Labor and Industrial Law

“Analysis of Lay-off, Retrenchment and Closure”

TUTORIAL 3

Final Submission

SUBMITTED BY:

DYLAN SHARMA (16010324224)

Symbiosis Law School, Hyderabad.

Symbiosis International (Deemed) University, PUNE.

In

September, 2020

Under the guidance of

Professor Dr. Anuradha Binnuri

Symbiosis Law School, Hyderabad

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 CERTIFICATE

The project titled “Analysis of Lay-Off, Retrenchment and Closure” submitted to Symbiosis
Law School, Hyderabad for Labour and Industrial Law as a part of the internal assessment is
based on my original work carried out under the guidance of Professor Dr. Anuradha Binnuri
in September, 2020.

The research work has not been submitted elsewhere for award of any degree. The material
borrowed from other sources and incorporated in the thesis has been duly acknowledged.

I understand that I myself could be held responsible and accountable for plagiarism, if any,
detected later on.

Signature of the Candidate

Date: 28/9/2020

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 ACKNOWLEDGEMENT

In the accomplishment of this project successfully, many people have bestowed upon me
their blessings and heart pledged support, this time, I am utilizing to thank all the people who
have been concerned with this project.

I would like to thank my professor, Dr. Anuradha Binnuri, who gave us such a wonderful
topic to write on. I thank my professor, whose valuable guidance and support has been the
one that helped me make this project and make it a full proof success, her suggestions and
instructions has served as the major contributor towards the completion of the project.

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 INDEX

S. No Title Pg. No.

1 Introduction 5

2 Research Questions 10

3 Literature Review 12

4 A Detailed Analysis of the Provisions Dealing with these Concepts 15

5 Conclusion and Recommendations 28

6 Bibliography and References 31

4
1. Introduction:

1.1. What are Chapters V-A and V-B and why are they Necessary?

The basic pre-requisite of a civilized community is to guarantee social welfare for all classes
of citizens and an essential part of this is to protect the rights of laborers and to provide for
labour welfare1. It becomes a primary duty of the State to ensure a safe work environment
with appropriate standards of respect and dignity for the entire workforce. This means that
workmen have to be protected against exploitation by the employer, especially in terms of the
wages they are paid and the job security they are guaranteed. In India, to guarantee this, the
Industrial Disputes Act, 19472 was introduced with specific provisions including the principle
of collective bargaining3.
This Act of 1947 was termed as “welfare legislation” 4 as it dealt with the essential subject of
labour welfare given in the Concurrent List of the Indian Constitution. However, while the
law had several provisions for employment security, it was not until a 1953 Amendment 5 and
a 1976 Amendment under Article 32 of the Indian Constitution added the provisions dealing
with lay-off, retrenchment and closure under Chapter V-A and provided for more strict norms
governing these under Chapter V-B of the Act. The introduction of Chapter V-A was done to
effectively define and regulate the way industries discharged employees by lay-off,
retrenchment, and closure. Further, chapter V-B focused on the fallacies of the previous
chapter to provide stricter standards and rules for these.
These concepts are related with the determination of removal from service in a manner which
is compliant with Labour and Employment Laws and relevant regulations, while also
protecting the principle objectives of a company or organization. This was deemed necessary
since the management of companies and industries had to take critical decisions in terms of
the legalities of terminating employees. General company policies may provide general
guidelines and directions which deal with workforce matters, but more specific and detailed
laws were required to be added to existing labour laws in order to ensure that every level and
kind of employee would receive protection and security from ambiguous terminations of
service, irrespective of the pay scale, the nature of employment contract or the kind of work
performed6. By adding detailed provisions under this Chapter, the law is able to guarantee
1
Prof DS Chopra, “Are Workmen Overprotected in Industry?”, Bharati Law Review, Oct-Dec Edn, 2015, p 48
2
ACT NO. 14 OF 1947
3
Section 18 of the Act of 1947
4
Prof K.M. Pillai, “Labour and Industrial Laws”, 11th Edn, 2007
5
Industrial Disputes (Amendment) Act, 1953
6
Dr Avtar Singh, “Introduction to Labour and Industrial laws”, 2nd Edition 2008

5
such uniform safety to all labor force, not dependent on the rules and policies that may
already govern that specific category of employees7.
Furthermore, prior to the amendment, the law of contracts were primarily governed by the
principle of laissez faire8 principle. This meant that employers had complete freedom in
drafting and enforcing employment contracts, following which, certain industries practiced
discharging the labour force on grounds of spoilage of equipment and machinery and other
reasons that would not be within the control of the business. But, this meant that laborers
could be forced into involuntary removal from their job and left an arbitrary and absolute
power with the employers. Moreover, the workforce would not be compensated adequately in
such circumstances and the lack of these norms led to a degradation of the economic
wellbeing of workers in industries. However, there was legislative stress on the need for
rights of the workforce in such cases of unemployment 9 due to the call for better social
welfare, and the government decided to intervene more in employer-employee relations. Due
to this, employers no longer had the absolute power to terminate contracts of employment on
such grounds, and with the introduction of chapters V-A and V-B, could now only
temporarily remove laborers from service.

This objective was also reiterated in Workmen of Dimakuchi Tea Estate v. Management of
Dimakuchi Tea Estate10, where the Hon’ble Supreme Court stated that such provisions were
necessary to

 Promote steps to build better relations between employers and employees,

 Prevent unlawful strikes by the workforce,
 Guarantee relief to employees when they are laid-off, retrenched or unemployed due to
closure, and
 To assist in any pending enquiries or for the settlement of any complaint and disputes
between the worker and management, or any such representatives of the workforce.

The need for specific provisions of lay-off, retrenchment and closure under the Act were also
recognized in Banaras Ice Factory Ltd. v Its Workmen11 to ensure that all workmen under the
Act would receive fair compensation and their rights would not be adversely affected.

7
P. L. Malik, “Industrial Law”, 22nd Edition
8
“Businesses are given the freedom to function and develop without any rules or control by the State”-
Definition of laissez-faire, Cambridge Business English Dictionary, Cambridge University Press
9
Article 25, Universal Declaration of Human Rights, 1948
10
AIR 1958 SC 353
11
AIR 1957 SC 168

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1.2. How Chapters V-A and V-B are applied

Under Chapter V-A12, it is stated that the provisions under it, namely Sections 25 C to E will
only apply to industries that have at least 50 laborers employed on average on each working
day of the preceding month or where the nature of work done is continuous and not seasonal.
Further, an industry or industrial establishment13 under the scope of this chapter also refers to
a factory as given under the 1948 Factories Act or a mine as given under the 1952 Mines Act,
or a plantation as given under the 1951 Plantation Labour Act 14. Applying Section 2 (ka), the
chapters apply to any undertaking which conducts trade, production or business.

