Laid Off Without Compensation: How Can Employees Navigate This Sudden Crisis?

Hi all,

Can you folks help me in knowing the procedures to be followed by the management at the time of layoff? Due to some management issues, the management suddenly said that they don't have any funds and laid off almost 95% of the employees. When the employees are asking for compensation, management is saying they can't provide any compensation even though it is mentioned in the appointment letter that 1 month's salary will be paid (but there was a tricky clause stating that management can waive it). Now they are saying that they will give 15 days' salary. Employees are very upset now, not knowing what to do. There was no prior notice; suddenly, they called a meeting and conveyed this message to the employees. Is there any way employees can be helped out?

I would be very thankful if you could help by providing some suggestions.

Regards,
Swati

As per the Industrial Disputes Act, prior notice is required to be given to employees before a layoff, and provision of compensation is also there in the Act. In the case of section VB, permission is required from the appropriate government. In contravention of the above, a layoff will be illegal, and an Unfair Labor Practice (ULP) complaint can be filed against the employer.

V.S. SARODE

Dear [Recipient],

I sense from your query that you are a little confused about lay-offs, closures, and retrenchment, and you are seeking clarification on closure.

A lay-off is a temporary measure where employees are entitled to 50% pay during the lay-off period, which cannot extend beyond 45 days.

Closure, on the other hand, involves shutting down the establishment. For this, permission is required, and you must provide a 3-month notice pay along with 15 days' salary for each year of service as retrenchment compensation.

Thank you,
J. S. Malik

Hi Swati,

My advice would be to go through the Standing Order of the organization and see what's mentioned in it at the time of layoff.

Secondly, if the manpower in the organization is more than 50, the employer is liable to give compensation to its employees. However, in the case of manpower less than 50, it's not mandatory as per the laws.

Surabhi

Discrimination by Employer in Retention Bonus and Notice Pay During Closure

My company is an MNC in the financial services business and is closing its operations in India, where it has been registered as a private limited company for the past one and a half years. The employee strength is around 50.

Recently, we have been informed by the management that there will be a 6-month notice for each employee. Apart from this, the management has divided employees into three categories: critical, essential, and non-essential. Critical employees will receive a 100% bonus, essential will receive a 50% bonus, and non-essentials will receive no bonus.

I have been working for the company for the last three years in the marketing department, where we have a team of two, myself and the head of the department.

All critical and essential category employees have received written communication about the retention bonus and terms.

Now, my boss is suggesting that I look for a new job as I fall into the non-essential category, while he will be getting a 50% retention bonus. Due to some pressure he created, the CEO has shifted him and a few employees (who have been ingratiating) into the essential category from non-essential.

I asked him how this discrimination happened. He replied that the CEO has received a budget from the headquarters, and he has to manage within that amount, which is why some lower hierarchy employees have been excluded.

We are also committed, capable, performing, and loyal like others. My question was, why not have equal distribution of the bonus among all employees instead of giving it to a few? In that case, higher-income level employees are going to receive a proportionately higher bonus than lower-income group employees.

I strongly feel that this is a case of moral harassment. Please guide me on whether any legal action can be taken. I am ready to fight this battle.

Thanks,

S V