Does the Industrial Dispute Act's Lay-Off Rules Apply to Our 29 Workmen?

We have 69 people working in the company, out of which 29 are workmen, and the balance are admin, engineers, managers, and accountants. Does CHAPTER VA - LAY-OFF AND RETRENCHMENT of the Industrial Dispute Act apply?

As per the definition, it says it doesn't apply to "Industrial establishments in which less than fifty workmen on an average per working day have been employed in the preceding calendar month."

In this case, the total number of employees is 69, and out of that, workmen are 29.

Thanks

When the provisions of lay-off are not applicable to an industrial establishment by virtue of its workforce falling below the threshold prescribed under Section 25-A of the Industrial Disputes Act, 1947, such an establishment cannot resort to laying off employees unless there is an enabling clause in the employment contract. If done contrary to this, the laid-off workers are entitled to compensation of full wages.

This principle was established in the judgment of the Supreme Court in Workmen of M/S Firestone Tyre & Rubber Co. Ltd v. Firestone Tyre & Rubber Co. Ltd [1976 AIR 1775].

Thank you for your input to clarify the issue. The company has a total of 69 employees, of which 29 are workmen performing work on components, and the rest are engineers, supervisors, accountants, and managers. All of them have been issued Appointment Letters, which they have accepted. The Appointment Letter states a 1-month notice or 1-month pay in lieu of notice for relieving by the employee or employer.

Question about Chapter VA of the ID Act

My question is, the definition of Chapter VA of the ID Act mentions workmen. When the company has 69 employees, and only 29 are workmen, will this section apply?

Thanks again. If I repeated some points, I apologize for that.

This is an interesting point. I assume you are asking whether you need to give them retrenchment compensation in addition to the notice pay that is due to them. I would be very much interested in Umakhanta Sir's opinion on this.

Dear Jagannatha Rao,

For the purposes of Section 2-A, Chapters V-A and V-B, the IDA, 1947 takes into account only those employees who fall within the ambit of the definition of the term "workman" as defined under Section 2(s) of the Act.

Even if an engineer is predominantly employed to do technical work without anyone under him to exercise any supervisory control, he would be considered a "workman" under Section 2(s) of the Act, irrespective of his salary or designation.

Appointments with a termination clause specifying a certain minimum period of notice or notice salary in lieu thereof are common, particularly in respect of higher management cadre employees. However, as per the ratio decidendi of the Central Inland Water Transport Corporation v Brojonath Ganguly (1986 SCR(2) 278), such a termination clause was deemed unconscionable and opposed to public policy under Section 23 of the Indian Contract Act, 1872, and therefore held to be void or voidable. In that case, the Supreme Court directed payment of a higher compensation than the notice salary to a DGM (HR) who was terminated without reason under such a termination clause. If this practice continues unchecked, terminating the services of an unwanted employee would become an easy task for every employer. Therefore, it is important to note that such a termination clause, even if accepted earlier by the concerned employee, would not stand up to judicial scrutiny if challenged later.

Regarding your last query, the employee strength in an industrial establishment, as defined in the two chapters of the IDA, 1947, must be determined solely with reference to the number of employees classified as "workmen" on the rolls. Casual or contract laborers are not included for this purpose. Out of a total of 69 people in the establishment, only 29 are workmen, which falls below the threshold of 50, thereby exempting the establishment automatically. I accept your statistics as provided without any further questions.