While Chapter V-B has provisions that better dealt with these needs, it also determines how
the provisions are to be applied 15. It states that all industrial establishments which perform
work of continuous nature, and not seasonal, and where a minimum of 100 workers 16 are
employed on average for each working day for the preceding year must follow these
provisions. Thus, industries working intermittently cannot fall under the scope of this
Chapter, and when any issue with determining the nature of work arises, the appropriate
authority must decide and this decision will be final in establishing whether the workers of
the industry in question can claim benefits of compensation under this chapter 17. This was
given a positive application to ensure that the objective of social welfare is guaranteed.

Both chapters mention that the industry must not be of a “seasonal nature” and the work done
must not be “intermittent”. The case of Kohinoor Saw Mills Co v Industrial Tribunal 18 better
explained the term “intermittent” to mean an industry that has a temporary existence and has
no continuity in the work done. Thus, the work is only performed for a brief period until the
existence of a contract, project or service to be rendered. Also, “seasonal nature” implies that
the industry only works for short specific durations and its functioning is not regular but with
breaks. This usually refers to work that is done dependent on the time of the year or on the
season. When such industries exist, they don’t fall under the scope of these chapters.

12
Section 25 A
13
As defined in Section 2(ka)
14
K.N. Joglekar v Barsi Light Railway, (1955) I LLJ 371 (Bom)
15
Section 25K
16
Substituted by Section 12, Act 46 of 1982, for “three hundred”
17
Andhra Pradesh Federation of ILTD Workers vs Government of Andhra Pradesh, 1983 Lab I C (NOC) 91 AP
18
(1974) II LLJ 210 (Mad)

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Section 25A, clause 2 of Chapter V-A provides the power of a governmental authority to
determine the seasonal or intermittent nature of an establishment, if such question arises. In
such cases, this decision is final. Thus, under these chapters, the authority has complete and
exclusive jurisdiction, and until this determination is made, all other disputes and proceedings
with relation to the applicability of these chapters will be suspended.

This was better dealt with under Tata Oil Mills Co. v The Workmen of the Kanitta
Establishment19. In this case, workers of a depot approached a tribunal claiming that they had
been unlawfully discharged at the time of seasonal closure. The question before the tribunal
was whether the industry could be considered to be of seasonal character and the tribunal
decided that it was not of seasonal character since the annual seasonal closures were
unnecessary and unreasonable, and would have to ensure continuity of employment to the
laborers. However, on appeal, this decision was struck down as the question of determining
seasonal character for the sake of these chapters could only be decided by a governmental
authority, and was not within the jurisdiction of the tribunal.

Also, the concept of lay-off under these chapters can only apply if an industrial dispute
occurs and the scope of “industrial dispute” is limited to the pre-requisites under Section 2(k).
Another issue that arises when the question of application is raised is whether the
establishment in question performs industrial or non-industrial work as limited to the
definition of Section 2(j). The case of Bangalore Water Supply v. A. Rajappa20 dealt with this
question and the Honorable Supreme Court stated that when an establishment performs a
series of complex functions, some of which are non-industrial in nature, and if such activities
are performed by employees who are not “workmen”, then the most dominant functions
carried out must be analyzed to determine if the establishment, as a whole, can be termed as
an “industry” even if those particular employees who are not workmen receive no benefits
from the provisions of chapters V-A and V-B.

1.3. The Meaning of Lay-off, Retrenchment and Closure

Under the Industrial Disputes Act, it is defined in Section 2 (kkk). Lay-off ordinarily means
that when the management of a company, usually referred to as the employer, decides that
19
1980 Lab IC 355 (Ker)
20
AIR 1978 SC 548

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they can longer keep a particular worker or class of workers in service or on the muster roll
when there is a shortage of financial resources, lack of power and required raw materials, or
the unavailability of functioning machinery, caused by factors not within the control of the
organization, thus rendering the particular workforce unsustainable. This provision applies
when the employee faces immediate termination of employment for reasons not related to
his/their own actions, but which render the employer incapable of keeping him in the
establishment. Lay-offs occur in continuing industrial work and workers must receive
compensation21. The reason is usually only temporary, and has no direct effect on the terms of
employment that the company usually adopts.
When dealing with “Retrenchment”, the definition under Section 2 (oo) is understood as the
termination of service of a “workman” by an employer for reasons other than those used as
disciplinary measures against the action of the worker, or reasons such as retirement
voluntarily claimed by him, retirement due to age of the worker eligible to receive company
pension where such a term of employment exists, termination due to continued health issues,
or termination due to the expiry of a contract of employment prior to its renewal. This would
mean that it is a decision only taken by an employer 22 for reasons other than given in the
Section.
However, an important condition to understand the scope of these provisions is that they can
only apply to workers in industries, as defined in the Act. This would mean that these rules
apply to such employees who are not specifically included below –
An employee who is part of the company management or administration, who works for the
company in a supervisory position with a salary of over ten thousand rupees per month, or
who carries out managerial functions in the company due to the authority vested in him or the
duties assigned to him23.
Finally, the Act also dealt with closure. During this Amendment, the Act made no reference
to “closure” but was introduced in the Supreme Court decision of Hariprasad Shiv Shankar
Shukla v. A.D. Diwelker24. Following this, the 1982 Amendment of the Act added the
definition under Section 2 (cc) as the permanent shutting down of an organization or
company. This is a provision that deals with the employers inability to continue business
leading to permanent closing of the entire company, and specifies the procedure to be

21
Kairbetta Estate v. Raja Manickam, (1960) II L.L.J. 275
22
Tea Districts Labour Association v. Ex-Employees of Tea District Labour Association (1960) 1 L.L.J. 802
(Supreme Court)
23
Section 2 (s) of the Industrial Disputes Act, 1947
24
AIR 1957 SC 121

9
followed when such a plan for shutting down arises. The Act also mentions that this only
applies to continuing businesses and not companies working on time-bound or one-time
projects such as the construction of roads, dams, buildings etc.

2. Research Questions:

 When analyzing the conditions precedent for lay-off and retrenchment, and the rightful
compensation, how have the Courts decided on the validity of employee claims in light of
principles of social justice and fairness towards workmen?
 Is the scope of the term “any reason for termination” under retrenchment indefinite when
an employee’s service is terminated? How have the Courts decided when a case falls
under retrenchment?
 Is the scope of conditions of termination such that employers can use these provisions as
part of a company’s downsizing policy?
 How have the Courts decided on the Constitutional validity of Special Provisions related
to lay-off, retrenchment and closure?
 What is the role of Trade Unions in solving disputes relating to lay-off compensation and
retrenchment at the root level?
 Do prevalent issues of illiteracy, ignorance, and discrimination along with insufficient
assistance by Trade Unions worsen cases of lay-off and retrenchment without legal
compliance? What are the solutions to be adopted by relevant authorities?

