Lay -Off

2(KKK)
Introduction

 In the day to day running of business , the management is often

compelled to take measures with the view to effect economy and avoid
waste.
 Management may not temporarily require the services of certain of his
workmen .
 An Employer does not temporarily need the normal strength of
workmen.
 Lay off introduced through Amendment to IDA- 1953
 Restriction on lay off- Amendment 1976
 Amendment 1984
Lay off : 2(kkk)

 lay-off means 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.
EXPLANATION

 Every workman whose name is borne on the muster rolls

of the industrial establishment and
 who presents himself for work at the establishment at the
time appointed for the purpose during normal working
hours on any day and
 is not given employment by the employer within two
hours of his so presenting himself shall be deemed to have
been laid- off for that day within the meaning of this
clause.
EXPLANATION

 Provided that if the workman, instead of being given

employment at the commencement of any shift for any
day is asked to present himself for the purpose during
the second half of the shift for the day and is given
employment then, he shall be deemed to have been
laid- off only for one- half of that day:
 Provided further that if he is not given any such
employment even after so presenting himself, he shall
not be deemed to have been laid- off for the second half
of the shift for the day and shall be entitled to full basic
wages and dearness allowance for that part of the day.
 The essentials of lay-off:
(i) There must be failure, refusal or inability on the part of the employer to
give employment to a workman.
(ii) The failure, refusal or inability should be on account of-
 shortage of coal or
 shortage of power or
 shortage raw materials or
 accumulation of stocks or
 breakdown of machinery, or
 natural calamity, or
 any other connected reason.

(iii) The workman’s name should be on the muster rolls of the industrial
establishment.

(iv) The workman should not have been retrenched.

Management right to Lay -off

1. Under Traditional Laws

2. Under Standing Orders
3. Under IDA 1947
Lay of provisions not applicable
to : Section 25 A

(a) An industrial establishment in which less than fifty

workmen on an average per working day have been
employed in the preceding calendar month

(b) Industrial establishments which are of a seasonal

character or in which work is performed only intermittently

(c) Industrial establishments to which chapter V-B ( Special

provisions Relating to lay off) applies as inserted by the
Industrial Disputes Amendment Act, 1976.
Special Provisions Relating to
Prohibition of Lay-Off: chapter V-B
Section 25 M
 No workman, other than a badli or a casual workman,
whose name is borne on the muster rolls of an industrial
establishment to which this chapter applies shall be laid
off by his employer unless such lay-off is due to shortage
of power or natural calamity, and in the case of a mine
such lay-off is due also to fire, flood, excess of
inflammable gas or explosion.
 He can lay-off the workman only with the prior permission
of the appropriate government or such authority as may
be specified by that government on an application made
in this behalf (as amended by the Industrial Disputes
Amendment Act, 1984).
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 State the clear reason for the intended lay off

 Copy of the application shall also served simultaneously on
the workmen concern
 The permission applied for shall be deemed to have been
granted on the expiration of the 60 days .
 Order of granting or refusing shall be final and binding
Penalty of lay –off without
previous permission: 25 Q

The employer who contravenes the provisions of section 25M

is punishable with imprisonment for a term which may
extended to one month or with fine which may extended to
1000/- oe with both.
Procedure for Lay off

 The Industrial Dispute (Central Rules )1957

 Rule 75
 To give notice of period of lay off in the form 1 and 2
within the seven days of commencement of such lay-off
 This notice should be given by the employer to the affected
workmen irrespective of the fact whether they are entitle the
compensation under section 25 C or not.
 Compensation for Lay-Off :Sec 25 C
 a workman who is laid-off is entitled to compensation equivalent to
50 per cent of the total basic wages and dearness allowance for the
period of lay-off.
 CONDITIONS:
(i) He is not a badli or a casual workman.
(ii) His name should be borne on the muster rolls of the establishment.
(iii) He should have completed not less than one year of continuous
service under the employer.
During any period of twelve months, a workman is so laid- off for more
than forty- five days, no such compensation shall be payable in
respect of any period of the lay- off after the expiry of the first forty-
five days, if there is an agreement to that effect between the workman
and the employer.
 [Link] vs Management of Lotus Ltd
 Workman is not Entitled to Lay-Off
Compensation: Section 25-E

[Link] a laid off workman refuses to accept alternative

employment.
[Link] or casual workmen
[Link] he does not present himself for work
[Link] the laying –off is due to a strike or go slow on the part
of workmen in another part of establishment.
 [Link] a laid off workman refuses to
accept alternative employment

 provided that such alternative employment is:

(a) In the same establishment from which he has been laid-off or
(b) In any other establishment belonging to the same employer
situated in the town or village within a radius of five miles from the
establishment to which he belongs,
(c) In the opinion of the employer the alternative employment does not
call for any special skill or previous experience and can be done by the
workman and
(d) It carries the same wages which would normally have been paid
to the workman in his original employment

Industrial Employees Union vs JK Cotton Spinning and Weaving Mills Co.

