Karnataka Compliance Question: What Rules Apply When Employee Count Hits 50?

Hi Professionals, Is there any Karnataka state-level compliance or rule that we need to follow when the number of employees increases to 50? Please provide your valuable suggestions.

There is no special treatment or compliance applicable to establishments that employ 50 employees other than having certified standing orders. If you delve deeper, you can see that when your number of employees becomes 50, the law relating to layoff (the term used in reference to the Industrial Disputes Act and not the term used in modern HR to mean termination of employment) will become applicable. You can declare a layoff if there are reasons like a shortage of raw materials, accumulated stock, or power shortages, and while doing so, the employed workers shall be paid only 50% of their wages.

When your number of employees reaches 50, you need to inform the appropriate authority under the Industrial Disputes Act whenever you lay off some workers, whenever you find that there is redundancy, and therefore some of them (the last employee joined in a particular department to be the first employee to be retrenched first) should be permanently retrenched. Or when you find that the unit is not viable and therefore should be closed. When the number of employees reaches 100, in order to declare a layoff, retrench, close down, or transfer the undertaking, permission from the government is required.

LWF: Contribution to the Labour Welfare Fund

Specifically, when an establishment reaches a strength of 50, the contribution to the Labour Welfare Fund must be remitted to the fund of the Karnataka Labour Welfare Board as prescribed under the provisions of Sec.7A read with Sec.2 sub sec. (3) & (4)(iii) of the Karnataka Labour Welfare Fund Act, 1965.

"Establishment" means any establishment, including a society registered or deemed to be registered under the Karnataka Societies Registration Act, 1960, and a charitable or other trust, whether registered under any applicable law or not, that carries on any business, trade, or work in connection with or ancillary thereto and employs, or on any working day during the preceding twelve months employed, more than fifty persons. However, it does not include an establishment (not being a factory) of the Central or any State Government.

Please refer to the extract of the Act for further guidance.