2.1. Objectives of the Study

 To provide a basic understanding of what lay-off, retrenchment and closure are, what
their essential ingredients are, how they differ from regular terminations and lockouts,
and the scope of applicability of the provisions dealing with these.

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 To analyze the decisions given by Courts to enforce the conditions under each provision,
to guarantee that the rights of the employee are secured while guaranteeing that the
objectives and policies of the company are also respected, with focus on the matter
dealing with lack of transparent, non-discriminatory reasons given.
 To determine whether the provisions of lay-off and retrenchment create a clear distinction
between the terms of ordinary termination and compensation, and the conditions specially
provided in the mentioned sections with an effective objective of the Industrial Disputes
Act in mind.
 To analyze the persisting challenges and hurdles that arises in the implementation of these
provisions when the question of scope, applicability and constitutional validity are raised.
 To conclude on whether the existing rules for legal compliance and enforcement meet
desired standards of decision-making and security in employer-employee relations, and to
understand why most grass root workers are not yet fully protected from unjustified and
indiscriminate termination.
 To determine the existing loopholes in the literal interpretation of these Sections by the
Courts adopted in most cases, and provide recommendations on how practices by
management, Labour Unions and government authorities can better deal with issues of
exploitation, lack of transparency, discrimination, and on poor dispute resolution
guidelines.

2.2. Sources of Data:

The author recognizes two sources, primary and secondary. This research paper focusses on
the analysis, primarily of secondary data, with certain portions of research based on primary
sources such as the bare reading of the Industrial Disputes Act, 1947 and the relevant
amendments to the concerned Chapter. The major secondary sources include research work
of several renowned experts, articles of national and international journals and other texts
online.

2.3. Research Methodology:

This paper applies the methods of a doctrinal by a systematic review to examine the
conditions and special provisions laid down under the aforementioned Sections in relation
with both employee rights and employer policies. All of the information obtained and stated
is from secondary sources of information.

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The author has researched on and collected case files, articles and research papers on the
relevant case laws. The paper does not emphasize on a specific case but deals with the
concept while considering cases of Indian and foreign jurisdiction.

The author has used the method of identifying relevant cases and studies, and then providing
descriptive information of the topic based on the judgements given and research articles
published. The case laws used to examine different aspects of the employee rights and the
conflicts that arise was selected on the basis of their relevance.

3. Literature Review

The research article by Swati Shalini titled “Industrial Disputes Act (1947): Lay-off,
Retrenchment and Closure”, 2019 was important since the author describes the importance of
the Act in the context of labour welfare, and explains the basic objectives and ideas with
which the Act was enforced in 1947, focusing on its provisions of employment relations,
better standards of work and better dispute resolution. By introducing the principles behind
chapters V-A and V-B, the author has also explained why it is welfare legislation and how
the concepts of layoff, retrenchment and closure were enacted to prevent unjust victimization
by employers under the old norm of contractual freedom, and how the provisions of this
chapter were directed towards social equity for employers and laborers. Thus, the paper has
successfully concluded that the chapters focus on the preamble of the act by fulfilling a
unique importance of cordial working conditions and appropriate compensation when issues
arise out of the control of an employer, also briefly stating the provisions that regulate layoff
and retrenchment.

The research article by Harishchandra Ram titled “Jurisprudence of Penalty for Lay-Off,
Retrenchment and Closure”, 2019 helped provide a clear and detailed understanding of the
provisions under chapter V-A, and in-depth focus on the special provisions governing these
concepts in specific industries under chapter V-B. The paper explains how these concepts are
different from ordinary termination of employment contracts since they were enacted to deal
with temporary discharge of workers. The author has explained the provisions of Section 25k
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to 25R, also dealing with how the chapters carry out the objective of preventing arbitrary
termination by employers in industries in light of the prohibitions under Section 25M, the
essential pre-requisites for retrenchment under Section 25N and the specific process for
lawful closure under Section 25O. The article is especially important because of the
conclusion he draws in stating that the penalties under the Act for default by the employer are
unjust towards the employer mainly because they are based on the deterrent form of justice
which goes against the idea of social equity.

The research article by Kruppa Gajjar titled “Lay-off, Retrenchment and Closure under
Industrial Disputes Act”, 2017 helped serve as the basis for research since the author
specifically focuses on the provisions of Chapter V-B dealing with regulation of these
concepts, including explanations for Sections 25K to 25S. The article was especially useful
since it gives us a clear definition of each of these as under the Act of 1947, and provides for
the reasonable restrictions given under Section 25M, thus explaining how it is
constitutionally valid. Further, the article also explains the pre-requisites of Section 25N and
explains how this is constitutionally valid with the help of several relevant case laws. The
author has also created a distinction between Section 25O as under the 1947 Act and the
amended Section 25O under the 1982 Amendment with the help of Supreme Court decisions.

The research paper by Sarita Rodrigues titled “Lay-Off”, 2018 gives us a clear understanding
of the concept of layoff since it provides a brief description of the need for this concept and
the historical evolution of the laws governing layoff. The paper helps create a distinction
between the prior practices of lay off before it was formally introduced in the 1947 Act and
the concept of layoff as defined in the Act, thus explaining why the Act of 1947 was so
important for social welfare in India. The author has also briefly mentioned some of the
important features of the 1947 Act which dealt with the scope, practices of layoff and
compensation, and distinguished between layoff, lockouts and retrenchment to provide
clarity. The paper is especially important since it describes what special rights laborers have
for compensation when laid off, explains the right of “continuous service”, talks about the
rights and liabilities of employers and provides essential case laws to further discuss the
Court’s opinions.

The research paper by Sarala Antao titled “Retrenchment”, 2019 helps provide a detailed
understanding of the provisions of retrenchment by defining the concept, explaining the
grounds for retrenchment and providing relevant cases which better explain these grounds

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and the exemptions under the Act. The paper also provides certain essential ingredients and
explains how retrenchment can only occur in “live establishments”, and mentions the
important procedures to be followed for lawful retrenchment including the need for
mandatory notice and compensation. The paper was especially useful since it explained the
changes in provisions by the Amendments of 1976 and 1984 dealing with the remedy against
violation, talked about the rule of “last come first go” and how the Courts applied this,
explained the conditions for valid re-employment of laborers who had been retrenched, and
how closure is different from retrenchment. The author has drawn a unique conclusion by
explaining that Section 25FFF is constitutionally invalid since it violates Articles 14 and
19(1) (g).

