(only the content in blue is from chatgpt that also I verified from the bare act and the

rest is from research papers)

INTRODUCTION

Even though Industrial Disputes Act 1947(ID Act) has just 40 sections, its interpretation and
understanding is quite complex. Of all the chapters in the Act the interpretation of Chapter 5A
and 5B (mentioned in the Act as chapter VA and VB) is the most challenging.
 Chapter V(a) & V(b) of the Industrial Disputes Act, 1947 provides for the protection
against retrenchment/Layoff and closure as it stipulates that before retrenchment of
any workman who has been in continuous service for not less than one year under an
employer, one month’s notice in writing indicating the reasons for retrenchment is
required to be served to the workman. Similarly, before closure of the establishment,
an employer is required to give sixty days’ notice to the appropriate Government.
 Under Chapter VB, in case of industrial establishments employing 100 and more
workers, retrenchment, closure and lay-off can be affected only with the prior
permission of appropriate Government and three months’ notice in writing indicating
the reasons is required to be served by the employer to the workman who has been in
continuous service for not less than one year.
 The workman is also entitled for compensation in case of retrenchment, lay-off and
closure as per provisions of Chapter VA and VB of the Industrial Disputes Act, 1947.
 The Act also prescribes penalty against the employer in case of violation of the above
mentioned provisions.

DIFFERENCE
The Industrial Disputes Act, 1947 distinguishes between Chapter VA and Chapter
VB based on the applicability, procedures, and requirements for industrial establishments
concerning lay-offs, retrenchments, and closures. Here are the main differences:
1. Applicability:
o Chapter VA applies to industrial establishments employing fewer than 100
workers on average per working day in the preceding 12 months.
o Chapter VB applies to larger industrial establishments with 100 or more
workers on average per working day in the preceding 12 months
Retrenchment Procedures**:
 o Chapter VA allows employers to carry out lay-offs and retrenchments after
meeting certain conditions and paying compensation, but it does not require
prior permission from the government.
o Chapter VB, however, mandates that employers obtain prior permission
from the appropriate government authority before proceeding with any
lay-off, retrenchment, or closure of an establishment. Without this permission,
such actions are considered illegal, and penalties apply .

 Chapter 5A deals with layoff, retrenchment, transfer and closure of industrial

establishment employing not more than 100 workmen.
 Chapter 5B deals with layoff, retrenchment, and closure of only factories, mines and
plantations employing more than 100 workmen (and not transfer).
 Chapter 5A is complex and 5B is simple to understand.

WHAT IS COVERED IN CHAPTER 5A OF INDUSTRIAL DISPUTES ACT 1947

1. Sections 25C (right of workmen to layoff compensation), 25D(duty of employer to

maintain muster roll of laid off workmen) and 25E (circumstances in which laid off
workmen can be denied layoff compensation) deals with layoff procedure only in
respect of factories, mines and plantations employing 50 to 100 hundred workmen
who have rendered at least one year continuous service (other than badli or casual
workmen).
2. In other words, sections 25C, 25D and 25E dealing with lay off procedure are
applicable only to factories, mines and plantations employing 50 to 100 workmen.
3. Layoff as per these sections can be given without the permission of government. But a
notice is to be sent to the government.
4. The layoff procedure for factories, mines and plantations employing more than 100
workmen is covered in chapter 5B).

UNLIMITED LAY OFF IN THE FOLLOWING CASES

5. Casual and badli workers can be given layoff without paying layoff compensation to
any number of workers for any number of days.
 6. Factories, plantations and mines employing less than 50 workers can give lay off to
workers without paying compensation to any number of workers for any number of
days.
7. Workers who have not rendered at least one year continuous service can be given
layoff without compensation to any number of workers for any number of days.
8. Workers in other organizations (other than factory, mine or plantation) like shops,
commercial establishments, (retail malls, IT, BPO) or transport undertakings can be
given layoff without compensation to any number of workers for any number of days
irrespective of the size of workforce.

RETRENCHMENT AND CLOSURE WITHOUT GOVERNMENT PERMISSION-

SECTION 25F, 25FFA AND 25FFF ARE APPLICABLE TO ALL EXCEPT THOSE
COVERED BY CHAPTER 5B
9. Section 25F (procedure for retrenchment of workmen), 25FFA and 25FFF (procedure
for closure of an establishment) are applicable to all the establishments like factories,
mines, plantations(other than those factories, mines and plantations covered by
chapter 5B), shops, commercial establishments (like IT companies, BPO, retail mall,)
transport undertakings and so on.
10. Under these sections retrenchment of workmen, and closure of establishments (except
factories, plantations and mines employing more than 100 workers covered by chapter
5B) can be done without government permission.
11. Only notice and compensation is to be given to the affected workmen.
12. One month advance notice or pay in lieu of notice and compensation at the rate of 15
days pay (basic pay and dearness allowance) for every completed year of service to be
given to all the eligible workers affected by retrenchment/ closure.
13. In case of closure the employer should also give 60 days advance notice (and not
application for permission) to the government.
14. Notice to government is not required if the establishment to be closed has less than 50
workers or is a construction industry.
15. In other words provisions of this chapter relating to retrenchment and closure are
applicable to all the establishments, irrespective of the nature of business and size of
workforce (except the factories, mines and plantations employing more than 100
workmen who are governed by chapter 5B).
SECTION 25FF PROCEDURE FOR TRANSFER OF OWNERSHIP OF INDUSTRIAL
ESTABLISHMENTS
16. Section 25FF deals with procedure for, transfer of ownership of industrial
establishments from one employer to another employer.
17. Even though section 25FF is given in Chapter 5A its provisions have wide
application.
18. 25FF is applicable to all establishments including the factories, mines, and plantations
covered by chapter 5B.
19. In other words, separate procedure for ownership transfer of industrial establishments
is not given in chapter 5B.
20. Affected workers are entitled for one month advance notice and compensation as if
they are retrenched.
21. Permission of the government is not required.

WHAT IS COVERED IN CHAPTER 5B OF INDUSTRIAL DISPUTES ACT 1947

1. Unlike chapter 5A, chapter 5B has limited application.

2. This entire chapter is applicable only to factories, mines and plantations employing
more than 100 workers.
3. This chapter is not applicable to other organizations like shops, commercial
establishments like IT, BPO, retail malls, transport undertakings etc., irrespective of
the total number of workers employed or affected.
4. This chapter is not applicable to factories, mines and plantations employing less than
100 workers.
5. It deals with closure of factories, mines and plantations employing more than 100
workers and layoff and retrenchment of workers therein.
6. Prior permission of the government is required for layoff, retrenchment, and closure.
7. Affected workers are entitled to three months’ advance notice or pay in lieu of notice
period in case of retrenchment and closure.
8. Affected workers are eligible for layoff compensation.

SIMILARITIES IN CHAPTER 5A AND 5B

1. Rate of compensation for layoff, retrenchment, transfer and closure.
2. Non applicability to seasonal industries and to establishments working intermittently.
3. Exclusion of badli or casual workmen from layoff compensation.
4. Sections 25B (definition of continuous service), 25D(duty to maintain muster roll
during lay off), 25FF(compensation in case of transfer of undertaking),
25G(procedure to identify workers for retrenchment), 25H(reemployment of
retrenched workmen), 25J(effect of laws inconsistent with these two chapters).