Layoff Compensation Norms In Service Industry

Dear Seniors, kindly help me as I have a slight confusion on lay off compensation / retrenchment compensation in service industry in case of shutting down the entire unit. I understand the norms related to manifacturing industry and I can also play it by giving them extra money and getting them to resign instead of lay offs however I am looking for advise or data on rules and regulations laid by the government on compensation in Service Industry as I dont want to ignore them as well. This is my first question on citehr and i hope I will get the best guidance:icon1:. Thanks Tapan Pandit

Though the interpretation to the term industry was very narrow in the beginning, with the passage of time and following several rulings, the term has been given a wider meaning to include service sector also. Therefore, wherever employer- employee relationship is present or wherever the prime objective of 'service' is profit, or wherever capital is invested, the Industrial Disputes Act, 1947 will be applicable. Lay off and retrenchment being subject of ID Act, service sector is not exempted from payment of compensation prescribed under it. However, settlement amicable in this regard with employees by which they are prepared to resign shall be a good initiative provided amounts sufficient to compensate the loss of salary for the time being are paid to them. Regards, Madhu.T.K

Is the act , specifically in case of layoff / retrenchment applicable to all employees or only a class of employees. In service industry as there is no manufacturing activity, an employee is not defined as a worker. In that case , will the act still be applicable? Regards, Swati

dear swati there is no difference between service industry or manufacturing process. we only decide ourself that he is in staff,he is employee or he is woker. legally as per I D act only it is workmen or working in supervisory or managerial capacty.I D ACT IS APPLICABLE to all persons working as workmen.so it is not designation who decides it but it is nature of job who decides that who is workmen. tks js malik

Thank you Mr. Malik. I need a further elucidation. Will a ITI trained person or a diploma holder in engineering who is working as directed on making industrial drawings, qulaify as a workman. He has no managerial responsibilities or powers. Though he does sport a fancy designation. Regards, Swati

Designation will not matter, if the employee does not wield managerial responsibilities. He will be treated as workman, provided all other terms for being considered as "Workman" under ID act are fulfilled.

Dear Seniors, In this case may i request a clarification as what would be the minimum retrenchment compensation applicable for the service industry employees in case we are shutting down one unit of the company due to heavy loss. Kindly suggest. Thanks Tapan Pandit

dear Pandit, Plz go through Chapter VA & VB of Industrial Disputes Act,1947 you will find the answer to your query. R.N.Khola Sr Associate