The layoff is defined in section 2 (kkk) of the Industrial Disputes Act,
1947.
The term ‘lay-off’ has been
defined as the failure, refusal or inability of an employer on account of the
shortage of coal, power or raw materials or the accumulation of stocks or the
breakdown of machinery or natural calamity or for any other unconnected reason
to give employment to a workman whose name is borne on the muster rolls of his
industrial establishment and who has not been retrenched.
Reasons for
lay-off
Some of the common
reasons for lay-off can be as follows, which basically put the production of
goods in the factory to a halt:
shortage of power
supply to the factory
shortage of raw
materials to the factory
accumulation of
stocks in the factory
break-down of
machinery in the factory
a natural calamity
Rules for lay-off
The lay-off must
be justified. Additionally, it must be bona fide and not mala
fide. Bona fide means in good faith and Mala fide means with the wrong
intention. The company must produce a valid reason for laying off its employees
and not do it just because it is convenient for them.
Procedure for LAY OFF:
·
The
employer cannot, without prior permission from the appropriate government,
lay-off an employee featuring on the muster rolls of the establishment A copy
of the said application has to be given to the concerned workmen as well.
·
If
the lay-off happened where the workmen (other than badli workmen
or casual workmen) of an industrial establishment, being a mine, owing to
reasons of fire, flood or excess of inflammable gas or explosion, the employer,
in relation to such establishment, shall, within a period of thirty days from
the date of commencement of such lay-off, apply in the prescribed manner, to
the appropriate Government or the specified authority for permission to
continue the lay-off.
·
The
said application will be considered and a reasonable opportunity to be heard
shall be given to the employer as well as the workmen. After considering the
same, the appropriate government may or may not grant the employer to close
down. Even here, if the government does not respond within sixty days from
application, the permission will be deemed to have been granted. There are
provisions for review of the said decision by the authority suo-moto or in response to an application.
Compensation for Laid-Off period:
A workman who is laid-off is entitled
to compensation equivalent to 50 percent of the total basic wages and dearness
allowance for the period of lay-off.
Compensation can be availed only if
the employee has done a continuous service of at least one year. Along with
this, the muster rolls of the establishment should bear the worker’s name to
avail of the compensation. A badli or
casual worker cannot avail of such compensation. Refusal to accept alternative
employment, absence from the establishment, strike or deliberate slowing down
of production could be grounds that would entail disentitlement to such
compensation.
If such Lay-off exceeds 45 days, the employer can either
keep paying such lay-off compensation or retrench the workers. Nonetheless,
retrenchment should necessarily be applied abiding by the procedure set out by
the statute; this will be described in detail in the upcoming section which
deals with retrenchment.
Muster roll of all employees must be maintained even during lay-off duration.
The employer
must give all details regarding the lay-off to the employee. Such as how long
the lay-off duration will be, whether employees should remain at the place of
work or return to their hometown, when shall the employee restart work, whether
the employee must register his presence at the company every day, etc.
Employer must give
the employee 3 weeks time to rejoin his duties post lay-off.
Employees have to
be compensated 50% of their Basic+DA wages for a period of up to 45 days in the
last 12 months.
When Is a Workman Not Entitled to Lay-off?
Section 25-E exempts
lay-off compensation. Thus, if an employee is laid off, he may not receive
compensation. Conditions are:
·
The employee will not receive lay-off pay
if he refuses alternative employment in the same place.
·
If the company offers the worker other
employment in a place within 5 miles and the worker rejects, he will not
receive lay-off pay.
·
If a worker refuses alternative work that
doesn't require further skills or experience, he won't obtain lay-off
compensation.
·
If the worker declines and it pays the
same, he will not receive lay-off compensation.
Written By:
M. Jhanse Lalitha [2nd Year, BA.LLB(Hons.)] under the guidance of Dr. Nagalatha Bathina, Associate Professor, Vignan Institute of Law.
Editorial Director:
Dr. Nagalatha Bathina, Associate Professor, Vignan Institute of Law.
Editors:
Dr. Praveen Kumar, Director, Vignan Institute of Law
Mr. L. Ashish Kumar, Assistant Professor, Vignan Institute of Law
Blog Managed By:
Taj Mahamood Baig [2nd Year, BA.LLB(Hons.)]