Chapter 5A and 5B of Industrial Disputes

Act 1947-Applicability
Published on August 12, 2014

Dr. G.P.Naik

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Director, Talent Avenues Corporation

17

CHAPTER5AAND5BOFINDUSTRIALDISPUTESACT1947
UNDERSTANDINGTHEIRAPPLICABILITY
EventhoughIndustrialDisputesAct1947(IDAct)hasjust40sections,itsinterpretation
andunderstandingisquitecomplex.OfallthechaptersintheActtheinterpretationof
Chapter5Aand5B(mentionedintheActaschapterVAandVB)isthemost
challenging.
Assumptionsandfindings
Assumption:Chapter5Adealswithlayoff,retrenchment,transferandclosureof
industrialestablishmentemployingnotmorethan100workmen.
Finding:Partiallytrue,butthereismuchmoretoitsunderstandingintermsofinclusion
andexclusionofestablishments.
Assumption:Chapter5Bdealswithlayoff,retrenchment,transferandclosureofany
industrialestablishmentemployingmorethan100workmen.
Finding:No,itdealswithlayoff,retrenchment,andclosureofonlyfactories,minesand
plantationsemployingmorethan100workmen(andnottransfer).
Assumption:Chapter5Aissimpleandchapter5Biscomplextounderstand.
Finding:Chapter5Aiscomplexand5Bissimpletounderstand.
WHATISCOVEREDINCHAPTER5AOFINDUSTRIALDISPUTESACT
1947
1)Sections25C(rightofworkmentolayoffcompensation),25D(dutyofemployerto
maintainmusterrolloflaidoffworkmen)and25E(circumstancesinwhichlaidoff
workmencanbedeniedlayoffcompensation)dealswithlayoffprocedureonlyin
respectoffactories,minesandplantationsemploying50to100hundredworkmenwho
haverenderedatleastoneyearcontinuousservice(otherthanbadliorcasualworkmen).
2)Inotherwords,sections25C,25Dand25Edealingwithlayoffprocedureare
applicableonlytofactories,minesandplantationsemploying50to100workmen.

3)Layoffasperthesesectionscanbegivenwithoutthepermissionofgovernment.But
anoticeistobesenttothegovernment.
4)(Thelayoffprocedureforfactories,minesandplantationsemployingmorethan100
workmeniscoveredinchapter5B).
UNLIMITEDLAYOFFINTHEFOLLOWINGCASES
5)Casualandbadliworkerscanbegivenlayoffwithoutpayinglayoffcompensationto
anynumberofworkersforanynumberofdays.
6)Factories,plantationsandminesemployinglessthan50workerscangivelayoffto
workerswithoutpayingcompensationtoanynumberofworkersforanynumberof
days.
7)Workerswhohavenotrenderedatleastoneyearcontinuousservicecanbegiven
layoffwithoutcompensationtoanynumberofworkersforanynumberofdays.
8)Workersinotherorganizations(otherthanfactory,mineorplantation)likeshops,
commercialestablishments,(retailmalls,IT,BPO)ortransportundertakingscanbe
givenlayoffwithoutcompensationtoanynumberofworkersforanynumberofdays
irrespectiveofthesizeofworkforce.
RETRENCHMENTANDCLOSUREWITHOUTGOVERNMENT
PERMISSIONSECTION25F,25FFAAND25FFFAREAPPLICABLETOALL
EXCEPTTHOSECOVEREDBYCHAPTER5B
9)Section25F(procedureforretrenchmentofworkmen),25FFAand25FFF(procedure
forclosureofanestablishment)areapplicabletoalltheestablishmentslikefactories,
mines,plantations(otherthanthosefactories,minesandplantationscoveredbychapter
5B),shops,commercialestablishments(likeITcompanies,BPO,retailmall,)transport
undertakingsandsoon.
10)Underthesesectionsretrenchmentofworkmen,andclosureofestablishments
(exceptfactories,plantationsandminesemployingmorethan100workerscoveredby
chapter5B)canbedonewithoutgovernmentpermission.
11)Onlynoticeandcompensationistobegiventotheaffectedworkmen.
12)Onemonthadvancenoticeorpayinlieuofnoticeandcompensationattherateof
15dayspay(basicpayanddearnessallowance)foreverycompletedyearofserviceto
begiventoalltheeligibleworkersaffectedbyretrenchment/closure.
13)Incaseofclosuretheemployershouldalsogive60daysadvancenotice(andnot
applicationforpermission)tothegovernment.
14)Noticetogovernmentisnotrequirediftheestablishmenttobeclosedhaslessthan
50workersorisaconstructionindustry.

