Anonymous
4

Hello Freinds,

When a manufacturing unit gets shifted to other location due to business strategy and closes down manufacturing operations at the old location and as a result, some positions get redundant, then what should be the terminal benefits and compensation, a worker/employee is entitled to receive

From India, Mumbai
PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Umakanthan53
Labour Law & Hr Consultant
Madhu.T.K
Industrial Relations And Labour Laws
KK!HR
Management Consultancy
+1 Other

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KK!HR
1343

Statutorily you need to follow the provisions of the ID Act 1947. As regards establishments covered as per the Industrial Employment (Standing Orders) Act 1947, its provisions need to be complied. In addition, the employees have to be paid all terminal dues.
From India, Mumbai
umakanthan53
5918

The situation described in the post is that of retrenchment consequent on relocation of the industrial establishment to some other place.

If the total number of workmen in the unit is 100 or more, the employer has to apply for prior permission u/s 25-N of the ID Act,1947 to the appropriate Government with a simultaneous notice of three months to the employees likely to be retrenched.

If the strength is less than 100, no prior permission is required and the employer can retrench the redundant employees by following the provisions of section 25-F of the Act under which the notice period is one month or one month's wages in lieu thereof.

However in either case, the retrenchment compensation shall be the payment of 15 days average wages last drawn for every year of completed service upto the date of retrenchment in addition to statutory gratuity, leave with wages at credit, proportionate statutory bonus etc, based on eligibility.

From India, Salem
Anonymous
4

Sir,

Please elaborate the criteria of total number of workmen in question. Whether it is combined total wprkmen of all units of the company and whether it also includes official employees or it's only for the concern unit to be shifted? Kindly advise.

From India, Mumbai
umakanthan53
5918

If all units of a company coming under common balance sheet for accounting purpose as well as having functional integrality, then the number of all the workmen employed in various units have to be taken into account for the purpose of the Industrial Disputes Axt, 1947.
Such calculation should be restricted only to that of workman category so defined u/s 2(s) of the Act.

From India, Salem
Anonymous
4

Respected Sir,

Suppose the concern factory in question of the company has 50 official staff and 60-70 workmen were employed in the past a year but the strength of workmen reduced to 40 and now the factory is getting closed and shifted to another location of 100 kms distance, near to another factory of the company. The total strength of the company including HO is more than 275. The office/HO will remain working as usual but the employees related to the factory will get retrenched. In this case, please throw insights what notice- 1 month or 3 months- to be given before closure of the factory at main location. And the workers, those have worked 3-4 years but can't complete 5 years continuous service due to the sudden closure decision, should be entitled to get gratuity or not.

From India, Mumbai
Madhu.T.K
3767

If the total number of employees working in the factory is 275, chapter VB will any way apply because there may not be 176 managers and 99 workers. I believe that a majority of your office staff may also come under the definition of workmen.
From India, Kannur
umakanthan53
5918

My dear anonymous friend,

Certain questions of law, at times, cannot be answered clear cut in isolation of the facts underlying such questions.

Your piecemeal queries after every response without giving complete facts pertaining to the so-called Company, it's H.O and it's branches including different manufacturing facilities compels me to suspect the very purpose of your questions for which, infact, I am very sorry.

Generally, questions in law can be purely academic as well as arising out of real life situations. Particularly in case of the latter, transparency is of much importance to get an appropriate answer without the intention to circumvent the provisions of law. As the citeHR being an open forum, the principles of ethics prevent the resource persons to encourage such questions.

With the above caveat, let me browse over the various provisions of the ID Act,1947 relevant to the thread under discussion from which I hope that you can cull out the answer yourself.

Chapter V-A of the Act deals with lay off and retrenchment in general as well as in particular to certain industrial establishments.

Chapter V-B of the Act deals with special provisions relating to lay off, retrenchment and closure in respect of certain industrial establishments.

Both the chapters have their own definitions of the term " industrial establishment " for the respective purpose of the chapter. If any difficulty in interpretation arises with reference to the purpose, it has to be resolved falling back on the definition of the term " industrial establishment or undertaking " as defined u/s 2(ka) of the Act.

Now, please decide for yourself by matching the actual facts of the issue.

From India, Salem
Anonymous
4

Respected Sir,
Let me write you in clear cut.
It's a manufacturing and trading concern with HO and manufacturing unit situated at location A. The company grew very fast over the last 5-6 years and crossed 100 crores turn over. It had Started another manufacturing unit at location B 2 years back. And now the company started another manufacturing at location C, near to location B and wants to close manufacturing operations of the first unit at A completely while keeping HO at A working as usual. The production people are getting redundant. In this case, what notice period or payment in liu of should be served and given.....1 month or 3 months apart from other terminal benefits that you already suggested earlier.


Further, those people who have already worked and put in 3-4 years and are nearing to complete 5 years but due to this strategic decision, they are going to be deprived from gratuity benefits. They are not resigning themselves. I feel all these are the loopholes in our system.

If I'm not wrong, there was news that Govt is planning to make a change in eligibility criteria from 5 years to 1 or 2 to get gratuity benefits. Since unlike in the past, people do switching jobs very frequently now a days.

I would love to hear from you how my query has been addressed in the new labour codes. Is this same there in the IR Code too or modified for better?

Lots of respect!

From India, Mumbai
Madhu.T.K
3767

The applicability provision of any Act with reference to the number of workers employed can be interpreted differently. That is why when such situations arise the Trade Unions place demands to pay higher compensation than what is stipulated in the ID Act. If you say that putting all the employees in the HO and the factories, the number would cross 100, the applicability of chapter VB is implied and as such three months' notice is invariably a liability on you. But at the same time, when you say that HO people are not retrenched following the closure of one of the units, the chapter will not be applicable. But the applicability of a particular section or a chapter is for the establishment and not to a particular division of the establishment. A such what I feel is that you should give 3 months notice.

Gratuity is payable to those employees who have completed five years of service. It shall also be extendable to those who have completed four years and then 240 days in the running year. The law which says that gratuity becomes payable to those who have served for one year or two years also has not be enforced yet and even if such an enactment is enforced, it does not apply to all employees but it applies only to those who have been appointed for a fixed term and the gratuity becomes payable only when the employee leaves at the event of employer not renewing the contract.

Again, the act of management closing the unit in the fifth year of its commencement is another act which will be questioned by the Union and I am sure that they will demand an amount equal to gratuity lost due to this closure.

From India, Kannur

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