3.

2 LAYOFF, RETRENCHMENT AND CLOSURE

2 (t) Lay-off
 "Lay-off" refers to a situation where an employer is unable to provide work to a
worker due to specific reasons beyond their control. These reasons include:
- Shortage of coal, power, or raw materials.
- Accumulation of stocks.
- Breakdown of machinery.
- Natural calamities.
- Any other similar connected reasons.
A "lay-off" applies to workers whose names are listed on the muster rolls (attendance
records) of the industrial establishment and who have not been retrenched (permanently
terminated).
Explanation
What happens when a worker presents themselves for work?
- If the worker reports to work at the designated time during normal working hours and
does not get employment within two hours, they are considered to be laid-off for
that day.
Partial Lay-off for the Day:
- If the worker is asked to return during the second half of the shift and is then given
work, they are considered to be laid-off for half the day only.
Full Wages for No Employment:
- If the worker is not provided employment even after presenting themselves during the
second half of the shift, they are not considered laid-off for the second half. Instead,
they are entitled to their full basic wages and dearness allowance for that part of the
day.

Section 65: Application of Sections 67 to 69

This section specifies the industrial establishments to which Sections 67 to 69 do not apply
and clarifies the meaning of "industrial establishment."

1. Non-Applicability of Sections 67 to 69:

o These sections do not apply to:
 Industrial establishments covered under Chapter X.
 Industrial establishments with fewer than 50 workers employed on an
average working day in the preceding calendar month.
 Industrial establishments that are:
 Seasonal in nature, or
 Where work is performed intermittently.
2. Authority to Decide Seasonal or Intermittent Nature:
o If there is any dispute about whether an industrial establishment is seasonal or
intermittent in nature, the decision of the appropriate Government is
considered final.
3. Definition of "Industrial Establishment":
o For this section (and Sections 67, 68, and 69), "industrial establishment"
includes:
 Factories: As defined under Section 2(m) of the Factories Act, 1948.
 Mines: As defined under Section 2(1)(j) of the Mines Act, 1952.
  Plantations: As defined under Section 2(f) of the Plantations Labour
Act, 1951.
Section 66: Definition of Continuous Service

This section defines what constitutes "continuous service" for a worker, including
interruptions and specific criteria for calculating it.

1. Meaning of Continuous Service:

o Continuous service refers to service without interruptions. However,
interruptions due to the following reasons are included in continuous service:
 Sickness.
 Authorized leave.
 Accidents.
 Legal strikes (not illegal).
 Lock-outs.
 Work stoppages not caused by the worker's fault.
2. Deemed Continuous Service:
o If a worker has not worked continuously for one year or six months, they are
still deemed to be in continuous service if they meet the following conditions:
o One Year of Service:
 Worked at least 190 days (if employed below ground in a mine) or 240
days (in other cases) during the preceding 12 months.
o Six Months of Service:
 Worked at least 95 days (if employed below ground in a mine) or 120
days (in other cases) during the preceding six months.
3. Calculation of Days Worked:
o For determining the number of days worked, the following days are included:
 Laid-off days: As per agreements or applicable laws.
 Leave on full wages: Earned in previous years.
 Temporary disablement: Due to accidents during employment.
 Maternity leave: For female workers, up to the maximum period
specified in the Maternity Benefit Act, 1961.

Purpose:
 Section 65 ensures that certain industrial establishments, particularly small, seasonal,
or intermittent ones, are exempt from specific provisions.
 Section 66 protects workers’ rights by defining continuous service inclusively,
ensuring that legitimate interruptions like illness or maternity leave do not affect their
employment benefits.

Section 67: Rights of Workers Laid-Off for Compensation

This section outlines the rights of workers (excluding certain categories) to receive
compensation when laid-off by an employer.

