Lay off in our manufacturing unit in which 400 workmen are working

Our management would like to lay off all our workmen on account of a shortage of coal. Please let me know the procedure on the following points:

1) When should we send notice to the appropriate government/Labour department? (1 month/2 months/3 months)
2) Is the 50% layoff compensation (45 days) based on Basic + DA or Total monthly wages?
3) For the 45 days payment, do employees need to come to the factory or not?

1) When should we send notice to the appropriate government/Labour dept (1 month/2 months/3 months)? There is a 30-day notice period.

2) Lay-off compensation of 50% (45 days) should be calculated based on Basic + DA or Total monthly wages.

a) Workmen whose name is on the muster roll and have completed one year of continuous service in your industry are entitled to payment for all days of layoff, excluding weekly holidays, at a rate of 50% of the total basic wages and DA.

b) The compensation is payable for a maximum of 45 days if the layoff extends beyond that period within a 12-month timeframe; this condition should be documented in an agreement between the workman and the employer.

3) For the 45-day payment, do employees need to come to the factory or not? An employee must be present during the 45 days at least once. Failure to report to work at the establishment during normal working hours at least once a day may disqualify the employee from receiving layoff pay.

Thank you so much, Mr. Pradipta Nath, for your update. I have one doubt in your update, i.e., compensation for 45 days should be jotted down in an agreement. Can you please explain to me?

Dear Venkat,

Though the title of your post states that your company is a manufacturing unit with 400 employees, there is no mention of it in the text. If this is accurate, then the special provisions concerning lay-offs outlined in Chapter V-B of the Industrial Disputes Act, 1947 would be applicable to the proposed lay-off due to a shortage of coal. You cannot immediately proceed with the lay-off as per Section 25-M(1) of the Act. It is necessary to obtain prior permission from the appropriate Government as specified in Section 25-M(2). I recommend verifying your State Industrial Disputes Rules for additional procedural details.

Regarding the amount of lay-off compensation, please refer to Section 25-C. Your assumption that compensation for only 45 days is sufficient is incorrect due to the explicit provision of Section 25-M(10).

Thank you.