2. Badli or Casual workmen

" Badli workman“ Section 25 C

means a workman who is employed in an industrial
establishment in the place of another workman whose name
is borne on the muster rolls of the establishment, but shall
cease to be regarded as such for the purposes of this
section, if he has completed one year of continuous service
in the establishment.
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3 Absence From the Establishment:

A workmen would not be entitled to any compensation if he
refuses to present himself for work,
If the workman does not present himself at the appointed
time during normal working hours.
 Nutan Mills vs Employees State Insurance Corporations
4. Strike or Go Slow:
If such laying-off is due to a strike or slowing down of
production on the part of workmen in another part of the
establishment.
 Associated Cement Companies Ltd. Vs Their Workmen
RETRENCHMENT
2(OO)
Retrenchment: Sec- 2(oo)

"retrenchment" means the termination by the employer service of a

workman for any reason whatsoever, otherwise than as a punishment
inflicted by way of disciplinary action but does not include-
(a) voluntary retirement of the workman; or
(b) retirement of the workman on reaching the age of superannuation if the
contract of employment between the employer and the workman concerned
contains a stipulation in that behalf; or
CONTINUE..

 (bb) termination of the service of the workman as a result of the

non-renewal of the contract of employment between the employer
and the workman concerned on its expiry or of such contract being
terminated under a stipulation on that behalf contained therein; or

 (c) termination of the service of a workman on the ground of

continued ill-health;
cases

 Barsi Light Railway Co vs Joglekar

 Hariprasad Shivshankar Shukla vs AD Divalkar
 Pipraich Sugar Mills Ltd vs Pipraich Sugar Mills Ltd
Mazdoor Union
What it includes

 Retrenchment means terminating an employee due to the

surplus of labour or
 Incapacity of employees to match the performance
standards of the work
 The Supreme Court has held that the mere act of striking off
an employee’s name from the employee roll for being
absent from office without leave is also retrenchment.
 (Arun Mathur vs Labour court)
SantoshGupta vs. State Bank
of India
 a female employee was discharged on the grounds that she
failed to qualify herself in the prescribed test for
confirmation of services.

 The Tribunal held that the termination does not amount to

retrenchment.
 But the Supreme Court reversed the decision of the Tribunal
and ordered reinstatement of the employee with full back
wages.
CONTINUE..

 The Supreme Court further held that the expression “termination

of service for any reason whatsoever” is wide enough to include
every kind of termination of service except those which are
expressly excluded by the proviso to the definition of
retrenchment as given in Section 2(oo)|.
Conditions precedent to retrenchment
of workmen: 25 F
 No workman employed in any industry who has been in continuous
service for not less than one year under an employer shall be retrenched
by that employer until-
(a) the workman has been given one month' s notice in writing indicating
the reasons for retrenchment and the period of notice has expired, or the
workman has been paid in lieu of such notice, wages for the period of the
notice: and
(b)the workman has been paid, at the time of retrenchment, compensation
which shall be equivalent to fifteen days' average pay for every completed
year of continuous service] or any part thereof in excess of six months; and
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 (c) notice in the prescribed manner is served on the

appropriate Government or such authority as may be
specified by the appropriate Government by notification in
the Official Gazette].
 Conditions precedent to retrenchment of
workmen.- 25 N

 where more than 100 employees have been engaged

 No workman employed in any industrial establishment to which this Chapter
applies, who has been in continuous service for not less than one year under an
employer shall be retrenched by that employer until,--
 (a) the workman has been given three months' notice in writing indicating the
reasons for retrenchment and the period of notice has expired, or the workman
has been paid in lieu of such notice, wages for the period of the notice; and
Continue..

 (b) the prior permission of the appropriate Government or

such authority as may be specified by that Government by
notification in the Official Gazette (hereafter in this section
referred to as the specified authority) has been obtained on
an application made in this behalf.
Continue…

 State the clear reason for the intended Retrenchment

 Copy of the application shall also served simultaneously on the workmen
concern
 The permission applied for shall be deemed to have been granted on the
expiration of the 60 days .
 Order of granting or refusing shall be final and binding
 Workmen is entitled to receive at the time of retrenchment , compensation
which shall be equivalent to 15 days average pay for every completed year
of continuous service or any part thereof in excess of six months.
Procedure for Retrenchment
[Section 25G]
 The principle of 'last come; First go’ :-

The employer shall ordinarily retrench the workman who was the last
person to be employed in that category, unless for reasons to be
recorded the employer retrenches any other workman.
Workshop of Jorhaut Tea Co Ltd vs Management
Re employment 25 H

a) The workmen retrenched with in the meaning of section

2(oo) before re employment
b) The workmen should be citizen of India
c) The worker should offer himself for re-employment in the
response to the notice by the management
d) The workmen should be from the same category in which
the employment is proposed.
 Management of the Baranan Co-operative Marketing –cum-
Processing Society Ltd vs Workman Pratap Singh
RULE 78

 Industrial Disputes ( Central )Rules

 Employer to display the vacancies on notice board
 At least 10 days before the date on which the vacancies are
to be filled
 To give notice by post to the retrenched workmen
 retrenched workmen must be given an opportunity
Penalty: 25 Q

 The employer who contravenes the provisions of section

25N is punishable with imprisonment for a term which may
extended to one month or with fine which may extended to
1000/- or with both.
Thank You