The research paper by Advocate Dev Chopra titled “Are Workmen Overprotected in
Industry?”, 2015 is essential since the paper focusses on the need for these concepts in light
of social and economic welfare for laborers as an important role of society and that it is the
duty of every State to enact laws and rules which guarantee job security and a safe standard
of work in terms of wages and compensation, and continuity of service. However, the paper
goes on to scrutinize the provisions that deal with employment security and suggests changes
in light of the principles of labour welfare as under the Concurrent List, explaining that the
existing provisions aren’t necessarily geared towards employer benefits since it provides too
much labour equity which fails to encourage new industries from being established under
such circumstances. This is a unique conclusion since the paper has a more critical approach
and recognizes the need for change keeping in mind the recommendations of the 1969
National Labor Commission.

The research paper by Dhruv Suri titled “Termination of Service, Layoffs and
Retrenchments”, 2020 was essential since the paper provides a discussion of the overall
legalities and procedural aspects of lawfully discharging workforce from service under these
concepts with the use of several important case laws. The paper focuses on these from the
perspective of employers since it discusses the need to also allow the top-level management
in industries to formulate policies in accordance with these concepts while keeping in mind
business goals without ignoring the objects of this Act. The author has boldly criticized most

14
labour laws including the industrial disputes act for being too complex and thus recommends
the need for a uniform code on labor laws so that the principles governing these concepts can
be contained in a single legislation regulating employment relations.

4. A Detailed Analysis of the Provisions Dealing with these Concepts:

4.1. Layoff:

The concept of layoff deals with the temporary discharge of laborers who are listed on the
muster rolls of an “industrial establishment”, on specific grounds that are not within the
control of the employer and which lead to an inability to provide employment 25. This concept
majorly deals with reasons that force the employer to refuse employment, and is a restriction
on his ability which temporarily affects business or production. It is clear that this can only
apply to industries that are not intermittent or seasonal.

A direct interpretation of this definition makes it clear that layoff can only exist if:

 There is an inability or failure to provide employment by the employer,

 This arises due to the shortage of raw materials and resources like coal and electricity,
spoilage of equipment and machinery or a natural disaster, or other “unconnected
grounds”,
 The laborers so laid-off must have had their names on the muster rolls,
 And these laborers should not have been retrenched.

This would mean that any layoff on the grounds of employee strikes or irregular attendance
by the workforce within the establishment would not fall under the scope of this definition 26.
Further, since the definition uses the term for “other unconnected reasons”, this cannot be
interpreted vaguely to mean “absolutely any reason” but have to include all those grounds
that are comparable and similar to the specific grounds given. The reason this term was used
was to ensure that the list of grounds was not exclusive but could be interpreted ejusdem

25
Section 2 (kkk)
26
Central India Spinning Weaving and Mfg Co v Industrial Court (1959) I LLJ 468 (Bom)

15
generis27 with the grounds mentioned. This implies that grounds related to financial hardships
cannot fall under the scope of this definition, but must be similar in nature to the grounds that
hamper production itself28. In order to protect the rights of the workforce, this section was
made so to prevent any such circumstances where the employer could maliciously or
intentionally interrupted working within the establishment so as to layoff the particular class
of laborers29. However, there are certain rules governing a lawful layoff given under Section
25M. These include:
 No employer can layoff any worker who has his name on the muster rolls unless the
permission of an appropriate government authority is obtained in the prescribed
procedure. This application from the authority has to be provided to the concerned
worker.
 In the case where a laborer working in an industry such as a mine is laid off due to
disasters like floods or a fire and the worker is not a “badli workmen” 30, the employer
must file an application with the appropriate government authority seeking permission to
carry out the layoff within 30 days from the date when the layoff began.
 This application will be scrutinized and the authority will give the employer and
concerned employee a chance to present their arguments for the layoff to consider the
genuineness behind the reason for layoff, the possible interests and welfare of the laborer,
following which the permission may or may not be given and a copy of this decision will
be sent to the employer and concerned employee which will remain binding on both
parties for a year from when it is passed. However, if there is no decision given within 60
days from when the application was filed, it is presumed that the permission was given.
 If the employer or employee wants to challenge the decision of the government, or if the
specific authority suo moto decides to review its own decision, the same may be done
before a tribunal and the tribunal must pass an award within 30 days from the date when
the matter was brought before it.

If the layoff is lawful, the provisions give the concerned workman the right to claim
appropriate compensation as was explained by the honorable Supreme Court in the case of

27
“These are general terms which are written after more definite terms within laws so as to allow for
interpretation of the general terms in such a way that their object would be of the same nature as the definite
terms preceding them” - Circuit City Stores Inc., v. Adams, 532 U.S. 105 (2001)
28
Tatanagar Foundry v Workmen (1962) ILLJ 382 (SC)
29
ibid
30
The term is defined in Section 25C as a substituted laborer who is working instead of another laborer who was
listed on the muster roll.

16
Kairbetta Estate v Rajamanickam31. But, in order to claim this right, the laborer had to be in
continuous service32 which means that the worker has to complete at least one year of
uninterrupted work within a single establishment, and based on the decision of the Supreme
Court in Sur Enamel & Stamping Works Ltd v. Their Workmen33 the worker must have been
employed for at least one year during which he should have worked for a minimum of 240
days and the burden of proof in proving this fact lies with the concerned worker 34. The
service will remain uninterrupted even if the worker had to be absent for reasons of an
accident or illness, authorized absence, legal laborers strike, or lockout.

If the condition is met, he has the right to claim up to 50% of the total wages and dearness
allowance to be paid to him from the date of layoff. But, the compensation cannot be claimed
if the employer offered an alternative job and the same was refused by the concerned worker,
or if fails to be present at work on the specified time at least once every day, or if he took part
in illegal strikes35. But, this exception would only apply if the worker participated in illegal
strikes and that was the reason for the layoff 36. However, for this section to apply, the
employer has burden of proof in establishing that the employee falls under these exceptions
and as held in RS Rekchand Mohota Spg and Wvg Mills Pvt Ltd v. Labour Court 37, if he can
prove that the worker lost his right to compensation for any of these reasons, he can avoid
any liability to pay compensation. Also, when this layoff continues for over 45 days, the
employer has the option to pay the entitled compensation or to retrench the particular
workforce38.

Finally, the Act also prescribes a stringent penalty where the layoff happened without
following lawful procedure39. It states that when the conditions given in Section 25 M are not
followed, the employer may be imprisoned for up to one month, or may have to pay a fine of
up to Rs. 1000, or both. Thus, as held under Manju Saxena vs Union of India40, the condition
of seeking prior permission for layoff becomes mandatory when read with the penalty under
Section 25Q.

