A Look At Layoff And Retrenchment Procedures In Light Of New Industrial Relations Code

The Industrial Disputes Act, 1947 has been the primary legislation to administer disputes between the employer and workmen and to provide safeguards for workmen. It covers several facets from defining what industrial disputes and industries are, to laying down the procedures to be undertaken in cases pertaining to strikes, lockouts, lay-offs, retrenchment, closure etc. The Act has undergone several amendments over the years, the notable ones being in 1956, 1976, and 2010. Finally, in 2020, on previous recommendations of Second National Commission on Labour, the Ministry of Labour and Employment streamlined the 44 existing labour legislations into four labour law codes; The Code on Wages, 2019, The Occupational Safety, Health and Working Conditions Code, 2020, The Code on Social Security, 2020 and The Industrial Relations Code, 2020. The Industrial Disputes Act, 1947 along with Industrial Employment (Standing Orders) Act, 1946 and Trade Unions Act, 1926 made up the Industrial Relations Code. In the past two years since covid-19 has struck us, the industrial world has taken a huge hit and we have seen terms like layoff and retrenchment being thrown around quite a lot. This article aims to explain the definitions, meaning and provisions associated with these terms, to improve the reader's understanding. The provisions associated with both these terms are provided under Industrial Disputes Act, 1947 which is now a part of Industrial Relations Code that is likely to be implemented this year and thus, these provisions have been explained here in detail. Layoff Layoff which was earlier defined under S. 2(kkk) of Industrial Disputes Act, 1947, has now been defined in Industrial Relations Code under S. 2(t). It essentially means the failure, refusal or inability of an employer to give employment to a workman whose name appears on the muster rolls of his industrial establishment. This inability to provide work can arise from any number of reasons ranging from shortage of coal, power, raw materials, breakdown of machinery and natural calamity; which are out of control of the employer. A point to be noted from the definition is that it only applies to a workman who has not been retrenched. As can be understood, it occurs due to no fault of either workman or employer but factors which are beyond their control. Outcome: It results in immediate unemployment which is often temporary and it only occurs in a continuing business. This is because if the industrial establishment is to be shut down, then laying off workmen is of no use, considering it is only a temporary measure. Permissions required: While the definition of layoff has been covered under Chapter 1, Section 2 of the new Industrial Relations Code, the provisions relating to the same which were covered under Chapter VA and VB in the Industrial Disputes Act, 1947, have been mentioned in Chapter IX and Chapter X of the new Code. Like Chapter VA of the Industrial Disputes Act, 1947, Chapter IX in the Industrial Relations Code mentions at the outset under S. 65 that the provisions of that chapter pertaining to layoff, retrenchment and closure are not applicable to an industrial establishment having less than fifty workmen or an establishment having a seasonal/intermittent character. To simplify, if an establishment has less than 50 workmen or if an establishment is seasonal/intermittent in character, then none of the provisions for layoff, retrenchment and closure are applicable to it, both under Industrial Disputes Act, 1947 and under Industrial relations code. To determine whether an establishment is of seasonal character, the decision of appropriate government will be final, according to both S. 25A(2) of Industrial Disputes Act, 1947 and S.65(2) of the Industrial Relations Code, 2020. Furthermore, if an establishment has between 50 – 300 workmen, then no permission from appropriate government is required as chapter VA of Industrial Disputes Act, 1947 and Chapter IX of Industrial Relations Code do not mention any conditions precedent to layoff of workers. However, under chapter VB of Industrial Disputes Act, 1947, which was only applicable to establishments having more than 100 workmen, prior permission of appropriate government was required to be obtained before laying off workmen. But in the new code, under Chapter X, the applicability of requirement to obtain prior permission from appropriate government is only applicable to establishments with 300 or more workmen. Thus, if an establishment has more than 300 workmen, then under S.78 of the new Industrial Relations Code, 2020, prior permission of appropriate government via an application (clearly stating the reasons for intended lay-off) has to be taken for layoff, unless the layoff is due to shortage of power, natural calamity and; in case of a mine, if the lay-off is due to fire, flood, excess of inflammable gas or explosion....

A Look At Layoff And Retrenchment Procedures In Light Of New Industrial Relations Code

Rashmi Bagri

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Rashmi Bagri

A Look At Layoff And Retrenchment Procedures In Light Of New Industrial Relations Code

Rashmi Bagri

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

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Rashmi Bagri

This is a premium content
Available exclusively to
Our subscribers