Industrial Disputes

Act, 1947

Dr. Subir Bikas Mitra

SESSION-15
 Lay-off
 Lay-off has been defined under section 2 (kkk) of the Industrial
Disputes Act, 1947.
 Lay-off means the failure, refusal or inability of an employer on
account of the shortage of coal, power or raw materials or the
accumulation of stocks or the breakdown of machinery or natural
calamity or for any other unconnected reason to give employment
to a workman whose name is borne on the muster rolls of his
industrial establishment and who has not been retrenched.
 Sec 25 (C): Whenever a workman whose name is borne on the muster
rolls of an industrial establishment and who has completed not less
than one year of continuous service under an employer is laid-off,
whether continuously or intermittently, he shall be paid by the
employer for all days during which he is so laid-off.
Continued…
 Casual workers are excluded form this
provision.
 Compensation which shall be equal to fifty per
cent, of the total of the basic wages and dearness
allowance shall be given to laid off workers.
 Section 25(M): In general cases no worker can be
laid off without prior permission form the
government.
 Essential Conditions
Essential conditions for lay-off are as follows:
 The number of workmen employed in an Industrial establishment should not
be less than 100 on an average per working day in the preceding calendar
month.
 The Industrial establishment should not be of seasonal character.
 The unemployment should be due to the failure, refusal or inability of an
employer on account of reasons beyond his control (there should not be
mala fide on the part of the employer).
 The name of the workmen should be borne on the muster roll of the
Industrial establishment.
 The workmen should have presented himself for work on the establishment at
the time appointed for the purpose during normal working hours.
 The workmen should not have been given employment within two hours of
his so presenting himself.
Conditions to be fulfilled by the laid-off
workman for claiming a compensation
 His name must be borne on the muster roll, and he
should not have been retrenched.
 He must have completed not less than one year of
continuous service (as defined in Section 25B)
 The workman must not be a badli (a workman employed
in the place of another workman) or a casual worker.
If these requirements are fulfilled, a workman shall be
paid compensation for all days during which he is laid off,
except for such weekly holidays. The amount of
compensation payable to such workman shall be half of the
total of basic wages and dearness allowance.
 When the workman is not entitled to
compensation
 Section 25E of the Industrial Disputes Act explains situations
where the workman will not be entitled to compensation.
These can be broadly understood as the following:
 Refusal to accept alternate employment in the same
establishment or any other establishment owned belonging to
the same employer, provided similar wages are offered to the
workman in the alternate employment as well.
 Where the workman does not present himself at the appointed
time during normal working hours at least once a day.
 Where the lay-off is because of a strike or slowing-down of
production due to workmen in another part of the establishment.
Continued....
 In K.T. Rolling Mills v. M.R. Meher (1962 - Bombay High Court) it was held
that provisions for payment of lay-off compensation does not mean that the
employer can pay compensation and declare lay-off. Further, compensation
cannot be awarded in advance of actual lay-off and on grounds of social justice.
 It is also necessary that the alternate employment is something which can be
done by the workman. This means that not only should the workman have the
physical capability to do the alternate work, but it should be acceptable to the
workman.
 Therefore, in Industrial Employees’ Union, Kanpur v. J.K. Cotton Spinning
and Weaving Mills Company (1961 - SC) it was held that offering the job of a
coolie to a skilled workman cannot amount to the offer of an alternative job.
 In Tatanagar Foundry Co. v. Their Workmen (1970 – SC). The SC in this
case held that employer cannot lay-off the workmen with mala fide intention or
by way of victimisation.
 Retrenchment
 The ordinary meaning of Retrenchment is that business itself is continuing though a
portion of staff or labour force is discharged as surplusage. In the Industrial Disputes
Act, 1947, Section 2(oo) defines retrenchment. The essential points that can be gathered
from the definition in the statute are as follows:
 Retrenchment is the termination of a workman for any reason whatsoever, otherwise
than as a form of punishment, given as a means of disciplinary action.
 Retrenchment does not include the following:
 Voluntary retirement of the workman
 Retirement of the workman on reaching an age of superannuation as stipulated in
the contract of employment
 Termination of service due to non-renewal of the contract of employment on the
contract’s expiry, or the contract being terminated.
 Termination of the service of a workman on the ground of continued ill-health
Continued....
 Section 25(F) states that no workman employed in any industry who
has been in continuous service for not less than one year under an
employer shall be retrenched by that employer until-
a) the workman has been given one month’s notice in writing indicating the
reasons for retrenchment and the period of notice has expired, or the
workman has been paid in lieu of such notice, wages for the period of the
notice.
b) the workman has been paid, at the time of retrenchment, compensation
which shall be equivalent to fifteen days’ average pay [for every completed
year of continuous service] or any part thereof in excess of six months; and
c) notice in the prescribed manner is served on the appropriate government
[for such authority as may be specified by the appropriate government by
notification in the Official Gazette]
 Section 25 (N) explains the various conditions precedent to
retrenchment of workmen.
 Procedure of Retrenchment
 Section 25G of the Industrial Disputes Act lays down the procedure
of retrenchment. It provides that if any worker is to be retrenched,
and that workman belongs to a particular category of workmen
in that establishment, then generally, that workman will be
retrenched by the employer who was the last person to be
employed in that category.
 The exceptions to this rule of the procedure are if there is a contract
between the employer and the workmen which is to the contrary, or
the employer records his reasons to retrench any other workman.
The employer can also retain an employee possessing special
qualifications whose services are necessary in the interests of
business in a bona fide manner.
Continued....
 This rule shows that the system of Last in, First out is to be followed in
retrenching. From this rule, it also follows that it is required from the
employer that they maintain a seniority list of the workmen. The general
principle of retrenchment is that the retrenchment should start with the
latest, newest worker, and progressively go up to employees higher up in
the seniority list.