31
(1960) II LLJ 275(SC)
32
Section 25B
33
(1963) 2 LLJ 367
34
R.M.Yellatti v A.E. Engineer, AIR 2006 SC 355
35
Section 25E
36
Jairam Sonu Shogala v New India Rayons Mills, I LLJ 20 (Bom)
37
1968 Lab IC 480
38
Zandu Pharmaceutical Works Ltd v. RN Kulkarni & Co, (1966) 1 LLJ 560 (Bom)
39
Section 25Q
40
(2019) 2 SCC 628

17
4.1.1. Whether the Conditions under Section 25 M are Constitutionally Valid?
The purpose of placing such conditions under Section 25M is to act as a reasonable
restriction on the right of an employer to lay off workers. Since the objective is to avoid
exploitation and arbitrary discharge from service, and since the provisions were enacted to
ensure effective work conditions and output from the workforce, this section specifically
mentions when and how a worker must be laid off lawfully.
Thus, when the constitutional validity of these restrictions was challenged in the case of
Papnasam Labour Union V. Madura Coats Ltd 41, the issue raised was that the section
unreasonably restricts the freedom of the employee to conduct his business as he chooses 42
since he needs to obtain permission from the government authority for a layoff.

The Honorable Supreme Court stated that the very objective of this Section was to prevent
any possible circumstances where an employer could exercise arbitrary and unchecked
freedom to discharge workers, and to reduce the extent of hardships that the workforce would
face when laid off. Thus, it was aimed at strengthening employee-worker relations for the
benefit of the industry as well. Since the objective kept in mind the welfare of the employee
and the employer, it was not unreasonable. Further, the Section specifically states that this
“prior permission” would not be needed if the layoff happened on grounds of disasters or
natural calamities which are seen as sudden and severe reasons that affect production and
business. With such explicit provisions mentioned in the Section, the restrictions are
necessary in light of public interest and social welfare, and thus, the Section was held as
constitutionally valid.

4.2. Retrenchment

Retrenchment is also a form of discharge from service, but is permanent in nature and usually
occurring when the nature of work in an establishment changes and there is a need to reduce
the number of employed workers43. Unlike layoff which only acts as a temporary break in
employer-employee relations; this severs all contractual relations permanently. But, since this
forced workers into unemployment, the need to legally protect the workforce from the
41
AIR 1995 SC 2200
42
Article 19 (1)(g)
43
Delhi Cloth & General Mills v Sambu Nath, AIR 1978 SC 8

18
hardships caused was recognized in the 1953 and 1976 Amendments to the Act. The purpose
behind this was explained in Indian Hume Pipe Co v Workmen44 where the Court stated that it
was enacted to provide appropriate compensation to any worker who was discharged
involuntarily and is still to find an alternate job.

The Act45 specifies that retrenchment can occur for “any reason whatsoever” except for the
circumstances explicitly given in Section 2 (oo). The use of this term “any reasons
whatsoever” cannot be broadly interpreted but is based on previous precedents laid. In the
case of State Bank of India v Sundarmany46, it was stated that when an employee is
temporarily employed in a bank to substitute a permanent employee for a short time, and if
the temporary employee is then discharged when this term ends, the definition of
retrenchment must be applied broadly to understand “any reason” as any reason that leads to
termination of services. Also, in the case of Hindustan Steel Ltd vs The Presiding Officer,
Labour Court, Orissa47, when a class of workers had been employed for a fixed term which
was subject to extension by the employer based on the policies of the establishment, if the
employer decides to not renew this employment contract, the resulting termination would
also fall under the scope of “any reason”.

Under Section 2 (oo), there are certain explicit grounds that cannot fall under the scope of
retrenchment which are:

 If the employee personally choses to leave the job voluntarily by resigning,

 If the employee was discharged due to continuous illness. But this illness must be
physical in nature and could be a disability that prevents his from carrying out his work48.
 If the employee is discharged at the age of superannuation, provided this benefit is
specified in the employment contract49.

44
AIR 1960 SC 251
45
Section 2 (oo)
46
AIR 1976 SC III
47
AIR 1977 SC 31
48
Anand Bihari v Rajasthan St Rd Corpn, 1991 Lab IC 494 (SC)
49
J.K.Cotton Spinning Mills & Co v State of UP, AIR 1990 SC 1808

19
But, while the definition provides exceptions, there are certain conditions that have to be
fulfilled before a case can be considered as lawful retrenchment50. When the worker has been
performing uninterrupted work for at least one year at an establishment, retrenchment can
only be valid if:

 The worker was given a prior written notice of one month specifying grounds for
retrenchment,
 The worker was paid a compensation amount equal to the average pay he would have
received for 15 days per year of uninterrupted service, or any part thereof which is more
than 6 months of service,
 A notice of this retrenchment must be provided to the specific government authority in a
procedure recognized and necessary, communicated by notification in the Official
Gazette, seeking prior permission for retrenchment51.

Further, under Section 25N, once the notice is submitted, an inquiry is held and the employer
and retrenched employee are given a chance to present their arguments explaining the reason
for retrenchment, the genuineness behind it and the procedures followed. Following this, the
authority will provide a written response, and if this is not received within 60 days from the
date when the notice is submitted, permission is presumed to have been given. If a decision is
given by the authority, an application can be made before a tribunal by either the employer or
employee to challenge the decision, or can be reviewed by the authority itself suo-moto. If
these procedures are not complied with, the penalty as prescribed under Section 25Q will be
enforced.

This was further explained in the case of Santosh Gupta v State Bank of India52, where a bank
employee was discharged after one year of service since she failed a test necessary to
continue her term. The respondent argued that this was not retrenchment under Section 2(oo)
and Section 25F since she was not discharged for reasons of termination of surplus
workforce. The Honorable Supreme Court decided that this would also be a case of
retrenchment since the definition under this Section is so wide that it also includes these
grounds of termination since the conditions under Section 25F were satisfied.

50
Section 25F
51
Bombay Union of Journalists v State of Bombay, 1964 I LLJ 351 (SC)
52
1980 Lab IC 87 (SC)

20
But, the 1984 Amendment to the Act added Section 2 (oo) (bb) which stated that when an
employee is working only for a temporary stipulated period, the termination of employment
by non-renewal of the employment contract at the end of this period would no longer fall
under the scope of retrenchment53. Thus, if a casual laborer employed only on a particular
service is discharged once that work is complete, it cannot amount to retrenchment under this
amended section. The same would apply even to a case where a casual laborer is employed at
multiple occasions for that particular work which would amount to prolonged periods of
service54.

