Laid Off Employees: Is Keeping Them on Payroll Until March 31st Legally Sound?

Good Evening Seniors,

My name is Lalitha and I have been working as Manager HR for 2.5 years. Our company has 100 employees and we are involved in software development and implementation. Recently, on Friday, February 28, 2009, we laid off 20 of our employees without any prior notice. However, we assured them that in lieu of the notice period, we would pay them one month's salary.

I have a small doubt as I haven't dealt with such issues before. My management is considering keeping all 20 employees on our payroll until March 31st and paying them their salary, even though their last working day would be February 28th. I suggest that since they will be on our payroll until March 31st, we relieve them on the same date without them having to work for the month. Could there be any legal issues with this approach?

Please clarify my doubt as I need to wrap up this matter by tomorrow itself.

Thanks & Regards,
Have a nice day,
Lalitha :)

Dear Lalithal,

It seems that you have wrongly mentioned the date as 28.03.2009. In the case of a layoff, there is no question of giving one month's notice. You are covered under the Industrial Disputes Act, 1947, and therefore, you are advised to go through the provisions of a layoff under this Act and take action accordingly.

Regards,
R.N. Khola
Sr. Associate
Skylark Associates, Gurgaon (Haryana)

Thank you for your suggestion Khola. As mentioned by you, I have gone through the Industrial Act 1947, but there I didn't get a solution for my query. Could you please explain to me in the mail itself?

Thanks & Regards, Have a nice day.

Lalitha :)

Please review the corrected text below:

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Please go through the chapters V A & V B of the I D Act, 1947. If you are employing 100 or more employees, then permission to lay off employees will be compulsory. These chapters relate to layoff & retrenchment.

Regards, R.N.Khola

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I have corrected the spelling and grammar errors, as well as formatted the text into paragraphs with a single line break in between.

Hi,

For statutory requirements, we have to give a notice period compulsorily. Additionally, retrenchment benefits should be provided as per your company's laid-down policy, if any, and in accordance with the terms stated in the offer letter.

Lakshminarayanan

Lalitha or the employer has combined the layoff with retrenchment. I understand that the attempt is not to lay off the 20 employees but to retrench them, paying one month notice/salary in lieu of notice. Since the establishment had employed 100 employees, Chapter V B of the ID Act will apply, and if so, prior permission from the government is required either to lay off or retrench the employees. Notice declaring layoff or retrenchment shall be simultaneously served both to the government and the employees concerned. Therefore, there are no possibilities of holding their last working day as 28th Feb, a date earlier than the actual date of laying off/retrenchment.

Regards, Madhu.T.K

Dear Lalitha,

I am just responding to the last part of your post. "Anyhow they are on Payroll till March 31st"...

When you issue them their relieving letter, it must be mentioned that the last day of the working period is March 31st (end of the notice period).