1. Eligibility for Compensation:

o Applies to workers (excluding badli workers and casual workers) whose
names are on the muster rolls of the industrial establishment.
o The worker must have completed at least one year of continuous service
under the employer.
 2. Compensation for Lay-Off:
o The worker is entitled to compensation equal to 50% of the total basic wages
and dearness allowance that would have been payable if the worker was not
laid-off.
o Compensation is provided for all lay-off days, except for weekly holidays.
3. Limit on Compensation:
o If the worker is laid-off for more than 45 days within a 12-month period, no
compensation is payable for any additional lay-off days beyond the first 45
days if there is an agreement to that effect between the worker and the
employer.
4. Retrenchment Option:
o The employer can retrench the worker after the first 45 days of lay-off under
the provisions of Section 70.
o In such cases, any lay-off compensation already paid during the preceding 12
months can be adjusted against the retrenchment compensation.
5. Definition of "Badli Worker":
o A "badli worker" is someone employed temporarily in place of another worker
whose name is on the muster rolls of the establishment.
o However, if a badli worker completes one year of continuous service, they
are no longer considered a badli worker and are entitled to the same rights as
other workers.

Section 68: Duty of Employer to Maintain Muster Rolls

This section imposes a duty on employers regarding muster rolls during lay-offs.

1. Requirement to Maintain Muster Rolls:

o Employers must maintain a muster roll for workers even when workers are
laid-off in the industrial establishment.
2. Entries in Muster Rolls:
o The muster roll must allow workers to record their presence if they report to
the establishment during normal working hours at the designated time.

Purpose:
 Section 67 ensures that workers are compensated fairly during lay-offs while
balancing the employer's right to retrench workers when necessary.
 Section 68 aims to provide transparency and a record of workers' attendance during
lay-offs, ensuring that workers who report for duty are not overlooked.

Section 69: Workers Not Entitled to Compensation in Certain Cases

This section specifies circumstances under which a laid-off worker is not entitled to
compensation.

Refusal of Alternative Employment:

o A worker is not entitled to compensation if they refuse to accept alternative
employment provided by the employer, provided that:
 The alternative employment is in the same establishment or in another
establishment of the same employer.
  The alternative establishment is located in the same town or village or
within a radius of 8 kilometres from the original establishment.
 The job offered does not require special skills or prior experience and
is deemed suitable for the worker by the employer.
 The wages offered for the alternative job are equal to the worker’s
normal wages.

2. Failure to Present for Work:

o No compensation is payable if the worker fails to present themselves for
work at the establishment at the designated time during normal working
hours, at least once a day.

3. Strike or Slowdown in Production:

o If the lay-off results from a strike or a deliberate slowing down of production
by workers in another part of the establishment, compensation is not payable.

Purpose:
This section ensures that workers cannot claim compensation unreasonably, encouraging
them to cooperate with alternative employment arrangements and discouraging actions like
strikes or non-compliance that disrupt operations. It also protects employers from having to
pay compensation in circumstances beyond their control.

2 (zh) Retrenchment
The term "retrenchment" refers to the termination of a worker's employment by the employer
for any reason, except when the termination is part of a disciplinary action taken against the
worker. However, it does not include the following situations:
1. Voluntary retirement: When a worker chooses to retire voluntarily.
2. Retirement due to age: When a worker is retired after reaching the age of
superannuation (retirement age).
3. Non-renewal of contract: If the worker's employment contract expires and is not
renewed, or if the contract specifically includes provisions for termination at the end
of its term.
4. Completion of fixed-term employment: If a worker's employment ends because the
predetermined period or contract term has ended.
5. Termination due to ill-health: If a worker's service is terminated because they are
unable to continue working due to long-term health issues.

2 (h) Closure
 The permanent shutdown of a workplace or a part of it.

Section 70: Conditions Precedent to Retrenchment of Workers

This section lays down the mandatory conditions that must be fulfilled by an employer before
retrenching a worker who has completed at least one year of continuous service.

1. Notice or Pay in Lieu of Notice:

o The employer must provide the worker with a one-month notice in writing,
stating the reasons for retrenchment, and ensure the notice period has expired.
o Alternatively, the employer can pay the worker wages for the notice period
instead of serving the notice.
 2. Compensation:
o At the time of retrenchment, the worker must be paid compensation
equivalent to 15 days' average pay (or as notified by the government) for
every completed year of continuous service or any part of the year exceeding
six months.
3. Notice to the Government:
o The employer must serve a notice in the prescribed manner to the
appropriate Government or the authority specified by the Government.