 Retrenchment of Workmen Compensation & Conditions

 Workman must have worked for 240 days.
 Retrenchment compensation @ 15 days’ wages for every completed year to be
calculated at last drawn wages should be paid to the workmen.
 One month’s notice or wages in lieu thereof should be given to the workmen.
 Reasons for retrenchment should be clearly mentioned in the notice being given to
the workmen.
 Retrenchment should be implemented with principle of ‘last come first go’.
 Conditions precedent to retrenchment of
workmen [Section 25-F] – Chapter 5A
a) The workman has been given one month's notice in writing
indicating the reasons for retrenchment and the period of notice
has expired, or the workman has been paid in lieu of such notice,
wages for the period of the notice.
b) The workman has been paid, at the time of retrenchment,
compensation which shall be equivalent to fifteen days average
pay for every completed year of continuous service or any part
thereof in excess of six months.
c) Notice in the prescribed manner is served on the Appropriate
Government or such Authority as may be specified by the
Appropriate Government by notification in the Official Gazette.
Conditions Precedent to Retrenchment of workmen
[Section 25-N]- Chapter 5B
1. Employee should have continuous service for not less than one year under
an employer
2. Three months notice in writing indicating the reasons for retrenchment or
payment for the period of the notice
3. Compensation which shall be equivalent to fifteen days’ average pay[for
every completed year of continuous service] or any part thereof in excess of
six months.
4. An application for permission to specified authority for the intended
retrenchment and a copy of such application shall also be served
simultaneously on the workmen concerned in the prescribed manner.
5. Compulsory permission from competent authority by employer
retrenchment of workmen.
Continued....
6. For Industrial establishments in which not less than
100 workmen are employed, on an average per
working day and are of not being seasonal character
and in which work is performed only intermittently,
have to seek prior permission from competent
authority by the employer to layoff workman.
If no application seeking permission to retrench
workmen is made by the employer or where such
permission is refused, such retrenchment shall be
deemed to be illegal and the workmen shall be entitled
to all benefits as if they have not been given any notice.
(Sub-Section 7).
Prohibition of unfair labour practice either by
employer or workman or a trade union as
stipulated in fifth schedule [Section 25-T]
 Both the employer and the Union/workmen can be punished if practice any
kind of unfair labour practice.
 Unfair labour practices have been explained under the firth schedule of the
Act.
 This schedule explains fair labour practices for the employer to not to exploit
the rights of the workers and promote collective bargain. These guidelines
also direct the employers to not to interfere in the matter of labour unions.
 There are guidelines for the workers and unions as well to protect the rights
of the employers as well.
Closure of an Undertaking or Place of
Employment
 As per Sec.25FFA- 60 days’ notice should be given
to the labour authorities for intended closure in
Form QA.
 Sec.25-O states that a prior permission should be
taken at least 90 days before in Form O by the
Government when there are 100 ore more
workmen during preceding 12 months (in UP 300
or more workmen).
Conditions of service etc. to remain unchanged
under certain circumstances during pendency
of proceedings [Section 33]
 During the pendency of proceeding no condition of service can
be altered by the employer.
 A permission in writing of the concerned authority is required in
case of any punishment is indented to be given to the disputed
workmen for misconduct.
 To seek approval of the authority by paying one month’s wages
before altering condition of service, dismissing or discharging or
punishing a workman.
 We can conclude it like, employer can not change conditions of
service during the pendency of proceeding without written
permission form the competent authority.
Protected Workman [Section 33(3)]
 Explanation to Section 33(3) defines a protected workman as any
workman who is a member of the executive or other office
bearer of a registered trade union connected to the
establishment.
 Rule 61 of the Industrial Disputes (Central) Rules deals with
the recognition and distribution of protected workmen. It
contains four sub-rules, them being
1. Every registered trade union must communicate the names and
addresses of office bearers to the employer for the recognition
of a protected workman by 30th April of every year.
2. It is the duty of the employer to declare the list of protected
workmen within 15 days of receiving the letter from the union.
Continued....