For a valid retrenchment, another important condition is that the employee must be working
for a continuous establishment. The industry cannot be one that is closed or seasonal and if
the industry no longer exists due to a strike or lockout, retrenchment cannot exist 55. Further, if
the employment was terminated simply as a means of penalizing a defaulting worker, it
cannot be retrenchment56.

If the retrenchment is valid, the laborer is entitled to compensation under Section 25F (b) and
this is mandatory. The purpose of this was explained in the case of Pramod Jha v. Bihar57
where the Honorable Supreme Court stated that Section 25F has two objectives:

 The concerned employee must be given a notice so that he can look for another job, and
 The worker is paid an appropriate compensation to ensure his involuntary discharge
doesn’t result in extreme financial hardships.

4.2.1. Whether Section 25N is Constitutionally Valid?

As was raised in the case of Section 25M, the pre-requisites necessary for a valid
retrenchment were claimed to be unreasonable restrictions on the freedom of profession
under Article 19 (1) (g) and were challenged as being constitutionally invalid. The case of
Workmen of Meenakshi Mills Ltd., etc v Meenakshi Mills Ltd 58 dealt with this where the
Supreme Court stated that this Section is constitutionally valid since the restrictions created

53
Karnataka S.R.T Corpn. V. Sheikh Abdul Khaddar, AIR 1983 SC 1320
54
Marinda Cooperative Sugar Mills v Ramkishen, AIR 1996 SC 332
55
Union of India v Pitu Kishu, (1977) I Lab IC 1236 (Cal)
56
Imperial Tobacco Co. v Ethiraj, (1954) II LLJ 637 (Lat)
57
(2003) 3 ACE 167
58
AIR 1994 SC 2696

21
by the necessary conditions are done in general public welfare. The condition to obtain prior
permission and to give both employer and employee the chance to explain the retrenchment is
done to protect the social equity of employees and the business interests of employers.

The same question was also raised in Uttaranchal Forest Development Corporation and
Another v. Jabar Singh and Others 59, where the issue raised was whether the petitioner
organization could be considered as an industry and whether the conditions under Section
25N were reasonable and necessary to comply with. The Honorable Supreme Court stated
that the establishment was involved in a manufacturing service which means that it would be
an industry under the Factories Act, 194860. Reiterating the reasoning given in the Meenakshi
Mills case, the Court held Section 25N to be reasonable and a necessary procedure to comply
with for a lawful retrenchment since the workers were entitled to social welfare and job
security, and would be entitled to full reinstatement.

4.2.2. The Rule of Last Come First Go under Retrenchment

Section 25G of the Act states that when any worker of a specific category of workforce, who
is an Indian citizen and working in an industrial establishment has to be retrenched, the
employer may retrench the last worker employed in that particular category, unless for any
specific reasons given by the employer. This statutory provision led to the principle of “Last
Come, First Go”. While the employer ordinarily has the freedom to decide which worker
must be retrenched, provided all the rules are complied with and proper reasons are recorded,
this rule was implemented to prevent any unreasonable discrimination of workers during
retrenchment. When an employer decides to retrench a worker who is not the last employed,
and fails to provide sufficient reasons, issues of possible ulterior motives can arise and could
be against labour welfare. To avoid this, the rule must be complied with under Section 25G.
But, this is not a rigid practice since there are circumstances where the employer may depart
from the rule if he can justify the grounds. This is usually done when the worker possesses
some specific qualifications that the employer needs.

Also, the retrenchment usually happens category-wise and in the case of Workmen of Sudder
Workshop of Jorehaut Tea Co. Ltd. v Its Management 61, a group of laborers were retrenched
59
Civil Appeal No. 5728-5729 of 2006
60
Section 2K
61
AIR 1980 SC 1454

22
in a manner departing from the rule under Section 25G. The Honorable Supreme Court stated
that where the employers provided sufficient justification for this and showed that the
circumstances necessitated such deviation, including the efficiency or unreliability of these
retrenched workers, the retrenchment will be valid. In the absence of such a “speaking order”
from the employer, the matter will be considered to be malicious and an attempt to victimize
the group of workers.

But, an important decision to note was in the case of Om Oil & Oil Seeds Exchange Ltd v
Workmen62 where the Court held that while retrenchment under Section 25G must happen
category-wise, reasons of categorization for pay scales and such grouping cannot be
considered as new categories for the purpose of this Section.

4.2.3. Other Provisions of Retrenchment

Section 25H enables the employer to re-employ a worker previously retrenched. For this,

 The employer must provide the opportunity of re-employment,

 The worker must be willing to consider this opportunity, and
 The worker must be re-employed ahead of any fresh applicants.

But this right can only be available if:

 The worker had been retrenched previously,

 The worker has to be an Indian citizen,
 The worker himself has to offer himself for re-employment once the notice for re-
employment is given by the employer, and
 The worker had to have been previously retrenched from the same nature of work as he is
seeking re-employment in.

Thus, if the worker was discharged from service for any reason not falling under
retrenchment, this right will not be available. Also, a worker previously working as a clerk
cannot seek re-employment in a manufacturing job within the same establishment under this
Section.

Apart from the grounds and conditions of retrenchment already discussed, retrenchment may
also occur in special circumstances where the ownership of an establishment is transferred to
62
(1966) I LLJ 324 SC

23
another, under an agreement or by law. This is dealt with under Section 25FF and the
workforce under the previous management must be given sufficient notice and compensation,
similar to the rules given in Section 25F. This can only apply if:

 The workers are being discharged due to the transfer, or

 The terms of the employment contract with the new owners are less favorable than
before.

This Section was added by the amendment of 1956. Prior to this, under Section 25F, workers
were not entitled to compensation if discharge from service happened due to a genuine
transfer from one owner to another63. But, the case of Hari Prasad Shivashankar Shukla v.
A.P. Divelkar64 was important since the Honorable Supreme Court recommended an
amendment to the Section due to the hardships caused in such circumstances. This led to the
amendment.

Thus, workers who had been working for at least one year uninterrupted before such transfer
are entitled to compensation as if they have been retrenched, provided that there was an
actual transfer of ownership and it wasn’t a benami transaction, and the transfer involved the
entire establishment and not just a part. Based on this, in the case of R.S Madho Ram & Sons
Agencies v. Workmen65 it was found that when an establishment transferred only one of its
undertakings to another company, such transfer could not fall under the scope of Section
25FF.

