Navigating Layoff Compensation: How to Handle Employees Refusing Severance Packages?

Dear HR professionals,

I work in the Telecom/ISP industry, and due to business losses, we are having to let go of staff who have been working with us for the past year. Could you please advise if we have any policies in place for compensating the affected staff? Our management is willing to provide compensation, but some employees are accepting it while others are not. I would appreciate your suggestions on how to handle this situation.

Thank you.

Dear Sekhar,

The heading of your question is on "Lay Off" Compensation. However, in your question, you mentioned that "because of loss in business, we are removing the staff who have been working with us for the past 1 year."

Please specify your question without ambiguity. Additionally, you have not mentioned the "Termination Clause" as per the Appointment Letter, the Amount of Compensation Offered, etc.

Is Chapter VB of the Industrial Disputes Act, 1947 applicable to your establishment?

Clarification on Retrenchment and Layoff

By your narration, it appears that you want to sever the employer-employee relationship. This action can be termed as retrenchment, not a layoff. If you want them to remain on your rolls and ask them to report for duties later, then it is a layoff. Please clarify what you intend to do.

There is no need to have a policy for layoff and retrenchment as the Industrial Disputes Act, 1947, has detailed provisions unless you plan to compensate affected employees by paying wages or compensation at a rate higher than specified in the Act.

Your case is not a lay-off but rather retrenchment. You can pay retrenchment compensation to those who have completed continuous work of 240 days. You have to pay notice pay at 30, 60, and 90 days, considering the strength of the workforce in your industry. The retrenchment should be based on the principle of last in, first out.