labour laws

CLOSURE
PROVISIONS AND PROCEDURE

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

‘Closure’ means permanent closing down of a place of employment or part thereof. [section 2(cc)]. The total physical shut-down on permanent basis is the only requirement. The ‘motive’ or mens-rea is wholly irrelevant so long as shut-down is permanent, final and irrevocable.


PROCEDURE FOR CLOSING DOWN AN UNDERTAKING (Section 25-O)

A. The closure does not by itself bring about termination of services of the employees because the contract of service does not automatically stand terminated just because the company stops its activities. In order to terminate services, it is absolutely necessary that a Notice is given to the employees whose services are desired to be terminated. The Notice of termination may be given individually or collectively but a notice is a must
(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least 60 (sixty) days before the date on which the intended closure is to become effective, to the appropriate Government in Form QA or where notice has been given to employees in Form QB (Section 25FFA) (Rule 75-C)
The notice as the case may be, application shall be made in triplicate. The failure to give such Notice attracts penalty of imprisonment for a term upto 6 months or fine upto Rs. 5000/- or both under Section 30 A of the Act.
(2) Notice should clearly state the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner.
(3) Every workman who has been in continuous service for not less than 12 months, immediately before the closure, is entitled to:
a) The prescribed notice, and
b) Compensation as if he had been retrenched.
(4) If the closure is on account of ‘unavoidable circumstances beyond the control of the employer’; The compensation is not to exceed his average pay for 3 months.
(5) The phrase ‘unavoidable circumstances beyond the control of the employer’ does not include:

(a) Financial difficulties including financial
(b) losses, Accumulation of unsold and unutilized stocks,
(c) The expiry of the period of lease or the license granted to it

(6) These special provisions also apply to only those workmen whose names are on the muster-rolls of the industrial establishments.

(7) Where an application for permission has been made, the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public 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.
(8) Where the appropriate Government 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 sixty days.
(9) An order of the appropriate Government granting or refusing to grant permission shall, be final and binding on all the parties and shall remain in force for 1 (one) year from the date of such order.
(10) The appropriate Government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission or refer the matter to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
(11) Where no application for permission is made within the period specified therein or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.
(12) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that the provisions shall not apply in relation to such undertaking for such period as may be specified in the order.
(13) Where an undertaking is permitted to be closed down or where permission for closure is deemed to be granted, every workman who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to 15 (fifteen) days' average pay for every completed year of continuous service or any part thereof in excess of six months.

FORM QA
(To be submitted in triplicate)
[SEE RULE 75C (1)]

Form of notice for permission of closure to be given by an employer under sub-section
(1) of Section 25-O of the Industrial Disputes Act, 1947 (Act 14 of 1947).

Date__________

To
The Secretary to Government, Punjab,
Labour Department, Chandigarh

Sir,

1. Under Section 25-O of the Industrial Disputes Act, 1947 (Act 14 of 1947), I/We hereby inform you that I/we propose to close down the undertaking specified below of (Name of the Industrial establishment) (Give details of the undertaking).

2. with effect form________________ for the reasons explained in the Annexure.

3. The number of workmen whose services will be terminated on account of the closure of the undertaking is ______________ (number of workmen).

4. Permission is solicited for the proposed closure.

5. I/we hereby declare that in the event of approval for the closure being granted, every workmen in the undertaking to whom sub-section (7) of the said Section 25-O applies will be given notice and paid compensation as specified in Section 25-N of the Industrial Disputes Act, 1947 (Act 14 of 1947), as if workman had been retrenched under that section.
Yours Faithfully,
For …………………………..



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. The total number and categories of workmen affected by the proposed closure, along with addresses of the workmen and the details of 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. Details of persons or the organization to whom the job(s) is (are) being entrusted Relationship / interest of the persons / organizations with the director(s) for the officer(s) of the company.
10. 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.
11. Number of working days in a week with number of shifts per day and strength of workmen per each shift
12. Balance sheets, profit and loss accounts and audit reports for the last three years.
13. Financial position of the company.
14. (i) Names of the inter-connected companies or companies under the same management.
(ii) Details about inter corporate investments and changes during the last one year
(iii) Interest of any of the directors / officers of the undertaking producing same or similar type of product.
15. Percentage of wages of workmen to the total cost of production
16. Administrative, general and selling cost in absolute terms per year in the last three years and percentage thereof to the total cost.
17. Inventory position item-wise and value-wise for the preceding twelve months (Inventories to be shown in respect of finished products, components and raw materials to be shown separately item-wise and values-wise)
18. Selling arrangement for the last three years and any change in the selling arrangement in the preceding twelve months
19. Full details of the interest of the directors and officer of the company in the organization/persons involved in selling products of the undertaking.
20. Buying arrangements for raw materials and components.
21. Interests of the directors and officers with the organization/persons involved in buying raw materials and components for the undertaking
22. Annual sales figures for the last three years and month-wise sales figures for the preceding twelve months both item-wise and value-wise
23. Reasons for the proposed closure thereof
24. Any specific attempts made so far to avoid the closure.
25. Any other relevant factors with details thereof
*Strike out whatever is inapplicable.]
Yours Faithfully,
For ………………………………