Labour Laws

LAY-OFF PROVISIONS AND PROCEDURE

Provisions:

What are Chapter-V-A and Chapter-V-B?

Subject is governed by Chapter-V-B for units employing more than 100 workmen on an average during the previous twelve months respectively.

Notwithstanding these stipulations, we proceed as under:
1. WHO CAN BE LAID OFF: “workman” within the meaning of the term workman under the Act. Farther, as provided in the Explanation to Section 2 (kkk), the workman whose name is born on the muster roll of the Employer and presents himself in the prescribed manner for the work, can be laid off.
2. Lay-off Definition Section 2 (kkk)
The definition of lay-off as given in Section 2 (kkk) makes it abundantly clear that the unemployment must have resulted on account of a cause which is independent of any action or inaction on the part of the workman.
Refusal to Give Work :The Employer’s refusal to give work must be for:

a. shortage of coal
b. shortage of power (Electricity)
c. shortage of raw material
d. accumulation of stocks
e. break down of machinery
f. Natural calamity - Force-Major and any other connected reason

3. Sec. 25 (2) states that the State decides as to which industries are “seasonal” in nature. Since we are not concerned with this aspect, we let that be!

4. Sec. 25-B defines the concept of “continuous service” and stipulates the way in which it should be counted.

5. Sec. 25-C states that the “laid-off” workmen are entitled to receive 50% of their Basic + DA as “Lay-Off Compensation” during the period of lay-off. It further states that if the “lay-off” continues for more than 45 days in any period of twelve months, then the Employer will be eligible to stop payment of lay-off compensation to the laid-off workmen (if there is an agreement to that effect between the workmen and the Employer) OR RETRENCH such workmen following provisions of Sec 25F and other provisions (if applicable). Workman who is Badli or Casual will not be entitled to the lay-off compensation.

6. Sec. 25-D casts a responsibility on the employers to maintain “Muster Roll” for the workmen it employs. This is often done by requirements of other legislation also, hence not critical if it is complied with anyway!

7. Sec. 25-E outlines contingencies when a workman may not be entitled to “compensation”. Sec. 25 E (ii) further empowers the Employer to insist that the laid-off workmen present at the Factory each day at least once at the appointed time to be eligible Lay-Off Compensation. (But this provision is NOT mandatory in as much as the Employer may exempt the workmen from such a requirement at his volition.)

8. Sec. 25-F to Sec. 25-J are not concerned with any “Lay-Off” situation, hence are not commented upon.

9. Sec 25 M Establishments employing 100 or more workmen, as in their case, prior approval of Appropriate Government is necessary u/s 25M(1).

PROCEDURE: (Industrial Disputes (Punjab) Rules 1958)

1. Crystallize the reasons why the Company has to resort to “Lay-Off” and prepare a “statement of reasons” for the lay-off, to be annexed to the “lay-off” notice, unless such layoff is due to shortage of power or to natural calamity, and in the case of a mine, such layoff is due also to fire, flood, excess of inflammable gas or explosion

2. Identify the areas and the number of people who are found to be “surplus” to our requirements in the foreseeable future necessitating “lay-off”.

3. Rule 74-A & B: It is a requirement of law that the employer in this case Application for permission to the State Government of Haryana for permission to lay off shall be made in Form O-3 (Section 25M) either personally or registered post acknowledgement due WITHIN 7 (SEVEN) days of the commencement of “lay-off” and WITHIN SEVEN days of lifting the “lay-off’. The statutory FORMATS of both these NOTICES are enclosed.

4. The application for permission shall be made in triplicate and sufficient number of copies of the application for service on the workmen concerned shall also be submitted along with the application.

5. The employer concerned shall furnish to the authority to whom application for permission has been made such further information as the authority considers necessary for arriving at a decision on the application, as and when called for by such authority.

6. Where an application for permission has been made, the appropriate Government or the specified authority, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such layoff, may, having regard to the genuineness and adequacy of the reasons for such layoff, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.

7. Where an application for permission has been made and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of 60 (sixty) days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of 60 (sixty) days.

8. Where no application for permission is made within the period specified therein, or where the permission for any layoff has been refused, such layoff shall be deemed to be illegal from the date on which the workmen had been laid off and the workmen shall be entitled to all the benefits under any law for the time being in force as if, they had not been laid off.

9. An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, be final and binding on all the parties concerned and shall remain in force for one year from the date of such order.

10. Where the permission to lay off has been granted by the said authority, the employer concerned shall give to the Labour Commissioner, Haryana, Chandigarh notice of commencement and termination of such layoff in Form O1 and O2 respectively, within the 7 days of such commencement or termination, as the case may be.

11. In the first instance the lay-off can continue upto 45 days from commencement. If the exigencies require the “lay-off” may be converted into “retrenchment” at the end of 45 days by following Sec. 25F and the other applicable provisions (if any) on the subject and the “lay-off” compensation paid so far could be adjusted against the Retrenchment Compensation.

