If a company is going to sack emlpoyees due to closure of process. Is anything mentioned in law to give compensation to the employess?

If the management is not willing to give compensation, then what steps do they need to take.




The Industrial Disputes Act 1947 defines what is meant by the term "lay-off". It also lays down the procedure to be followed when workmen to whom Chapter V A and Chapter V B of the Industrial Disputes Act are applicable.

Chapter V-A is applicable in the case of factories, mines and plantations in which 50 or more workmen but less than 100 workmen are employed.

Chapter V-B of the Industrial Disputes Act is applicable to factories, mines and establishments in which 100 or more workmen are employed. I presume that the industry referred to by you is a factory employing 30 workmen. Therefore neither Chapter V-A or Chapter V-B of the Industrial Disputes Act are applicable. As on date the Government of Tamilnadu had not amended the Industrial Disputes Act so as to make the provision of Chapter V-A or Chapter V-B applicable to factories employing less than 50 workmen. You would notice that the Industrial Disputes Act in Chapter V-A and Chapter V-B has only laid down the procedure for laying off and had not conferred on the power of the employer to lay off his workmen. The power of the employer to lay off his workmen, whether he employs less than fifty or more than fifty but less than one hundred or more than one hundred workmen has to be found in the certified standing orders applicable to the factory/industrial establishment. If the standing orders are silent,or if there are no standing orders, then the power of the employer to lay off the workmen has to be found in the appointment order issued to the workmen. If the appointment order is silent about the power of the employer to lay off his workmen then the worker cannot be laid off. If the employer lays off his workmen without a power to lay them off, then the workmen are entitled to full wages for the period for which they are so laid off.
The employee has to be paid 50% of his last drawn salary at the time of lay off




Mr. Mahesh has provided the write up to help you.

You may go thru the last para carefully.

The notice pay as stated in the appointment letter is the minimum employer shall have to disburse.

You may approach the local o/o Labor Commissioner and check if the company has filed for closure.


RULES, 1972

3. Notice of opening, change or closure of the establishment:

(3) Where an employer intends to close down the business he shall submit a notice in Form C to the controlling authority of the area at least sixty days before the intended closure.


They will check if the company is closing, lay off or retrenching or circumventing the process, procedure, law……………….. to avoid due pay outs etc……….

The employers do attempt to avoid payment of benefits.


The employees should not shy to approach the authority, lawyer, trade unions………….


In case of lay off the relationship between employer and employee may continue to exist………..

'Redundancy' can be described as the situation where an employer no longer requires employees to carry out work of a particular kind or to carry out work of a particular kind at the same location. Redundancy refers to a job becoming redundant and not an employee becoming redundant.

An employee's position is usually considered to be redundant if:

·                                 an employer has made a definite decision that the employer no longer wishes the job the employee has done to be done by anyone

·                                 that decision is not due to the ordinary and customary turnover of labour

·                                 that decision led to the employee's termination of employment, and

·                                 that termination is not on account of any personal act or default of the employee.

In redundancy situations, the emphasis is upon a 'job' becoming redundant rather than a worker becoming redundant. The words 'when a position becomes redundant' should be given a broad reading and not one that is strictly literal, confining the word 'position' to a 'position with the employer'.


Unfair Labour Practices – Section 25T prohibits unfair labour practices by employer……


Employers resorting to any of the said forms of creating job losses is acting illegally and workers are entitled to receive wages for the period of illegality.

Dy Director

right hit by Mr K Mahesh


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This query is related to MNC, it's a big organization, which has more than 1000 employees and has many sub-processes, it's going to closedown the sub-process which has around 100 employees are said to leave the organization without paying compensation and are given 60 days notice period.
Dy Director

repeated at




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