Reviewed and Validated by: Shubham, Associate
Lay off means refusal by the employer to employ workmen on account of a shortage of any resources or raw-materials, accumulation of stocks, breakdown of machinery or natural calamity.
Essentials for Lay-off
For the purpose of Lay-off, the Industrial Disputes Act provides for the following essentials
- There must be failure, refusal or inability on the part of the employer to give employment to a workman;
- The failure, refusal or inability should be on account of a shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery, or natural calamity, or any other connected reason;
- The workman’s name should be on the muster rolls of the industrial establishment; &
- The workman should not have been retrenched.
Read another article: Executive: Civil & Criminal Immunity
Compensation
It is pertinent to mention here that when a workman has completed a no less than one year of continuous service with the employer, then that workmen shall be entitled to compensation equivalent to 50 percent of the total basic wages and dearness allowance for the period of lay-off. During lay-off the workman continues to be in the employment of the employer but at a reduced pay. If the lay-off continues for a duration of 45 days or more the employer can proceed for retrenchment. The compensation paid for lay-off is adjustable with the compensation payable for retrenchment.
The processes for lay-off shall differ from one establishment to other depending on number of workmen employed and nature of activity undertaken.
For a non-workman category employees the conditions of lay-offs will need to be mutually agreed. Needless to mention, despite necessary steps being followed, there is still the probability of a workmen challenging the termination before a court of law.
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