy u/s 23 of the Indian Contract Act,1872 and hence held to be void/ voidable. In that case the Supreme Court directed to pay a higher compensation than the notice salary to a DGM (HR) terminated simply without any reason under such notice clause of termination. If such a practice goes unabated, firing of the services of an unwanted employee would be a blissful cakewalk to every employer. Therefore, please remember that such a termination clause though incorporated in the appointment letter and meekly accepted by the concerned employee earlier would crumble to dust in Judicial Scrutiny if it is agitated later.

Coming to your last query, the employee strength in an industrial establishment defined as such in the two Chapters of the IDA,1947 has to be determined only with reference to the no of employees employed in ' workman' category on the rolls. Even, casual, contract labor are not included for the purpose. Out of the total of 69 people in the establishment, only 29 are workmen, i5 falls below the threshold of 50 and therefore the establishment becomes exempted automatically. Here, I take your statistics as it is without any questions.

From India, Salem

Hello Sir , Thank You for your detailed reply , will get back if any further doubts on this. Thanks
From India, Bengaluru

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