Temporary Closure

This query is : Resolved 

18 December 2008

A company wants to keep its factory closed due to scarcity of work. An agreement has been entered with the union for 50% wages.

Does this amount to lay off ?
Whether permision of labour inspector will be required (inspite of an agreement) ?

Kindly advise.

18 December 2008

eventhough the company has indicated about the lay off clause, the company has to get permission from the labour commissioner to declare layoff and should pay 50% of wage to it's permanent employees alone
91 98942 99192

Jaydeep Kurup (Querist)
19 December 2008

Thankyou Mr. Bharathy for the reply.

H. S. ThukralOnline (Expert)
20 December 2008

I dissent from the opinion of my Ld. friend Mr. Kamaraj.

We have to differentiate between a layoff effected without the consent of employees/workmen and reduction of wages after a settlement has been reached with the workmen.

Section 9A of the ID Act lays down procedure for change of conditions described in the schedule to the Act. Wages being one of the item in the schedule and hence to reduce the wages procedure under section 9A of the Act has to be followed. But a proviso says that where a change is in consequent to a settlement or award, it shall not be necessary to follow the said procedure.
therefore in the given circumstances it shall not be necessary to seek permission from the labour authorities.

Jaydeep Kurup (Querist)
22 December 2008

Thanks for your opinion Mr. Thakral.

You gave a good insight into the matter. However, the fourth schedule which you mentioned does not have any clause for temporary closure of undertaking. So whether in this situation can we treat such closure and deduction of wages as change in condition of service. Other provisions aptly canbe applied to our situation.

13 March 2009

I agree with Mr. Thukral.

Hiralal Das (Expert)
08 April 2009

Thanks all of you the ld. members and the author.
I think your valuable opinions will assist everybody to solve their problem/matter in question properly.

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