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Q. Notes on Lay off, Lockout, Retrenchment, Strike.

Section 2(kkk) - Lay off
Lay-off means failure, refusal, or inability of a employer to give employment to a workman whose name is on the
muster rolls of his industrial establishment and who has not been retrenched, on the account of lack of coal, lack of
power, lack of raw material, over stocking of output, failure of machinery, due to natural calamity, or due to any other
connected reason.
Central India Spinning, Weaving, and Manufacturing Co. Ltd. Nagpur vs State Industrial Court 1959 - Held that
the words, "failure, refusal, or inability" are key to the definition and means that the unemployment is due to a cause
independent of any action or inaction of the workmen.
Temporary
Due to reasons beyond employer's control
Due to economic reasons
non-intentional
Rights and Obligations Resulting from lay-off
Layoff is not a right conferred upon the employer but an obligation that the unemployment is temporary in nature and
in a reasonable time the laid off worker will be restored his position. However, there is no indication regarding the time
layoff will continue.

25C. RIGHT OF WORKMEN LAID OFF FOR COMPENSATION
Whenever a workman (other than a badli workman or a casual 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, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent of the
total of the basic wages and dearness allowance that would have been payable to him had he not been so laid off :
Provided that if during any period of twelve months, a workman is so laid-off for more than forty-five days, no such
compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty-five days, if there
is an agreement to that effect between the workman and the employer :
Provided further that it shall be lawful for the employer in any case falling within the foregoing proviso to retrench the
workman in accordance with the provisions contained in section 25F at any time after the expiry of the first forty-five
days of the lay-off and when he does so, any compensation paid to the workman for having been laid-off during the
preceding twelve months may be set off against the compensation payable for retrenchment.
Explanation : "Badli workman" means a workman who is employed in an industrial establishment in the place of
another workman whose name is borne on the muster rolls of the establishment, but shall cease to be regarded as
such for the purposes of this section, if he has completed one year of continuous service in the establishment.

25M. PROHIBITION OF LAY-OFF. (1) No workman (other than a badli workman or a casual workman) whose name is borne on the muster-rolls of an
industrial establishment to which this Chapter applies shall be laid-off by his employer except with the prior
permission of the appropriate Government or such authority as may be specified by that Government by notification
in the Official Gazette (hereinafter in this section referred to as the specified authority), obtained on an application
made in this behalf unless such lay-off is due to shortage of power or to natural calamity, and in the case of a mine,
such lay-off is due also to fire, flood, excess of inflammable gas or explosion.
(2) An application for permission under sub-section (1) shall be made by the employer in the prescribed manner
stating clearly the reasons for the intended lay-off and a copy of such application shall also be served simultaneously
on the workmen concerned in the prescribed manner.
(3) Where the workmen (other than badli workmen or casual workmen) of an industrial establishment, being a mine,
have been laid-off under sub-section (1) for reasons of fire, flood or excess of inflammable gas or explosion, the
employer, in relation to such establishment, shall, within a period of thirty days from the date of commencement of

