Confused About Continuous Service Under the ID Act: Does Mr. A Qualify for Benefits?

Dear Seniors/Friends,

I am facing a lot of confusion on a matter, even after reading several case laws (SC and High Courts). The matter seems not to be dealt with by these courts—probably because it is too simple or never disputed.

The facts are as below:

- Mr. A was hired in October 2019. He was retrenched in July 2020, with a total continuous period of service of 10 months. He was a full-time employee.

- On a plain reading of Sec 25C [Right of workmen laid-off for compensation]: "Whenever a workman whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid-off, whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid-off..."

- Mr. A has clearly not completed one year (or more) of service with the company.

Thus, can we simply conclude that he has no rights under Sec 25C of the ID Act?

Or, the other view is that we should refer to Sec 25B [Definition of continuous service] - sub-section (2):

"Where a workman is not in continuous service within the meaning of clause (1) for a period of one year or six months, he shall be deemed to be in continuous service under an employer—

(a) for a period of one year, if the workman, during a period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than—

(i) ... and

(ii) two hundred and forty days, in any other case."

Thus, would Sec 25A (2)(a)(ii) apply in this case? Since Mr. A has worked for 10 months, i.e., more than 240 days, should he be deemed to have worked a full year, and thus the beneficial provisions of Sec 25C should apply to him as he is now deemed to have worked for a full year?

Your kind help in this matter would be very helpful. Also, if you could please share a reference to case law to substantiate your guidance, it would be extremely useful.

Thanks & best regards,

Jayant

Dear Jayanth, such confusion in calculating "continuous service" as defined under Section 25-B of the IDA, 1947 arises from the date with reference to which the notional calculation is to be made.

Understanding Section 25-B of the Act

Sub-section (1) of Section 25-B defines what constitutes continuous service rendered by a workman for the purpose of Chapter V-A. It encompasses the period of uninterrupted service under the same employer, which includes interruptions due to sickness, authorized leave, accidents, legal strikes, lock-outs, or work stoppage not caused by the workman's fault.

Chapter V-A addresses the rights of workmen laid off for compensation and the conditions necessary for retrenchment, including the payment of retrenchment compensation based on the years of service completed under the same employer. Sections 25-M(10) and 25-N(9) of Chapter V-B also touch on similar aspects, respectively.

Sub-section (2) of Section 25-B

Sub-section (2) deals with situations where a workman does not have continuous service as defined in sub-section (1) within a specific duration, such as one year or six months. This section introduces a provision to compute continuous service, combining uninterrupted and authorized interrupted services under sub-section (1). The minimum number of days required is notionally set as 240 days for the preceding 12 months and 120 days for the preceding 6 months.

The date for the notional calculation is the actual date of the workman's lay-off or retrenchment. To reach 240 days, you need to calculate backward from that date, not forward from the date of appointment. Once you meet the minimum required days at a specific point, there's no need to extend it for the entire period. In essence, the 240 days do not have to be spread across the entire 12-month period.

Therefore, if 'A' completed 240 days of continuous service within the 10-month period from October 2019 to July 2020 at the time of his retrenchment, he is entitled to retrenchment compensation and notice under Section 25-F.

Regarding Section 25-A(2) concerning seasonal industries or intermittent work nature, it seems unrelated to the initial query you raised.

I hope this clarifies the matter.

Sincerely, [Your Name]

Thank you so much for your answer and providing a clear explanation and clarification. Please allow me to summarize our discussion shortly, as below:

While Section 25C [Right of workmen laid-off for compensation] mentions that this section applies only to workmen who "has completed not less than one year of continuous service under an employer is laid-off," i.e., completed 1 or more years of continuous service before being laid-off, as per your clarification—even if a workman has worked for 10 continuous months (from Oct 2019 to July 2020 in our example), you mentioned that such a workman shall be entitled to compensation. So, as a rule, once a workman completes 240 days of continuous service, he becomes eligible for compensation. Is this summary correct? Thank you so much again for your guidance.