Applicability of chapter va of i.d.act

jagadish paranjape (Querist) 07 March 2023 This query is : Resolved
One pethological lab. employing 5 employees wishes to close down.It is governed by Shops and Establishment Act in Madhya Pradesh.Will employer be required to pay closure compensation.

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A pathological lab with 5 employees in Madhya Pradesh, governed by the State's Shops and Establishment Act, is considering closure. The Act mandates specific employee compensation upon closure, including one month's notice pay, retrenchment compensation, and earned leave encashment. While gratuity and bonus may not apply due to the small number of employees, adherence to the state act's provisions is crucial for a lawful shutdown.

kavksatyanarayana (Expert) 07 March 2023
No compensation will be given.

Dr J C Vashista (Expert) 09 March 2023
Shops & Establishment Act is a State subject.
It is better to consult and engage a local prudent lawyer for proper analyses of facts / documents, professional advise and necessary proceeding.

T. Kalaiselvan, Advocate (Expert) 10 March 2023
You have to serve one month notice or one month's pay in lieu of notice, retrenchment compensation @ 15 days average wages for every completed year of service, gratuity if eligible and cash equivalent to the no of days of E.L at credit.
The Act is enacted for the purpose of protecting the rights of employees.
As the company has been registered under the MP state Shops and establishment act, you are required to comply or adhere to the rules set therein with regard to paying compensation to the employees on the roll of your company at the time of closing the company.

jagadish paranjape (Querist) 10 March 2023
This appears to be the right answer. Since there are only 5 employees,question of gratuity,bonus etc. does not arise .

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