 Where any dispute arises between the employer and

registered trade union related to the matter of recognition of
protected workmen, the dispute is referred to Regional
Labour Commissioner or Assistant Labour
Commissioner (Central).
 The rule prescribes the number of workmen to be
recognised as protected workmen. Section 33(4) of the
Industrial Disputes Act 1947 provides provisions for the
same. It states that one percent of the total number of
workmen employed is subject to a minimum of five and a
maximum of one hundred.
 Penalties
Serial Penalties Offence Punishment
No.

Section 25U Unfair Labor Practice punishable with imprisonment for a term which may extend to 6 months or with
1. fine which may extend to 3000/- rupees or with both.

Section 26 Illegal Strikes punishable with imprisonment for a term which may extend to one month, or with
2. fine which may extend to 50/- rupees, or with both.

Section 26 Illegal Lock-Outs punishable with imprisonment for a term which may extend to one month, or with
3. fine which may extend to one 1000/- rupees, or with both.

Section 27 Any person who instigates or incites punishable with imprisonment for a term which may extend to 6 months, or with
4. others to take part in, or otherwise acts in fine which may extend to one 1000/- rupees, or with both.
furtherance of, a strike or lock-out which
is illegal under this Act,

Section 28 Giving Financial Aid To Illegal Strikes punishable with imprisonment for a term which may extend to 6 months, or with
5. And Lock-Outs fine which may extend to 1000/- rupees, or with both.

Section 30 Disclosing Confidential Information Punishable with imprisonment for a term which may extend to 6 months, or with
6. fine which may extend to 1000/- rupees, or with both.

Section 31A Closure of establishment Without Notice punishable with imprisonment for a term which may extend to 6 months, or with
7. fine which may extend to 5000/- rupees, or with both.

Section 31 Contravenes the provisions of Section 33 Punishable with imprisonment for a term which may extend to 6 months, or with
8. fine which may extend to 1000/- rupees, or with both.
 Comparison of Industrial Disputes Act, 1947
and Code on Industrial Relations 2020
Provision Act Existing Code on Industrial Relations

Applicability Industrial Applies to workmen Applies to workers including working

Disputes Act, drawing less than Journalist, sales promotion employees
1947 Rs.10,000 per mensem. and unorganized workers.

Applicability Industrial Chapter V-B applies for Chapter V-B applies for establishments
Disputes Act, establishments employing employing 300 or more workmen.
1947 100 or more workmen.

Definitions of Industrial Not defined in any of the Means the engagement of a worker on
Fixed-term Disputes Act, Act the basis of a written contract of
Employment 1947 employment for a fixed period
Continued...

Provision Act Existing Code on Industrial

Relations

Definitions of Industrial Means a cessation of work by a body Mass casual leave by 50% or
Strike Disputes of persons employed in any industry more workers on a given day
Act, 1947 acting in combination or a concerted also included in the
refusal, or a refusal, under; a definition of “Strike”
common understanding of any
number of persons who are or have
been so employed to continue to
work or to accept employment

Definitions of Industrial Workmen Workers now include

Worker Disputes Act, working Journalist, sales
1947 promotion employees and
unorganized workers
Continued...
Provision Act Existing Code on Industrial Relations

Provisions:

Grievance Redressal Industrial Not mandatory to refer the Grievance Redressal

Committee [Sec-9(C)] Disputes grievance to the committee Committee is now a mandate
Act, 1947 before moving to a under the Code.
Conciliation Officer

Negotiating Union Industrial No Provision Recognition of “Negotiating

Disputes Act, Union” is mandatory
1947

Completion of Industrial No time limit mentioned for Investigation and inquiry have
Disciplinary Disputes Act, completing the disciplinary to be completed within 90
Proceedings 1947 proceedings against the days from the date of
workmen suspension of a worker
Continued...
Provision Act Existing Code on Industrial Relations

Notice for Strike Industrial Disputes Prior Notice - condition 14 days prior notice before strike
Act, 1947 was only applicable to mandated for all Industrial
Public Utility Service establishments. Strike has to happen
industries within 60 days.

