Facing a Company Shutdown? Know Your Rights and Next Steps for Employee Protection

Dear Friends,

I want to know the procedures and details if a company is going to shut down its processes. How many days' notification has to be given to employees if the operations are going to shut down, and how many months' salary should be paid? If they are not ready to pay, what steps can the employees take legally? I need these details urgently.

Hope to get the replies soon from my Cite HR friends.

Cheers,
Swati

Dear Swati,

Notification depends on their contracts, specifically on the notice period mentioned in the employees' appointment letters. For example, if three months are specified, you should inform them three months in advance.

In the event of an immediate company shutdown, you are required to pay the salaries for the notice period.

If the company is unable to meet the salary obligations for the notice period, employees have the option to take legal action by sending a formal letter.

Regards,
Hassan

Dear Swati,

As per the law, you are required to pay one month's notice salary; otherwise, the employee can challenge you in the labor court. Ultimately, you will have to pay.

Regards,
Jitender

As per the Company Factory Act 1948, the company owner must inform the government of the state two months before closing the company. Approval is required before closing the company for any reason. The company can only be closed with state approval; otherwise, it is not allowed.

In the case that the owner shuts down the company, three months' salary or 45 days' additional payment for mental harassment is required. If any employee is terminated, the employee can approach the labor court. Half of the gross salary should be paid within six months, and 75% should be paid after nine months. Full payment should be made within nine months from the date the case ends or from the approval date. All annual increments should be made according to the law.

Thank you.