4.3. Closure

In the 1947 Act, there were no provisions that dealt with the rights and liabilities arising out
of the closure of an establishment. This was only introduced by a 1957 Amendment, in light
of the recommendations given in the case of Hari Prasad Shivashankar Shukla v. A.P.
Divelkar66. Later, in the 1982 Amendment67, the present form of “closure” under the Act was
adopted. This concept deals with the permanent shutting down of an industrial establishment

63
Barsi Light Railway Co.Ltd. v. K.N. Jogalkar, (1957) I LLJ 243 (SC)
64
AIR 1957 SC 121
65
(1964) I LLJ 366 (SC)
66
ibid
67
Industrial Disputes (Amendment) Act of 1982, (w.e.f. 21-8-1984)

24
or any part of it. The Act defines “Closure” as the permanent closing down of a place of
employment or part thereof68 and is not voluntary.

Prior to this 1982 Amendment, Section 25O was already in force but was struck down as
being unconstitutional in the case of Excel Wear v. Union of India69 on the grounds that it was
an unreasonable and arbitrary restriction on the freedom to conduct business under Article 19
(1) (g). Thus, to fall within the scope of Article 19 (6), Section 25O was re-amended to
provide more reasonable but mandatory procedures for closure which must be complied with,
provided the establishment isn’t performing intermittent work such as road, dam, building or
other such constructions. These pre-requisites are:

 The employer must seek prior permission of the appropriate government authority, a
minimum of 90 days before closure, providing all the grounds for closure. A copy of this
must also be given to the workers through an appointed representative.
 The authority shall then hold an inquiry and give opportunity to the employer and
workers in stating the reasons, the genuineness and the steps taken in the interest of
labour welfare and keeping in mind business policies. After this, a written decision shall
be provided to grant permission or to not permit closure of grounds of non-compliance or
inadequacy of reason, and this shall be final and binding, and be enforced for a year.
 If this decision is not given within 60 days from the date of filing such application, the
permission is presumed to have been given.
 If the employer or employee wants to challenge this decision or if the authority decides to
suo-moto review its own order, the matter can be referred to a Tribunal and the award
shall be passed within 30 days from such time.

If these conditions are met with, the closure is deemed to be lawful and the workers are
entitled to compensation equal to the average pay of 15 days of work for every year of
uninterrupted service or any part more than six months70.

Once this amended section was enforced, the issue of constitutional validity was solved.
Where the issues in the Excel Wear case 71 were with the unreasonable curb on freedom to

68
Section 2(cc)
69
AIR 1979 SC 25
70
Section 25O (8)
71
ibid

25
carry out business as one chooses, the new 1982 Amendment changed its objectives in the
following ways72:

 While an employer has the freedom to choose when to shut down his business, this
freedom is not absolute. If the State decides to regulate the exercise of such freedom in
the interest of public good, laws for this can be enforced.
 While labour welfare and social justice are necessary, it would not be reasonable to
guarantee these in all circumstances of unemployment, as this would ignore the hardships
of employers when reasons are not within their control, not considering the financial
reasons for such closure which may render it impossible to continue business. To combat
this, Section 25O (2) was introduced which requires sufficient reason to be provided by
the employer and gives both employer and employee the chance to argue on the basis of
the closure. The inquiry by the authority will determine whether the reasons are
reasonable or malafide and whimsical73.
 Also, an issue raised was that the authority might decide to refuse permission without
understanding the financial risks for an employer and this would force the employer into
economic ruin74. But, the opportunity to refer a decision for review before a Tribunal
under the newly amended section solves this issue.
 The purpose of this is to ensure that while a certain level of freedom remains, the
employer doesn’t attempt to continue business when he is unable to pay minimum wages
to his workers.

But, for this Section to apply, an important condition is that the worker should have been
working for an uninterrupted period of one year.

If the pre-requisites for a lawful closure are not met or the due procedure is not complied
with, a penalty under Section 25R has been provided. In such a case, the employer may be
imprisoned for up to one year, or will have to pay a fine of up to Rs. 5000, or both. Further, if
the government authority refused permission for closure under Section 25O, and the
employer ignores this order, he can be imprisoned for up to one year, or will have to pay a

72
Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd
73
C.R. Garu & Others v. State of Maharastra and Others, 1997 II LL.J 1072
74
Maharastra General Kamagar Union v. Vazir Glass Works Ltd., & Others, 1998 LL.J (Supp) III 231 (Bom)

26
fine of up to Rs. 5000, or both, and if this default continues, the fine may be extended to Rs.
2000 per day that the default continues.

4.4. International Practices of Lay off and Retrenchment

While the laws on lay off and retrenchment have undergone multiple amendments to provide
in-depth protection of labour welfare while keeping in mind the business interests of
employers, other nations also have policies and rules that govern such concepts, although
very different from Indian legislations. Under English law and in America, these concepts are
referred to as “redundancy” which is defined as the discharge of a worker or a group of
workers, either temporarily or permanently from service primarily due to economic
constraints of the business. It is usually applied when a job or service has become redundant
within the establishment, or if the effectiveness of that group reduces within the business
model75.

In USA, layoff is used to define a permanent termination from employment, and the law
specifies that if the circumstances involve only temporary discharge, the same has to be
explicitly written in the order. Several other countries 76 also refer to these as “downsizing”
which implies that they are processes aimed at reducing surplus workforce when the business
doesn’t need it. Under such laws, the objective is geared more towards capitalism than social
welfare as the provisions create rights to intentionally remove excess workers from an
establishment if that is necessary to increase the overall efficiency of its functioning 77.
Another major reason seen as lawful ground for layoff and retrenchment is cost cutting.

5. Conclusion and Recommendations:

While detailed and socialistic industrial laws emerged in 1947 in the form of the Industrial
Disputes Act, it is evident that the 1982 amendment to the Act was the most important step
that looked to strengthen the core purpose of these laws in the evolving economic policies of

75
R.S. Desai, “Industrial Law on Layoff, Retrenchment and Closures, The Law and Practice", 2006,
Manibenkara Institute, p 69
76
In countries such as Japan and UK
77
ibid

27
India. When the government saw privatization and globalization as the key solution to
economic growth, policies geared towards foreign investments and international trade were
encouraged. But, with an increase in privatization of industries, the need for better laws to
protect the labor class working in these sectors was recognized. A national commission 78 was
established to recommend better practices, mainly focused on improving the laws of
retrenchment and closure which were already well detailed within the 1947 Act.
Furthermore, when the objectives of Chapters V-A and V-B were made evident, the need for
these recommendations was timely to prevent economic miseries on the labor class. These
laws serve a major function which is to govern the contractual relation between employers
and employees. There may be circumstances where the employer is forced to discharge an
employee and the Act has effectively provided for steps that dictate ways in which this can be
done with respect and value for the rights of the worker as well.

