Compensation offered to the employees on layoffs, downsizing or termination?

In Layoffs, downsizing or termination scenarios, as per rules what is the minimum and maximum compensation that must be offered to the employees?


Hi @Chitra

There are lot of reasons why a company would down size or lay off etc.,

But one thing remains common is how FnF done. FnF should be done in accordance with the central and state rules.

Example: Basic is a salary that needs to be paid at any cost and 30 days notice or 1 month payment need to be made by the employer - PF closure and Remittance of TDS

are somethings in common.

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Hi Chitra,

Layoff, retrenchment and closure provisions are laid down under the Industrial Disputes Act, 1947 in which sections 25C to 25E will apply to the industrial establishments in which less than fifty workmen on an average per working day have been employed in the preceding calendar month; or to industrial establishments which are of a seasonal character or in which work is performed
only intermittently.

Chapter V-B of the ID Act will apply to the other industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than one hundred workmen were employed on an average per working day for the preceding twelve months.

If a question arises whether an industrial establishment is of a seasonal character or whether work is performed therein only intermittently, the decision of the appropriate Government thereon shall be final.

Based on the above the employer’s obligation relating to lay-off, retrenchment, and closure arises under the respective Chapters A & B.

With regard to lay-off the establishment has to look into the ‘continuous service’, ‘compensation rights of the workmen laid-off’, ‘who are not entitled for compensation’ etc., to compute the compensation.

There are a few state amendments relating to these provisions as well.

Bhuvana Anand

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