Layoff Compensation Dilemma: How to Handle Worker Pay When a Factory Closes Due to Pollution Rules?

Hi all, I am in a manufacturing unit as an HR executive. I am facing a problem here, as compensation should be given to the workers if the unit remains closed or sealed due to not applying some statutory norms related to pollution, and the employer had to bring back some workers for not having production. Please clarify all the limits of layoff and its compensation.

Hi,

As per the norms of the Employees' Compensation Act, if an organization is unable to provide a job temporarily due to any reason, employees may be laid off with compensation of 15 days' salary per month.

Amit Goyal

Hi Shafiq,

It seems you are a bit confused. The layoff period is the temporary period during which employees are not provided a job. Therefore, layoff compensation is to be given for the entire period of layoff.

Amit Goyal

Thanks, Amit.

But, you said that the employer has to pay only 15 days' wages for a layoff month. I want to know what is to be paid if the employer has to lay off for 2 months or more.

Dear Friends,

Regarding Laid-Off compensation:

As per the Industrial Disputes Act, 1947 Section 25-C, it states that a workman shall be paid by the employer for all days during which he is laid off, except for such weekly holidays as may intervene. The compensation shall be equal to 50% of the total of the basic wages and dearness allowance that would have been payable to him if he had not been laid off.

For any detailed notes on this, please refer to the Industrial Disputes Act, 1947.

Regards,
PBS KUMAR

Hi Mr. Beg,

It appears that your unit is closed or sealed due to non-compliance with certain norms under the Environment Act. In my view, layoff compensation would not technically apply here. I would suggest that you pay employees their basic pay until the time your factory becomes operational.

Thanks,
Md Meraj

Hi,

If any company closes for a temporary period (short duration), it's called a layoff. At the same time, if it closes permanently (or without any result), it's a lockout. According to BMS Kumar, it is the right to give 50% of basic wages to the employees at the time of a layoff. However, before that, you have to confirm the type of employees they are - whether temporary, permanent, or contract workers.

By MSR. MARIYAPPAN

Dear Mr. Mariyappan,

If I am not wrong, a lockout is not a permanent closure, but rather a temporary denial of work by the management to protest, similar to a strike by the workers. In a strike, workers refuse to work, whereas in a lockout, management refuses to provide work to show protest against the workers. It is important to note that a lockout is not a layoff, and therefore no wages are payable to the workers if a lockout is initiated through legal procedures. Generally, a lockout is called against unfair practices by the workers.

Amit Goyal

Dear Amit Goyal,

Thank you for explaining Lay Off and Lock Out. However, the books I verified are from one of the referenced books at Anna University, which provided me with a different interpretation. According to the book, Lay off means a temporary closure, while Lock Out signifies a permanent closure.

MSR. MARIYAPPAN

Hi!

Lay off or lock out. If there is anything employees can do to change the decision of management, that would be negotiation to get the best possible compensation and support during a difficult time frame. From the worker's side, is there any way to go on strike and seek help from the union to obtain compensation? Let me know.

Regards,
Ayesha

Hello,

Can anyone suggest what the exact policy is for layoffs for confirmed employees and probationary employees? Also, please advise if layoff letters have already been issued to probationary employees stating they will receive one month's severance pay, but now the employer is unable to pay the additional month's salary. Can the employer inform the employees that they cannot make any further payments for the extra month's salary?

Kindly advise.

Regards,
Ruchi Thakkar

Hi,

It seems to be a non-compliance case. So, in the case of layoffs, employees should be given 50% of their monthly wages or salary.

:-P

Management Decisions on Layoffs and Retrenchment

In this case, the management needs to be clear whether they are in the process of clearing the hurdles and restarting operations. If yes, then a layoff applies, which, as per the Act, is for 45 days or as mutually agreed with the workmen. It is mandatory to inform and get permission from the appropriate government before implementing a layoff.

If the management is not in a position to restart and, due to unavoidable reasons, has to close down, they need to inform the appropriate government. After receiving the order, they can retrench workmen by paying them compensation, i.e., 15 days of wages for each completed year of service (if worked for more than 6 months, a complete year has to be considered).

Regards

Section 2 (kkk) ID Act 1947: Definition of "Lay-off"

"Lay-off" (with its grammatical variations and cognate expressions) means the failure, refusal, or inability of an employer, on account of a 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.

Refusal, failure, or inability on account of reasons as mentioned above is considered a lay-off. Lay-offs on account of reasons other than those given in the act would be illegal. In such a situation, it is a denial of employment that warrants full wages. For compensation, please refer to Chapter VA or VB as applicable.

Debapriya is right. Lay off in an "industry" as defined under the Industrial Disputes Act could be only for the reasons specified in section 2(kkk) of the Industrial Disputes Act. It cannot be for any other reasons. If the employer is not able to give work because of non-compliance with statutory provisions, then it would not amount to lay off, and the workmen would be entitled to get full wages for the period.

Hi Sachin Mane, I would like to know the procedure for applying for a layoff before the Labor Commissioner.

Regards, Sachin Mane