Facing a Layoff: Do Private Companies Need to Clear Pending Salaries First?

Hi,

I am working in a private company as a permanent HR staff. Due to financial crisis from a government client, my company has decided to send all employees on layoff for 45 days. Kindly note that our salaries have been pending for 4 months. What are the rules for layoff in a private organization? Is there a requirement to clear pending payments before sending employees on layoff? Also, please provide information on payment rules for employees on layoff.

Thanks and regards,
ABC

Layoff Rules and Compensation

Financial crisis is not a basis for sending the workmen into layoff. You should be specific and clear under the provisions and conditions (S-2kkk) why the management wants to place its manpower on layoff. Create a notice and send a copy to the Assistant Labour Commissioner/Regional Labour Commissioner as well.

Under layoff, you are required to pay 50% of wages as layoff compensation, which should be paid on the scheduled date of salary disbursement. If there is any pending balance salary, try to reach an agreement with your workmen representatives and settle it in installments, as that would be a better approach.

Please let me know if you need further assistance.

Thank you,

Regards, [Your Name]

Please study Chapter VA and Chapter VB of the Industrial Disputes Act to understand the details and obligations of the employer under the law.

Thank you!

Raj sir,

I think in this case, the layoff is not due to a financial crisis but due to a lack of work from a PSU. So in such a case (lack of orders, lack of material), layoff is allowed.

In any case, we do not know the nature of the business or the number of employees in the company, so giving any concrete answer would be difficult because approvals are not needed for a layoff in the case of a small workforce (I think it used to be less than 100 employees).