What factors decide decision to lay-off employees?


“What is lay-off? Is it different from suspension?”


Answer- Layoff means termination of employment (with or without notice) by the employer or management. Layoffs are not caused by any fault of the employees but by reasons such as lack of work, cash, or material. Permanent layoff is called retrenchment.

But in view of the Industrial disputes act, 1947 (India), layoff means temporary removal of employees because of deficit and shortage of inputs which are related to productivity, breakdown of machinery or effect of natural calamity.

Layoff of employees does not mean that they are terminated from the job, such employees could be reinstated if the situations improve. Lay off applies to workmen and suspension applies to all other employees of the company, including managerial employees

In case of questions, please ask in the comments below.


The literal meaning of the term " lay-off" as it is mostly used in the western countries and the U.S.A is different from its legal meaning as it is defined u/s 2(kkk) of the Industrial Disputes Act,1947 in India.
“Lay off” as a phrasal verb has got four usages viz., (1) To stop employing some one due to no work (2) To stop using or doing something (3) To stop annoying or hurting somebody and (4) To pass something to another.
"Lay off " as a noun refers to the act of the employer ending the worker’s employment temporarily for some time for want of sufficient work.
The IDA,1947 defines lay off as the failure or refusal or inability of the employer to provide employment to a workman on the roll of his industrial establishment on account of (1) shortage of coal,power or raw materials or (2) the accumulation of stocks or (3) the break down of machinery or (4) natural calamity or (5) any other connected reason.
It is different from suspension in that suspension is a disciplinary power vested in the employer to be exercised in disciplinary case against an employee.
The similarity between lay off and suspension is that the contract of employment remains in tact.


Thanks, @Umakanthan Sir, for participating in the discussion and enlighting us with additional information, with your expertise over and above 30+ years in this field.

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