12. In short, we have to prepare following documents to effect the proposed “lay-off”

i. NOTICE of Lay-Off in FORM O-1 complete with the “Statement of Reasons” for the Lay-Off.

ii. NOTICE to be put up on the company NOTICE BOARDS informing employees about the fact of “lay-off” along with the reasons and exigencies etc., the mode of payment of “Lay-Off Compensation”, and whether it would be essential for the affected workmen to attend work to become eligible to receive lay-off compensation.

iii. All notices required to be given under this Standing Order shall be displayed on notice-boards at the time-keeper’s office and at the main entrance to the establishment.

iv. Letters to the Individual Workmen informing that they have been laid-off and the reasons thereof, and the facts of the NOTICE referred above.

v. NOTICE of ending the Lay-Off in FORM O-2.

vi. Application in Form O-3 for seeking prior approval from Haryana Govt.

vii. Appropriate Returns under the “Collection of Statistics Act”

13. Once the lay-off becomes a reality, the company should review the situation from time to time with a view to end the lay-off as early as possible.

14. As per Sec 25D, to maintain the Muster Roll and make facilities available to workmen to make entry when laid off. This is the record that enables the employer to compute the amount of lay-off compensation.

15. As per Section 25C, the “laid-off” workmen shall be paid by the employer for all days during which he is so laid off, except for such weekly holidays as may intervene, compensation which shall be equal to 50% of their Basic + DA as “Lay-Off Compensation that would have been payable to him had he not been so laid off.

16. However, if better terms of payment of lay-off are in the contract of employment then the workmen is entitled to payment in terms of contract of employment or standing orders.

17. If the employer and the workman comes to an agreement to the effect that no lay-off compensation will be payable after 45 days, if the lay-off period goes beyond 45 days.

18. It must remembered that the “Lay-Off” is TEMPORARY SUSPENSION of CONTRACT OF EMPLOYMENT and therefore the Employer-Employee Relationship CONTINUES and the service related benefits will continue to accrue to the affected workmen.

Once the above steps are meticulously implemented, the process of effecting a “Lay-Off” is complete.


19. In a period of 12 months, if lay-off lasts for more than 45 days, no compensation is required to be paid and the employer is free to retrench his workmen. No doubt only after passing retrenchment and complying with the provisions of Section 25F of the act, the employer is given liberty to set-off the lay-off compensation paid during the preceding 12 months against the retrenchment compensation payable to workmen (section 25C).

20. ‘Closure’ means permanent closing down of a place of employment or part thereof. [section 2(cc)]. - - Thus, closure can be of part of establishment also. - - 60 days notice should be given for closure to Government, if number of persons employed are 50 or more [section 25FFA]. Compensation has to be given as if the workman is retrenched. [section 25FFF(1)]. - - If number of workmen employed is 100 or more, prior permission of Government is necessary for closure u/s 25-O.



FORM O-1
(See Rule 74-A)

To

The Commissioner of Labour, Haryana
Chandigarh.

Dear Sir,

1. Under Rules 74-A of the Industrial Disputes (Punjab) Rules, 1958, I / We hereby inform you that I / We laid off___________ out of a total of _____________ workmen employed in the establishment, with effect from ______________ for the reasons explained in the Annexure.

2. Such of the workmen concerned as are entitled to compensation under section 25-C of the Industrial Disputes Act, 1947 will be paid compensation due to them.

Yours Faithfully,
For …………………………



(…………………………………….)


Copy forwarded to:
a.) Deputy Commissioner of Labour/ The Assistant Commissioner of Labour,
b.) Conciliation Officer (here specify the address of the Deputy Commissioner of Labour)
c.) Assistant Commissioner of Labour, (or as the case may be, the Conciliation Officer.)

ANNEXURE
Statement of Reasons.

------------------------






FORM O-2
(See Rules 74-A)

To
The Commissioner of Labour, Haryana
Chandigarh.

Sir,

As required by Rules 74-A of the Industrial Disputes (Punjab) Rules, 1958, and in continuation of my/our notice dated ___________ in Form O-1,

I / We hereby inform you that the lay-off in my/our establishment has ended on ________

Yours Faithfully,
For …………………….



(……………………………..)


Copy forwarded to:
a.) Deputy Commissioner of Labour/ The Assistant Commissioner of Labour,
b.) Conciliation Officer (here specify the address of the Deputy Commissioner of Labour)
c.) Assistant Commissioner of Labour, (or as the case may be, the Conciliation Officer.)