It is also clear that industries have policies which bind workers under contracts of
employment to ensure that all the business policies of an establishment are complied with,
especially dealing with the policies on leaves, wages etc. But, the provisions under these
chapters ensure that such contracts are drafted in a manner that complies with the law. Thus,
the laws become necessary to assist the employer in making business decisions along the
lines of legal compliance. But, there have been issues raised as to whether these laws act as
reasonable restrictions on the freedom of employers to carry out business as they deem fit
while keeping in mind public interest. The Meenakshi Mills case79 and case of Papnasam
Labour Union V. Madhura Coats Ltd80 were important judgements to discuss the
constitutional validity of Section 25M and 25N and the decisions must be appreciated since it
was held that these sections are under the ambit of “reasonable restrictions” and the Court put
interest of the rights of workmen and the public at large ahead of absolute freedom, thus
preserving the purpose of these chapters.

Also, judgements such as in the case of Byram Pestonji Gariwala v. Union Bank of India and
Others81 are appreciated since the sections dealing with retrenchment are perceived as having
a wide scope and the interpretation of the Court on this is essential in understanding the
question of applicability. State Bank of India v. N. Sundara Money82 and Punjab Land

78
Second National Commission on Labour, 2002
79
Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd
80
AIR 1995 SC 2200
81
AIR 1991 SC 2234
82
AIR 1976 SC 1111

28
Development and Reclamation Corporation Ltd., Chandigarh v Presiding Officer, Labour
Court, Chandigarh83 are other such cases where the previous narrow definition given was
overturned and the Courts instead agreed that the definition under this Section must include
termination of service for any reason except those expressly excluded. This indicates that the
Courts have focused on a literal interpretation of the definition of these concepts to apply
them.

But, there are also certain issues with these laws. There are multiple other labour laws which
attempt to serve the same purpose including the Industrial Disputes Act, 1947, the Shops and
Establishment Act, 1988, apart from the fact that individual company policies themselves
have procedures for layoff, retrenchment and closure in accordance with their respective
business objectives. When a laborer or his representative has to complain against a matter of
injustice by the employer, the lack of legal education and the cumbersome number of laws
makes it difficult to take appropriate legal action unless proper legal help is sought. The paper
agrees with the recommendation that there is a need for a uniform labour law 84 which will
compress the common provisions of multiple different Central and State legislations and
ensure that the procedures of compliance and labour welfare protection are simplified.

Also, the penalties prescribed under sections 25Q and 25R are in the nature of being
deterrents. But, considering that these apply when the employer fails to follow legal
procedure and necessary conditions, there may be circumstances where the employer has
defaulted unintentionally but is simply acting in the interest of business policies. While the
amount of fine and imprisonment are not necessarily perceived as being very serious, but the
resulting consequences can have permanent damage on the reputation of the establishment.
Also, if the layoff happens without lawful compliance, distressed employees and their
representatives may choose to carry out strikes or lockouts and this will lead to business loss.
While this can be seen as effective deterrents to ensure that employers follow the law in this
respect, the provisions should also allow for a warning or notice of non-compliance issued to
the employer before the penalty for default is enforced.

Certain other suggestions include:

83
1990 SCR (3) 111
84
OP Malhotra, “The Law of Industrial Disputes”, vol 2, p 1740

29
 There is a need to educate the labor class and create awareness about the laws that give
rights and protect their economic conditions in certain circumstances. They must be
informed about their right to claim compensation, the procedure and amount available.
 While every establishment will have its own HR Department and legal team that deals
with the rules of compliance and conditions for lawful layoff, retrenchment and closure.
But, these departments must also assign separate committees or teams to address issues
and grievances that workers face in terms of their compensation.
 In several cases of layoff or retrenchment, when the procedures are not complied with or
the compensation specified to be paid is not followed, the worker usually feels victimized
and has to face extreme financial hardships. But, since most of these workers are lower
class and poor, apprehension develops in their minds to communicate these issues against
top level management. Thus, while creating awareness, the workers must also be
encouraged and informed about the procedures of approaching relevant authorities to file
a complaint seeking relief that is guaranteed under law.
 The importance of labour unions must be emphasized on in such matters. Since they are
empowered to address grievances and act as middlemen at the grass root level, there must
be more involvement in looking for solutions that are in the interest of employers and
workers.
 Apart from monetary compensation, other schemes must be implemented in the law to
focus on benefits beyond financial support when there is an involuntary loss of source of
income for the worker and his family. This could be in the form of concessions in
education fees, taxes etc.
 In the interest of employers, an issue that arises when discharging of surplus workforce
was that the lesser number of employees sometimes put more stress on the remaining
workers to maintain the level of output as before. To prevent this, if the management
decides to deviate from “last come, first go”, they must maintain an organized roster of
workers and their qualifications and responsibilities managed by the HR Department so
that the choice of who to retrench can be made only when a certain service is less
necessary or redundant, and not only on the basis of qualifications or regularity.

Bibliography and References:

 Dhruv Suri, “Lay-off Under the Industrial Dispute Act, 1947”, 2008, PSA Publications,
Issue 3

30
 Sarita Rodrigues, “Lay-Off- The Changing Scenario in Labour Legislations”, 2018, G.R.
Kare Law Library, Edition 1
 OP Malhotra, “The Law of Industrial Disputes”, 1998, Universal Law Publishing, Vol. 2
 Harishchandra Ram, “Jurisprudence of Penalty for Lay-Off, Retrenchment and Closure”,
2019, Journal of Advances and Scholarly Researches in Allied Education, Vol.16
 Prof K.M. Pillai, “Labour and Industrial Laws”, 2007, 11th Edn
 Dr Avtar Singh, “Introduction to Labour and Industrial laws”, 2008, 2nd Edn.
 R.S. Desai, “Industrial Closures, The Law and Practice", 2006, Manibenkara Institute,
Mumbai
 “Termination of Service, Layoffs and Retrenchments”, ProLegal Law Chambers, 2020,
www.lexology.com
 Nitya Bansal, “Lay-off, Retrenchment and Closure – An Overview”, 2020,
www.legalbites.in
 Swati Shalini, “Industrial Disputes Act (1947): Lay-off, Retrenchment, and Closure”,
2019, Seminar on Labour Law – I
 S.N. Mishra- “Labour and Industrial Laws”, Central Law Publication, 24th Edn
 Sarala Antao, “Retrenchment under Labour Law”, 2005, Seminar on Labour Law, :
https://www.researchgate.net/publication/335060965
 Advocate DS Chopra, “Are Workmen Overprotected in Industry?” 2015, Bharati Law
Review, Oct-December Edn
 “The Law Relating to Closure – The Changing Perception”, Chapter 8,
https://shodhganga.inflibnet.ac.in/bitstream/10603/96381/13/13_chapter%208.pdf
 SM Chaturvedi, “Labour and Industrial laws”, Central Law Agency, 13th Edn
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Industrial-Disputes-Act.html

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