Worker re- Industrial Disputes No such Provision Worker re-skilling fund: The employer
skilling fund Act, 1947 will be required to deposit an amount
equal to fifteen days last drawn wages
of every retrenched worker

Fixed-term Industrial Disputes No such Provision Fixed-term Employment introduced,

Employment Act, 1947 which refers to workers employed for
a fixed duration based on a contract
signed between the worker and
employer
Continued...
Provision Act Existing Code on Industrial Relations

Resolution of Industrial Resolution of Industrial The Industrial Tribunal will consist of

Industrial Disputes Act, Disputes use to be done two members out of whom one shall be a
Disputes through 1947 by only one member Judicial member and the other will be an
Industrial Tribunal under Administrative member
Tribunal Industrial Disputes Act

Penalties Industrial Less Stringent Penalties are more stringent now:

Disputes Act, Penalties Up to INR 2,00,000: In case of non-
1947 certification of Standing Orders, an
additional fine of INR 2,000 per day
during which the contravention continues.

In subsequent contravention, fine up to

INR 4,00,000 and imprisonment for a
term up to 3 months, or both.
 CASE LAWS
 In Santosh Gupta v. State Bank of India (1980 - SC), a female employee was discharged
on the grounds that she failed to qualify herself in the prescribed test for confirmation of
services. The Tribunal held that the termination does not amount to retrenchment. But
the Supreme Court reversed the decision of the Tribunal and ordered reinstatement of
the employee with full back wages. The Supreme Court further held that the expression
“termination of service for any reason whatsoever” is wide enough to include every
kind of termination of service except those which are expressly excluded by the proviso
to the definition of retrenchment as given in Section 2(oo).
 In P.H. Kalyani v. Air France, Calcutta, 1963, 1963 AIR 1756, 1964 SCR (2) 104, it was
held by the Constitution Bench that where a domestic inquiry is found defective and the
employer leads evidence before the Labour Court and subsequently, the Labuor Court
gives its approval that the charges are proved, the order of termination would relate
back to the date of original order of termination.
 In Reserve Bank of India and Others vs. C.N. Sahasranaman and Others [1986 AIR 1830,
1986 SCR (2) 881], it was held by Hon’ble SC that employees are fully covered by the
definition of the term "workman" in section 2(s) of the said Act.
Continued...

 Chandrakant Tukaram Nikam and others vs. Municipal Corporation

of Ahmedabad and another, Appeal (civil) 4849-4854 of 1992- It was
held by the Supreme Court that the Jurisdiction of the Civil Court
was impliedly barred in cases of the dismissal or removal from
service. The appropriate forum for such relief was one constituted
under Industrial Disputes Act, 1947.

 In Physical Research Laboratory vs. K.G. Sharma (C.A. No.-002663-

002663 / 1997), The Hon’ble SC held that Employees of Laboratory
Ahmadabad, would come within the definition of "workmen" under
the Industrial Disputes Act and other similar legislation in the field of
relations between employers and employees. The principal nature of
work performed by the employee concerned needs to be ascertained.
Continued...
 In Divisional Controller MSRTC v. Conciliation Officer Akola and
Anr,1993, Appeal (civil) 5453 of 2003 the Hon’ble Supreme Court
held that where the union sends only one name, such a workman is
bound to accept the privilege. In the case, declaring Respondent No.2
as a protected workman was challenged. The appellant stated that this
was impossible as no list regarding the number of workmen was sent.
The application contained only one name, which was accepted.

 Jadhav J. H. vs. Forbes Gobak Ltd. (Appeal Civil 1089 of 2005)- In

this case, it was held by Supreme Court that, a dispute relating to a
single workman may be an industrial dispute if either it is espoused
by the union or by a number of workmen irrespective of the reason
the union espousing the cause of workman was not the majority of
the union.
THANK YOU
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