15)Inotherwordsprovisionsofthischapterrelatingtoretrenchmentandclosureare
applicabletoalltheestablishments,irrespectiveofthenatureofbusinessandsizeof
workforce(exceptthefactories,minesandplantationsemployingmorethan100
workmenwhoaregovernedbychapter5B).
SECTION25FFPROCEDUREFORTRANSFEROFOWNERSHIPOF
INDUSTRIALESTABLISHMENTS
16)Section25FFdealswithprocedurefor,transferofownershipofindustrial
establishmentsfromoneemployertoanotheremployer.
17)Eventhoughsection25FFisgiveninChapter5Aitsprovisionshavewide
application.
18)25FFisapplicabletoallestablishmentsincludingthefactories,mines,and
plantationscoveredbychapter5B.
19)Inotherwords,separateprocedureforownershiptransferofindustrial
establishmentsisnotgiveninchapter5B.
20)Affectedworkersareentitledforonemonthadvancenoticeandcompensationasif
theyareretrenched.
21)Permissionofthegovernmentisnotrequired.
WHATISCOVEREDINCHAPTER5BOFINDUSTRIALDISPUTESACT1947
1)Unlikechapter5A,chapter5Bhaslimitedapplication.

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2)Thisentirechapterisapplicableonlytofactories,minesandplantationsemploying

morethan100workers.
3)Thischapterisnotapplicabletootherorganizationslikeshops,commercial
establishmentslikeIT,BPO,retailmalls,transportundertakingsetc.,irrespectiveofthe
totalnumberofworkersemployedoraffected.
4)Thischapterisnotapplicabletofactories,minesandplantationsemployinglessthan
100workers.
5)Itdealswithclosureoffactories,minesandplantationsemployingmorethan100
workersandlayoffandretrenchmentofworkerstherein.
6)Priorpermissionofthegovernmentisrequiredforlayoff,retrenchment,andclosure.
7)Affectedworkersareentitledtothreemonthsadvancenoticeorpayinlieuofnotice
periodincaseofretrenchmentandclosure.
8)Affectedworkersareeligibleforlayoffcompensation.

SIMILARITIESINCHAPTER5AAND5B
1)Rateofcompensationforlayoff,retrenchment,transferandclosure.
2)Nonapplicabilitytoseasonalindustriesandtoestablishmentsworkingintermittently.
3)Exclusionofbadliorcasualworkmenfromlayoffcompensation.
4)Sections25B(definitionofcontinuousservice),25D(dutytomaintainmusterroll
duringlayoff),25FF(compensationincaseoftransferofundertaking),25G(procedure
toidentifyworkersforretrenchment),25H(reemploymentofretrenchedworkmen),
25J(effectoflawsinconsistentwiththesetwochapters).

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Dr. G.P.Naik

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Director, Talent Avenues Corporation

23 articles

9 comments
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Samir Mishra

0s

HR Intern at United Breweries Ltd., Core Member of Alumni Committee XIMB

A wonderful piece of article..!!! Thank you for sharing..!!!

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Nijanthan C

2y

Human resources at AGS Health

It is Really Helpful Mr.G.P.Naik. It shows the clear dierentiation and explanation on ID Act. Thanks for
the Valuable post
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aarti verma

1y

Assistant Professor @ A.Pee.Jay College of Fine Arts

Thanks for this explanation in lucid manner..

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Dr. G.P.Naik
Director, Talent Avenues Corporation

2y

Thanks Nijanthan C
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V M Bhat

2y

at

Good Info..
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Ravi Kumar

2y

Human Resources & Business Professional

Good synopsis that helps a non professional & pro alike.

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Partha Sarathy Parcha

6mo

DGM - P & A

Sir, a small correction is Chapter V-A (ref : Sec 25-A ) applicable to Industrial Establishments in which
less than Fiy workmen on an average per working day. But V-B is applicable( as per Sec 25-K) for an
industrail establishment in which not less than 100 workmen. There is no other provision in ID Act if 5199 Employees are there. However, in the Act it is there if any ambiguity Appropriate Govt. can take
decision on it. Request your opinion as well if procedure available for 51 -99 Employees Organization.
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The School

4mo

Accountant at Skyline Engineering Contracts (i) Pvt Ltd

Dear Sir, I want to know one thing in ID Act that the serial number of workmen should not break in
muster roll in next month....for example.....10 workmen joined in my 2016 serial number accordingly 1
to 10.....now i am preparing june month muster and i don't know in june month who is going to be
present then how can i mention the name in sequence....yes new joinee shall be in sequence as they
join......so you are requested focus me on this point sir...although they are workers of construction
company...no one knows when they come and when they go.......
Please clarify on imranjaved_1000@yahoo.co.in.....
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