Discuss the provision of the industrial disputes act 1947 relating to lay off and retrenchment?

Question

Answer

Provisions of the Industrial Disputes Act 1947 Relating to Lay off and Retrenchment

Lay off

The Industrial Disputes Act 1947 defines lay off as the failure, refusal, or inability of an employer to give employment to a workman on account of the shortage of coal, power, or raw materials, or the accumulation of stocks, or the breakdown of machinery, or for any other reason beyond the control of the employer.

Lay off is a temporary suspension of employment. It is not a termination of employment.

During the period of lay off, the workman is entitled to a compensation which is equal to 50% of the total wages which he would have earned had he not been laid off.

The period of lay off cannot exceed 45 days in a year. If it exceeds, then the workman is entitled to a notice of one month or wages in lieu of notice.

If the lay off is for more than six months in a year, then the workman is entitled to retrenchment compensation.

Retrenchment

Retrenchment is the termination of employment by the employer for any reason other than punishment inflicted by way of disciplinary action.

The Industrial Disputes Act 1947 provides that an employer can retrench workmen if it is necessary due to the following reasons:

Permanent closure of the establishment.

Reduction of the workforce due to surplus staff.

Continued losses in the establishment.

The employer has to follow the procedure laid down in the Act before retrenching the workmen. The procedure includes giving notice to the concerned workmen, giving notice to the appropriate government, and paying compensation to the workmen.

The compensation payable to the workmen is calculated on the basis of the following formula:

15 days average pay for every completed year of service.

Proportionate payment for any incomplete year of service.

In conclusion, the Industrial Disputes Act 1947 provides for the protection of the rights of the workmen in case of lay off and retrenchment. The Act lays down the procedure that the employer has to follow before laying off or retrenching any workman. The Act also provides for compensation to the workmen in case of lay off or retrenchment.

Top Courses for B Com

Suggested Free Tests

Related Content

Schools

Competitive Examinations

Quick Access Links

Technical Exams