Legal Strike and Retrenchment in Private Manufacturing: How Do You Navigate the ID Act?

Dear seniors, Respected Madhu T K, kindly tell me the procedure for a legal strike and retrenchment under the ID Act in private manufacturing companies.

Regards,
Paramjeet Singh

Understanding Legal Strikes and Retrenchments Under the ID Act

There is no illegal strike or illegal retrenchment as it is. All strikes or retrenchments against the provisions of the Law (Industrial Disputes Act) are illegal. Section 22 of the ID Act deals with the prohibition of strikes and lockouts (though it applies to public utility services). As per the Act, a strike by employees without a notice of 14 days shall be illegal. Similarly, a strike commenced while conciliation is pending is also illegal. The same applies to a lockout by the employer.

Retrenchment Procedures Under Section 25F

Section 25F states that if any employee or a batch of employees is required to be retrenched, the employer should serve a notice of retrenchment at least 30 days in advance. In case no notice is served, the employee(s) should be paid one month's salary in lieu of notice. Similarly, compensation at the rate of 15 days' salary calculated for every year of service of the employee should also be paid as retrenchment compensation. The Act also states that a notice informing the employer's intention of retrenching employee(s) should also be given to the Labour Department (Govt).

Retrenchment in Larger Companies

Retrenchment in companies that employ 100 or more workers will follow procedures as per Section 25N, wherein instead of one month's notice or payment in lieu of notice, three months' notice or three months' salary in lieu of notice is required to be given to employee(s) retrenched. Moreover, in such companies, mere intimation of retrenchment is not sufficient; you have to obtain PERMISSION from the Govt. to retrench the employees.

All retrenchments made without following the above procedures will be illegal.

Regards,
Madhu.T.K

Understanding Lockouts and Retrenchment

Lockout refers to the closure of an establishment, and therefore, when a lockout is declared, the question of continuing production does not arise. I cannot understand how you could "lock out" unionized employees. Though you can declare a lockout in a particular division alone and not necessarily the entire establishment, you cannot declare a lockout in respect of selected employees.

If you mean to say that you have retrenched/terminated the unionized employees and then started production with non-unionized employees, then it is okay. But in such a case, you should have retrenched following the principle of the last employee to be employed to be retrenched first, and you cannot select the employees to be retrenched according to their union membership. If you have done that, the same can be challenged by raising an industrial dispute.

Regards,
Madhu.T.K

Before declaring a lockout, is it necessary for an employer to give a notice period of 14 days to the affected employees?

Regards,
Sither

Certainly, yes, you have to give notice of a lockout to employees with a copy to the Labour Department.

Regards,
Madhu.T.K

I require your guidance related to the situation below:

Strike and Negotiation Situation in Manufacturing Plant

In our manufacturing plant, which operates in three shifts, we were negotiating with the workers' union for a wage settlement. Suddenly, the union representatives (who were our workers) walked out of the meeting and went to the plant, stopping operations. They then took all employees with them and went outside the gate, starting a protest against the management, essentially calling for a strike.

I immediately posted a notice on the company gate urging all workers to resume duty immediately. I also informed them that if they continued with the strike, they would lose wages as per the "No Work No Pay" policy. Simultaneously, I informed the Assistant Labour Commissioner, Director of Industrial Safety & Health, Electricity Board office, and the police station about the strike.

I posted the notice at the start of each shift and sent copies to the aforementioned authorities. This action continued throughout the four-day strike period. During this time, we attempted to negotiate with the workers' representatives to end the strike, but to no avail. We also went to the labour court to have the strike declared illegal and filed a caveat-emptor.

Finally, we engaged with another group of workers and persuaded them to return to work. They agreed and entered the plant along with other employees, providing assurance that they would not strike. Once an employee signed this agreement, they could resume duty.

The union representatives did not sign the agreement and threatened the workers who returned to work. Subsequently, I issued suspension pending an inquiry order along with a charge sheet to them. I then conducted a domestic inquiry with an independent Enquiry Officer. We provided subsistence allowance and conveyance amounts to these representatives to attend the inquiry. We followed all principles of natural justice. Upon concluding the inquiry, we sent them the inquiry report along with a second show-cause notice, to which they did not respond. After the seven-day period mentioned in the show-cause notice, we sent them a dismissal letter, asking them to claim all their legal dues as part of a Full & Final settlement.

They have now taken the matter to the Labour Court, alleging unfair labor practices on our part for dismissing them.

Please confirm the correctness of the procedure I have followed.

Regards,
AK

From the post, I do not find any illegality in your move. At the same time, the act of workers going on strike during a negotiation in progress is unfair. Therefore, you can file a counter stating the reasons for suspension, conducting an inquiry, and dismissal.

Now, the only question is whether the dismissed workers were protected workers and if so, before initiating disciplinary action, did you inform the labor officer and the conciliation officer who is to give approval for taking disciplinary action against such workers at a time when demands are pending.

Regards, Madhu.T.K