Instead of retrenching them. redundancy due to advanced machinery. grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen. the workmen concerned and the persons interested in such lay-off. or situate within such distance from the establishment to which he belongs that the transfer will not involve undue hardship to the workman having regard to the facts and circumstances of his case. However. This was held retrenchment. subsection (3) shall not apply in relation to such establishment for such period as may be specified in the order. after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer. This does not include .voluntary retirement. it is necessary so to do. situate in the same town or village. due to lack of performance. they were absorbed in other places. by order and for reasons to be recorded in writing. a workman shall not be deemed to be laid-off by an employer if such employer offers any alternative employment (which in the opinion of the employer does not call for any special skill or previous experience and can be done by the workman) in the same establishment from which he has been laid-off or in any other establishment belonging to the same employer. (4) Where an application for permission under sub-section (1) or sub-section (3) has been made the appropriate Government or the specified authority. or where no application for permission under sub-section (3) is made within the period specified therein. or. (10) The provisions of section 25C (other than the second proviso thereto) shall apply to cases of lay-off referred to in this section. superannuation. it shall pass an award within a period of thirty days from the date of such reference. in the prescribed manner.surplusage. the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days. apply. slowdown in business. DC & G Mills vs Shambhu Nath 1978 . to the appropriate Government or the specified authority for permission to continue the lay-off. Section 2(oo) . as the case may be. (8) Where no application for permission under sub-section (1) is made. he was shifted to another dept. by order.such lay-off. However. to a Tribunal for adjudication : Provided that where a reference has been made to a Tribunal under this sub-section. non-renewal of contract. the interests of the workmen and all other relevant factors. having regard to the genuineness and adequacy of the reasons for such lay-off. or where the permission for any lay-off has been refused. and asked for one more chance. if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like. such lay-off shall be deemed to be illegal from the date on which the workmen had been laid-off and the workmen shall be entitled to all the benefits under any law for the time being in force as if they had not been laid-off. may. subject to the provisions of sub-section (7). (6) An order of the appropriate Government or the specified authority granting or refusing to grant permission shall. (9) Notwithstanding anything contained in the foregoing provisions of this section. He was then removed from the rolls. For any reason what so ever .Retrenchment Retrenchment means termination of service of an employee by an employer for any reason other than as a punishment due to disciplinary action. One worker was given employment in another dept. with same pay. (7) The appropriate Government or the specified authority may. review its order granting or refusing to grant permission under sub-section (4) or refer the matter. as the case may be. termination on the ground of continued ill-health. Reason does not matter. a few workers were made redundant. (5) Where an application for permission under sub-section (1) or sub-section (3) has been made and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made. direct that the provisions of sub-section (1). Explanation : For the purposes of this section. be final and binding on all the parties concerned and shall remain in force for one year from the date of such order. he refused to go to another dept. provided that the wages which would normally have been paid to the workman are offered for the alternative appointment also. either on its own motion or on the application made by the employer or any workman. or. . the appropriate Government may.Due to reorganization. cause it to be referred.

unless for reasons to be recorded the employer retrenches any other workman. who is a citizen of India. Ill-health Lalit Mohan Puri vs Pure Drinks 1992 . PROCEDURE FOR RETRENCHMENT Where any workman in an industrial establishment. is to be retrenched and he belongs to a particular category of workmen in that establishment. . Section 25N. or the workman has been paid in lieu of such notice. and 2. VRS Panjab National Bank vs Virendra Kumar Goel 2004 . Held that it is not retrenchment because it is only seasonal work. Section 25F. the employer shall ordinarily retrench the workman who was the last person to be employed in that category. the workman has been given three months' notice in writing indicating the reasons for retrenchment and the period of notice has expired. The duration of employment must be read as per the nature of work and not from just the employment letter otherwise it will be abused by the employers.SC held that employees who opted for voluntary retirement and availed any part of retirement benefits were not eligible for retraction. SC held merely refusal to appear for medical examination should not be construed as ill health and held it to be retrenchment.A employee was asked to appear before ESI doctor to prove ill health. SC held it to be retrenchment because termination for any reason is retrenchment except if it is because of the reasons mentioned in the act. He was then removed. or the workman has been paid in lieu of such notice.Workers were employed in the sugar mill only during the season and then they ceased to work. wages for the period of the notice. CONDITIONS PRECEDENT TO RETRENCHMENT OF WORKMEN 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. (b) the workman has been paid. the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereafter in this section referred to as the specified authority) has been obtained on an application made in this behalf. Contract of Employment (subclause bb) In the case of Dilip Hanuman Shirke vs Zilla Parishad Yavatmal 1990 . at the time of retrenchment. He failed to appear. 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 or such authority as may be specified by the appropriate Government by notification in the Official Gazette. CONDITIONS PRECEDENT TO RETRENCHMENT OF WORKMEN 1. No workman employed in any industrial establishment to which this Chapter applies.A worker was removed after he failed a test that he was required to pass for confirmation of service.Held that the sub clause bb that allows an employer to not renew the employment contract must be read restrictively. Section 25G. Santosh Gupta vs SBI 1980 . in the absence of any agreement between the employer and the workman in this behalf. wages for the period of the notice. who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until 1.Morinda Coop Sugar Mills vs Ram Kishen and others 1996 .