FORM O-3
(To be submitted in triplicate with additional number of copies for service on the workmen concerned)
[See Rule 74-B (1)]
Form of application for permission to lay-off/to continue the lay-off of workmen in Industrial Establishments to which provisions of Chapter V-B of the Industrial Disputes Act, 1947 (14 of 1947) apply
To,
………………………..................
..……………………..................
……………………….................
[The authority specified under sub-section (I) of Section 25-M]
Dear Sir,
Under *sub-section (1)/sub-section [(2)] of Section 25-M of the Industrial Disputes Act. 1947 (14 of 1947) read with sub-rule (1) of Rule 74-B of the Industrial Disputes (Punjab) Rules, 1958. I/we hereby apply for permission to the lay-off/per- mission to continue the lay-off of …………………………………..workmen of a total of…………………….. workmen employed in my/our establishment with effect from…………………for the reasons set out in the Annexure.
Permission is solicited for the lay-off/to continue the lay-off of the said workmen.
Such of the workmen permitted to be laid-off will be paid such compensation , if any , to which they are entitled under sub-section [(6)] of Section 25-M read with Section 25-C of the Industrial Disputes Act, 1947 (14 of 1947).
Yours faithfully
For ……………………………….


(Signature)

*Strike out whatever is inapplicable.


ANNEXURE
(Please give replies against each item)
Item No.
1. Name of the undertaking with complete
postal address, including telegraphic
address and telephone number.

2. Status of undertaking :-
(i) Whether Central public sector/ State public sector /foreign majority company/ joint sector, etc.
(ii) If belongs to large industrial house, please indicate the controlling group; and if a foreign majority company, indicate the extent of foreign holdings.
(iii) Whether the undertaking is licensed /registered and if so, name of licensing / registration authority and licence/ registration certificate numbers.

3. (a) *Names and addresses of the affected workmen proposed to be laid-off/names and addresses of the workmen laid-off before the commencement of the industrial disputes ( Amendment ) Act, 1976 ( 32 of 1976 ) and the Dates from which each of them has been laid-off.
(b) The nature of the duties of the workmen referred to in sub-item (a), the units/ sections / shops where they are or were working and the wages drawn by them.

4. Product/products of the undertaking

5. Details relating to installed capacity, licensed capacity and utilised capacity.

6. (i) Annual production, item-wise for preceding three years.
(ii) Production figures, month-wise, for the preceding twelve months.

7. Work in progress-item-wise and value-wise.

8. Any arrangement regarding off-loading or sub-contracting of products or any components thereof.

9. Position of the order book-item-wise and value-wise for a period of six months, and one year next following, and for the period after the expiry of the said one year.

10. Number of working days in a week with the number of shifts per day and the strength of workmen per each shift.

11. Balance sheets, profit and loss accounts and audit reports for the last three years.

12. Financial position of the company.

13. Names of the inter-connected companies or companies under the same management.

14. The total number of workmen (category-wise), and the number of employees other than workmen as defined under the Industrial Disputes Act, 1947 (14 of 1947), employed in the undertaking.

15. Administrative, general and selling cost in absolute terms per year in the last three years and percentage thereof to the total cost.

16. Details of lay-offs resorted to in the last three) years (other than the lay-off for which permission is sought), including the periods of such lay-offs, the number of workmen Involved in each such lay-off and the reasons thereof.

17. Anticipated savings due to the *proposed layoff / lay-off for the continuance of which permission is sought.

18. Any proposal for effecting savings on account of reduction in -
(i) Managerial remuneration,
(ii) Sales promotion cost, and
(iii) General administration expenses.

19. Position of stocks on last day of each of the months in the preceding twelve months.

20. Annual sales figures for the last three years and month-wise sales figures for the preceding twelve months both item-wise and value-wise.

21. Reasons for the *proposed lay-off / lay-off for the continuance of which permission is sought

22. Any specific attempts made so far to avoid the *proposed lay-off flay-off for the continuance of which permission is sought.

23. Any other relevant factors with details thereof

*Strike out whatever is inapplicable.]
Yours Faithfully,
For …………………………








Draft Notice to be put up on Company Notice Board

The company regrets to inform all concerned that owing to ……… ……… ……… …… ……… …………… ………… ……………… ……………… …………… …………… …………… ……………… …………… ……………… ………… ……………… ………… ……………… ………… …………………… ………… ……….. that it is virtually impossible to continue to employ any number of people on an on going basis.
The Company, in conformity to the legal stipulations under Industrial Disputes Act 1947 and the rules thereunder, has decided to effect Lay-Off at the factory with effect from the first shift of ……….. . The employees/contract labour that will be affected by the said lay-off will be laid off will be eligible to receive “lay-off compensation” @ 50% of monthly wages, as provided under the said law. Presently the lay-off is likely to continue upto ………………. And unless the situation improves satisfactorily, it may have to be extended by such period as may be deemed necessary that the relevant point of time.
To be eligible to receive lay-off compensation each workman will have to report at the factory each day except the weekly off day and sign a register provided at the security gate for the purpose.
Notices of continuance or discontinuance of lay-off will be displayed at the security gate from time to time. The first payment of lay-off compensation to eligible workmen will be made along with the wage for the days worked, on the day of wage disbursement.
Please note that all legal formalities have been duly completed. The company regrets the situation and the necessity to resort to lay-off, but is entirely helpless in the matter. It is in the larger interests of all of us that the company survives and prospers ahead of us. Therefore co-operation of all is earnestly solicited.


Yours sincerely,
For ……………………