ID Act - Layoff can be resorted to when "sales slow down"? Or only when there are no input RM for the manufacturing process?

I am a new member of this awesome forum and find the topics covered in it very useful and practical. I am indeed very thankful to all the contributors to this forum and online community.

My questions are as follows:

1. Recently, one has read in the papers that some major auto companies are closing their factories or production lines for one day a week or two days a week. Under what provision of which law do they do this? Do they ask workers to just go home, not report for work, and pay them wages for that day (and deduct it out of their accumulated PL)? Or do they treat them as "laid off" and pay them 50% wages for the days that they are closed?

2. In the factory that I advise, we have two classes of employees. One is workmen covered under a Long-Term Settlement, and the second is all others who are both office and managerial staff. Can I lay off employees who are workmen (on 50% wages) and ask the others to go on leave with wages and deduct it from their PL account?

3. Can layoffs be resorted to when "sales slow down"? Or only when there are no input RM for the manufacturing process?

Dear Babu,

I would like to request you to go through the definition of the term "lay off" u/s 2(kkk) of the ID Act, 1947. The reasons cited in the definition are exhaustive and not illustrative. Therefore, the employer cannot resort to laying off his workmen for every reason of his temporary inability to provide employment to them. This is my answer to your third question.

Coming to your question no. 1, what the news item presented is the impact of the slowdown in the overall automobile sales during the particular period on auto component manufacturing units dependent on large automobile manufacturing companies. When their total number of workmen on their rolls exceeds the numbers fixed in sec. 25-A(a) or Sec. 25-K(1) of the ID Act, 1947, they have to pay them compensation as stipulated u/s 25-C of the Act apart from obtaining prior permission to lay off in case of the strength of 100 or more workmen. Since the so-called "sales slowdown" cannot be a valid reason for a layoff, they resort to closing down production lines for one or two days a week. It would automatically mean that such days are holidays with wages only. Yet another facet of such a move would be no work for contract labor engaged in such industries.

Regarding your second query, there is no such legal nomenclature as "staff" for white-collar employees. When they fall within the ambit of the term "workman" u/s 2(s) of the Act, they could not be laid off in violation of the provisions cited supra.