Can We Lay Off Workers Due to Low Orders? Seeking Insights on Legal Grounds and Case Laws

Can we lay off workmen due to a shortage of orders? Does it fall under the definition of "lay off" under the Industrial Disputes Act? Please substantiate your view with any case law if you have.

Thank you.

Please reply to the above question. Please specify if there is an agreement to this effect and whether it is legally valid or not.

Regards,
Ravi

After reviewing the definition of 'lay off,' it appears that a shortage of orders is not considered one of the reasons for declaring a lay off. The definition of 'lay off' can be read as follows:

(kkk) “lay-off” (with its grammatical variations and cognate expressions) means the failure, refusal, or inability of an employer on account of shortage of coal, power, or raw materials, or the accumulation of stocks, or the breakdown of machinery, or natural calamity, or for any other connected reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.

Submitted as requested.

Regards,
R.N.Khola

I have a doubt. I have reviewed the CSO of a company where there is an agreement on laying off employees in case of a shortage of orders. I am not understanding this because a layoff is not possible for this reason.

If you are allowed to do a layoff as per CSO, then go for a layoff keeping in view chapters VA & VB of the Industrial Disputes Act, 1947 on Layoff & Retrenchment.

Regards,
R.N. Khola

Legality of Layoffs Due to Lack of Orders

Layoffs on account of a lack of orders are absolutely legal and within the legal provisions of the ID Act. The inclusion of the phrase "the accumulation of stocks" indicates a lack of orders. I do not know where you get the idea that a layoff is not possible due to a lack of orders.

Regards,
T. Sivasankaran

Is it possible to lay off workers for 4 months in a year regularly? Since our company is a mining firm where we cannot have production during monsoon because of heavy rainfall, what is the procedure for seasonal businesses? Please help me out.

Thank you.

Layoffs can only be made for the reasons specified in the definition of layoff in the Industrial Disputes Act. As pointed out by Mr. R. N. Khola, layoffs cannot be made for a shortage of orders. "Shortage of orders" is not the same as "accumulation of stocks." The company may not have any orders, yet still be without any accumulated stocks.

Regards