Section 71: Procedure for Retrenchment

This section explains the "last-in, first-out" principle to be followed during retrenchment:

1. Category-Based Retrenchment:
o If workers in a specific category are being retrenched, the employer must
ordinarily retrench the worker who was last employed in that category.
2. Exception:
o If the employer chooses to retrench a worker other than the one employed last,
they must provide reasons in writing for such a decision.

Section 72: Re-Employment of Retrenched Workers

This section ensures that retrenched workers are given priority in re-employment:

1. Re-Employment Opportunity:
o If the employer intends to hire workers within one year of retrenching
workers, they must provide an opportunity to the retrenched workers to
reapply.
2. Preference to Retrenched Workers:
o Retrenched workers who offer themselves for re-employment will have
priority over other candidates.

Purpose:
 Section 70 ensures fairness and transparency during retrenchment by mandating
compensation, notice, and government intimation.
 Section 71 safeguards workers from arbitrary retrenchment by following the "last-in,
first-out" principle unless justified otherwise.
 Section 72 promotes job security by giving retrenched workers a chance for re-
employment, prioritizing their livelihoods over new hires.

Section 73: Compensation to Workers in Case of Transfer of Establishment

When the ownership or management of an establishment is transferred, workers are entitled

to safeguards to ensure fair treatment:

1. Entitlement to Notice and Compensation:

o Workers with at least one year of continuous service before the transfer are
entitled to notice and compensation as per Section 70, as though they were
retrenched.
2. Exceptions:
 o The provision does not apply if:
 The worker's service is not interrupted by the transfer.
 The terms and conditions of service after the transfer are not less
favourable than before.
 The new employer is legally bound to pay compensation in the event
of retrenchment, treating the service as continuous and
uninterrupted.

Section 74: Sixty Days' Notice for Intended Closure

Employers intending to close down an undertaking must follow a formal process:

1. Notice Requirement:
o Employers must serve a 60-day prior notice to the appropriate Government,
explaining the reasons for the closure.
2. Exemptions:
o The notice requirement does not apply to:
 Establishments employing less than 50 workers on any day in the
preceding 12 months.
 Establishments set up for construction projects like buildings,
bridges, roads, etc.
3. Government Waiver:
o The Government may waive the notice requirement in exceptional
circumstances such as accidents, death of the employer, or natural
calamities.

Section 75: Compensation to Workers in Case of Closure

Workers affected by the closure of an establishment are entitled to specific rights:

1. Entitlement to Notice and Compensation:

o Workers with at least one year of continuous service are entitled to notice
and compensation as per Section 70.
2. Reduced Compensation in Certain Cases:
o If the closure is due to unavoidable circumstances beyond the employer’s
control, compensation is covered at three months’ average pay.
3. Exceptions to Unavoidable Circumstances:
o Financial difficulties, unsold stock, lease expiry, or exhaustion of minerals in
mining operations do not qualify as "unavoidable circumstances."
4. Special Provisions for Mining and Construction Work:
o In mining operations:
 No compensation is payable if workers are offered alternative
employment within a 20 km radius, with uninterrupted service and the
same terms.
o In construction work:
 Workers are not entitled to compensation if the work is completed
within two years of the undertaking's setup.

Section 76: Effect of Inconsistent Laws

This section ensures the primacy of this chapter's provisions while allowing more favourable
benefits to prevail:

1. Supremacy of Chapter Provisions:

o The provisions of this chapter override any inconsistent laws or standing
orders.
2. More Favourable Benefits:
o Workers will continue to enjoy more favourable benefits provided under
other laws, contracts, or awards, even if they differ from this chapter.
3. Clarification:
o The settlement of industrial disputes shall not affect the provisions of any
other law, but the rights and liabilities concerning lay-offs and retrenchment
are governed exclusively by this chapter.