such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workman and the workman shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him. having regard to the genuineness and adequacy of the reasons stated by the employer.Lock Out Lockout means temporary closing of the place of employment or suspension of work or refusal by the employer to continue to employ any number of persons employed by him. Section 2(l) . give an opportunity to the retrenched workmen who are citizens of India to offer themselves for re-employment. to a Tribunal for adjudication :Provided that where a reference has been made to a Tribunal under this sub-section. it shall pass an award within a period of thirty days from the date of such reference. 4. by order and for reasons to be recorded in writing. either on its own motion or on the application made by the employer or any workman.Antithesis of strike. Where permission for retrenchment has been granted under sub-section (3) or where permission for retrenchment is deemed to be granted under sub-section (4). after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer. Where an application for permission has been made under sub-section (1) and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made. 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. 9. cause it to be referred. intentional . direct that the provisions of sub-section (1) shall not apply in relation to such establishment for such period as may be specified in the order. may. and such retrenched workmen who offer themselves for re-employment shall have preference over other persons. grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen. The appropriate Government or the specified authority may. by order. review its order granting or refusing to grant permission under subsection (3) or refer the matter or. it is necessary so to do. or where the permission for any retrenchment has been refused. the interests of the workmen and all other relevant factors. the appropriate Government may. An order of the appropriate Government or the specified authority granting or refusing to grant permission shall. RE-EMPLOYMENT OF RETRENCHED WORKMEN Where any workmen are retrenched. Section 25H. due to a trade dispute. 8. Where an application for permission under sub-section (1) has been made. Used as a measure of coercion . subject to the provisions of sub-section (6). 7. every workman who is employed in that establishment immediately before the date of application for permission under this section shall be entitled to receive. at the time of retrenchment. 5. as the case may be. Notwithstanding anything contained in the foregoing provisions of this section. and the employer proposes to take into his employment any persons. An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner. the appropriate Government or the specified authority. 6. in such manner as may be prescribed. Where no application for permission under sub-section (1) is made. he shall. be final and binding on all the parties concerned and shall remain in force for one year from the date of such order. the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days. the workmen concerned and the persons interested in such retrenchment. if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like.2.

Hunger. during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings. Section 22. or a refusal under a common understanding. vs Certain Workers . or 3. within six weeks before locking-out. 2. Workmen of Itakhoolie Tea Estate vs Management 1952 . or 2.4 ingradients of Lockout 1. or 2.In lock out workmen are asked by the employer to keep away from work and thus they are not under any obligation to present themselves for work. PROHIBITION OF STRIKES AND LOCK-OUTS 1. or 4. or a concerted refusal. motivate by coercion 3. as hereinafter provided. Temporary closure of a place of employment by employer or suspension or work by the employer. before the expiry of the date of strike specified in any such notice as aforesaid. No person employed in a public utility service shall go on strike in breach of contract 1. Ram Sarup vs Rex .Strike Strike means a cessation of work by a body of persons employed in any industry acting in combination. . Sympathetic. 2.Mere absence from work is not enough but there should be a concerted refusal to accept employment to call it a strike. or 3. Indian Iron and Steel Co vs Its Workmen . Work to Rule. Go Slow. within fourteen days of giving such notice. No employer carrying on on any public utility service shall lock-out any of his workmen 1.Cessation of work for even half an hour can be a strike. Patiala Cement Co. or refusal to employ any number of persons by the employer.General. without giving them notice of lock-out as hereinafter provided. or 4. before the expiry of the date of lock-out specified in any such notice as aforesaid. Section 2(q) . during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings. Types of Strike . due to a dispute in such industry. of any number of persons who are or have been so employed to continue to work or to accept employment. without giving to the employer notice of strike. within fourteen days of giving such notice. within six weeks before striking.Held that mere cessation of work is not strike unless it is shown that it is due to an industrial demand. in an industry 4. Tools down/Stay In.

