Facing Major Layoffs in a Media Company: What Are the Legal Steps and Employee Rights?

Dear Sir,

We are a media organization with a current strength of approximately 75 (PVT. LTD Company). We are planning an immediate retrenchment, and the workforce would be reduced to approximately 10.

Please suggest the necessary formalities and what compensation rights the employees have, apart from the notice pay as per their contract/appointment letter.

Please suggest ASAP.

It is better that you provide the breakdown of the current staff strength, including workmen, supervisors, managers, and others, as well as the presence of a Trade Union, if applicable. With the total staff count being less than 100 (keeping in mind that this average should have been maintained over the preceding 12 months), you have the option to lay off employees based on their juniority. This can be done by giving them one month's notice or one month's salary in lieu of notice, along with retrenchment compensation at a rate of 15 days' salary for each year of completed service, gratuity if eligible, leave salary for any unused leave, and bonuses for the service rendered during the accounting year. Please refer to Chapter V-A of the Industrial Disputes Act, 1947 for further details.

If the remaining staff strength is to be reduced to just 10 people, it constitutes a significant downsizing that necessitates justification and consensus through negotiations with the affected employees to ensure a smooth transition process.

Dear Mr. ManHR, While appreciating your ethical approach to industrial strife and employers' commitment to the contract of employment, I would like to highlight the fact that no aspect of illegality is involved either in the question or in the possible answers to it. In fact, industrial relations are the product of attitudes, approach, and actions of all the stakeholders tested on the anvil of appropriateness or inappropriateness and not of rights or wrongs. That's why there are provisions in the Industrial Disputes Act, 1947 for lay-off, retrenchment, and closure subject to certain conditions. What the "Teaching of Amenophis" says, "A pilot who sees from afar, will not make his boat a wreck," applies well to industrial crises also.

Further to what Umakanthan has responded to HRAL, it looks like you haven't read HRAL's posting well and misjudged the intent. HRAL has clearly asked for "necessary formalities and what are the compensation rights of the employees apart from the notice pay as per their contract/appointment letter" — the key words being APART FROM. Frankly, I would appreciate him/her for keeping the employees' well-being and rights in mind from the very word 'go'. You have been a member of this forum since Feb 2009 — I am sure you would have seen many postings in this forum of complaints by employees of being retrenched or fired without any dues being paid or partially paid... and here you have an HR who wants to safeguard BOTH the company's and the employees' interests.

Regards,
TS

Downsizing in the Private Sector

Sometimes, industries do have to downsize. That is the way the private sector works. We cannot have PSU-type operations where employees claim, as a matter of right, huge overtime, and extra privileges like late coming and early departure. One needs to read about indiscipline in PSUs by unions, etc., where peons, watchmen, and drivers receive thousands in overtime alone. The taxpayer is permanently subsidizing AI (named only for example). The private sector will obviously reduce manpower if they have other plans.

This, of course, is not to say that some private players are also difficult with employees and do not fully respect employees genuinely. Equally, there are employees who abscond or change jobs without intimation or following any process. The blade cuts both ways. An ideal playground is a utopian idea, and one has to deal with situations as they arise, as per law.