Layoff, Retrenchment & Closure

By Kanak Yadav Roll no. 0860

Layoff
According to Industrial Disputes Act,1947 Lay-off is the failure, refusal or inability of an employer to give employment to a workman on account of:
shortage of coal, power or raw materials; the accumulation of stocks; the breakdown of machinery; any other reason.

 Workmans name must be borne on muster rolls of

the establishment Worker is in continuous service for not less than 1 year (worked for 240 days during that year) is entitled to layoff compensation He must not be retrenched

Process of layoff
Firms employing 100 or more workers

Application for permission to the appropriate authority

Grant or refusal of permission by appropriate authority within a period of 60 days

Give layoff for 45 days intermittently or continuously during the period of 12 months

 The laid off workman is eligible for compensation under sec. 25(C) of the ID Act,1947 if he meets the eligibility conditions

Rate of compensation = 50% [Basic wages + DA] for all days during which he is laid off, except for such weekly holidays as may intervene.
Certain cases where workmen are not entitled to compensation

Retrenchment
Retrenchment is the termination of the workman's services 'for any reason whatsoever.' However, this does not include the following: Punishment by way of disciplinary action; Voluntary retirement; Retirement at the age of superannuation, if the contract of employment contains a provision in that behalf; Termination on ground of continued ill-health.

Procedure of retrenchment

Preparation of seniority list

Giving notice to workers

Payment of compensation and salary in lieu of notice

 Compensation =15 days of the average pay for every

completed year of service or any part thereof in excess of six months

Worker should have worked for 240 days during that

year .
The retrenched workman is also entitled to re-

employment.

Closure

It means the permanent closing down of a place of employment or a part thereof.

Procedure of closure
Employer applies for

permission 90 days before date of intended closure to the govt.

Govt after inquiry may grant or

refuse permission
An order of the govt is issued

which is final and remains in force for 1 year

Govt may review its order or

refer the matter to the tribunal for adjudication

Compensation for closure

Compensation= 15 days average pay for every completed year of continuous service or any part thereof in excess of six months Firms closure due to financial difficulties is not beyond employers control Some categories of workers in construction work like buildings, roads are not eligible for closure compensation if work is completed within 2 years from the date of which the concern is set up

Bibliography
http://india.smetoolkit.org/india
/en/content/en/35417/What-arethe-differences-between-Layoff-and-Retrenchment-

http://www.ilo.org/public/englis
h/dialogue/ifpdial/info/terminati on/countries/india.htm

http://www.indialaws.info/encyc
lopedia/learnlaw.aspx?ID=401