as the case may be. shall be punishable with imprisonment for a term which may extend to one month. manufature. Systematic Activity 2. Section 2(j) .3.Practially reiterated the principles in Bombay Hospital Mazdoor Sabha case. or with fine which may extend to one thousand rupees. 5. or avocation or workers. employment. or otherwise acts in furtherance of a lock-out which is illegal under this Act. Does not include spiritual or religious services e. or with both. making. Triple Test - 1. shall be punishable with imprisonment for a term which may extend to one month. handicraft. continues or otherwise acts in furtherance of. The notice of lock-out referred to in sub-section (2) shall be given in such manner as may be prescribed. State of Bombay vs Bombay Hospital Mazdoor Sabha . If on any day an employer receives from any person employed by him any such notices as are referred to in sub-section (1) or gives to any person employed by him any such notices as are referred to in sub-section (2). a strike which is illegal under this Act. Section 26. (2) Any employer who commences. lock-out in the public utility service.Any activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material service to the community at large or a part of such community with the help of employees is an industry. business. PROHIBITION OF FINANCIAL AID TO ILLEGAL STRIKES AND LOCK-OUTS No person shall knowingly expend or apply any money in direct furtherance or support of any illegal strike or lockout. 4. The following points were also observed - 1. It only includes material services and things. PENALTY FOR ILLEGAL STRIKES AND LOCK-OUTS (1) Any workman who commences. undertaking. industrial occupation. for the production and or distribution of goods or services calculated to satisfy human wants and wishes. but the employer shall send intimation of such lock-out or strike on the day on which it is declared. prasad. the number of such notices received or given on that day. on a large scale. or with fine which may extend to fifty rupees. The notice of strike referred to in sub-section (1) shall be given by such number of persons to such person or persons and in such manner as may be prescribed. service.Industry Industry means any trade. . The notice of lock-out or strike under this section shall not be necessary where there is already in existence a strike or. Bangalore Water Suppy vs A Rajappa . he shall within five days thereof report to the appropriate Government or to such authority as that Government may prescribe. Section 25.g. 6. continues. or calling of service of employers and includes any calling. organized by a cooperation of employer and employees 3. to such authority as may be specified by the appropriate Government either generally or for a particular area or for a particular class of public utility services. or with both.

Brahmo Samaj Education Society vs WB College Employees Associaltion . private.Whether a University or Educational institution is an industry or not depends on the evidence in each case. Exceptions . Dominant Nature Test . If an organization is a trade or business. . DN Banerjee vs PN Mukherjee . The true focus is on the function and the decisive test is the nature of the activity with special emphasis on employee-employer relationship. In general Universities are industry even though its workers may not be Workers as per the the act. or clubs operating on a small scale are not industry. Bombay Hospital Mazdoor Sabha case was rehabilitated and Hospital is considered an industry. 4. Indian Standards Institute are all Industry. If the evidence points that there is no much importance of individual teachers and the focus is mainly profit. the predominate nature of the business and the integration of the departments is the true test. it does not cease to be an industry merely because philanthropy is animating the undertaking. it is an industry. Lawyers Office. or research labs.Certain gurukuls. or joint. Clubs such as Cricket Club of India.Municipal Corporation is an industry. 3.2.If an undertaking includes several activities some of which are industry and some not. In the Bangalore Water Suppy case. Absence of profit motive or gainful objective is irrelevant be the venture public.