Job Losses Regulation - Chapter VA and VB of the I.D.

Act, 1947

The original I.D. Act did not think of disputes likely arise out of
situations like lay-off, retrenchment, closure and transfer of industrial
establishments. There were number of dispute relating to these areas,
especially lay-off and retrenchment. As a result, the I.D. Act was amended
in 1953 and Chapter V-A was introduced to regulate lay-off and
Retrenchment. Subsequently the law makers found that there were
disputes relating to closure and transfer of Industrial establishments. In
1957 again the I.D. Act was amended and provisions relating to regulation of
closure and transfer of industrial establishments was added. In 1976,
another major amendment to I.D. Act was made by introducing Chapter V-B

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to the Act which regulated stringently Industrial establishments for lay-off,
retrenchment and closure, the Regulation required the prior permission of
the appropriate Government to lay-off, retrench and closure in case an
industrial establishment employing 300 or more workmen. The regulation
relating to closure contained in Section 25(o) was challenged in Excel Wear
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v. Union of India (1978)2 LLJ 527 SC, the Supreme Court struck down the
section as violative of Fundamental right to carry on trade or business.
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Subsequently, the Parliament has amended chapter VB of the I.D. Act based
on the observations made by the Supreme Court in Excel Wear case. The
amended Chapter VB of the I.D. Act with changes in lay-off (2m),
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Retrenchment (25)(n) and Closure 25(o) came into effect from 1984. This
was made applicable to industrial establishments employing 100 or more
than 100 workmen. The constitutionality of the amended 25(o) relating to
closure was upheld or held to be valid by a constitutional bench in Orissa
Textile and Steel Ltd., v. Orissa (2002)2 LLN 853 SC. The Supreme Court
upheld the constitutionality of Retrenchment in the unamended Section
25(n) in Workmen v. Meenakshi Mills Ltd. (1992)1 LLN 1055 SC. This is also
a constitutional bench decision. The constitutionality of regulations relating
to lay off in Chapter V-B contained in Section 25(m) was upheld in
Papanasam Labour Union v. Madura Coats Ltd., AIR 1995 SC 2200. In this
case, they followed the reasoning given in Meenakshi Mills case.

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 For the purpose of Chapter VB, an Industrial establishment has been
defined as – meaning a factory as defined in the Factories Act, 1948; a mine
as defined under the Mines Act, 1952; a Plantation as defined in the
Plantation Labour Act, 1951.

Definition of one-year continuous service

Only workmen who have put in a period of one year continuous

service are entitled to lay off compensation. One year continuous service
has been defined in Section 25-B. A workman shall be said to be in
continuous service for a period if he is for that period, in even interrupted
service, including service which may be interrupted on account of

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unauthorised leave or an accident or a strike which is not illegal or a lock
out which is not due to any fault on the part of the workman.

Simplifying the above, it is also said in the definition of continuous

service that, a workman shall be deemed to be in continuous for a period of
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one year, if the workman during a period of 12 calendar months preceding
the date with reference to which calculation is made has worked under the
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employer for not less than 190 days in the case of a workman employed
below ground and 240 days in other cases. This period of work will include,
the days on which the workman was laid off, has been on leave with full
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wages earned in the previous year; has been absent due to temporary
disablement caused by accident arising out of and in the course of
employment and in case of a female employee she has been on maternity
leave provided that the total period of such maternity leave does not exceed
12 weeks (here the amendment has been made after the amendment of the
Maternity Benefit Act where the period of Maternity leave has been increased
to 4 ½ months).

This explanation for calculating the period of continuous service for

one year is valid for compensation payable in case of retrenchment, closure
and transfer of industrial establishment.

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Lay-off concept and Regulations
Section 2(kkk) of the I.D. Act defines lay off. It means the failure,
refusal or inability of an employer on account of shortage of coal, power or
raw materials or the accumulation of stocks or breakdown of machinery or
natural calamity or for any other connected reason to give employment to a
workman whose name is same on the muster rolls of his industrial
establishment and who has not been retrenched.....

Section 25(c) of the I.D. Act in Chapter V-A of the I.D. Act provides for
compensation to workmen who has been laid off. In Chapter V-A, payment
of lay-off compensation is regulated with respect to workmen employed in

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industrial establishments. This chapter regulates lay off in industrial
establishments employing 50 or more workmen on an average per day. The
average is calculated based on the number of workmen employed in the
preceding calendar month. It does not regulate industrial establishments
which are seasonal character. For the purpose of this chapter, an industrial
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establishment has been defined. It means a factory as defined under the
Factories Act, a mine as defined under the Mines Act, a Plantation as
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defined under the Plantation Labour Act. This regulation of lay-off is not
applicable to industries which are not industrial establishments as defined
above - that is a Factory, a mine and a plantation.
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A workman has put in one year continuous service as defined in

Section 25B will have to be paid compensation which shall be equal to 50%
of the total of the basic wages and dearness allowance, that would have
been payable to him had he not been so laid off.

In a period of 12 months, if a workman is laid off for more than 45

days, he will not be entitled to lay off compensation beyond 45 days. There
has to be an agreement to this effect. The employer will have the right to
retrench the services of a workman if the layoff is more than 45 days in a
period of 12 months.

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 Here is a very interesting situation that, if there is an agreement
between the employer and workmen, the employer need not have to pay lay-
off compensation after the first 45 days. In the absence of an agreement,
the employer will have the right to retrench the workmen who were laid off
for 45 days or more. In case of such a retrenchment, the amount paid
towards lay off can be adjusted against the Retrenchment compensation
payable to the workman.

When workmen will not be entitled to lay off compensation

A laid off workman will not be eligible to get lay off compensation if,
1. He has not completed one year continuous service as has been
explained earlier under Section 25B

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2. If he refuses to accept alternative employment in the same
establishment from which he has been laid off or in any other
establishment belonging to the same employer situated in the same
village or town or situated within a radius of five miles from the
establishment from where he has been laid off. In the alternate
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establishment similar wages must be offered.
3. If the laid off workman does not present himself at the establishment
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at least once a day during the normal working hours

4. If such laying-off is due to strike a slow down production on the part
of the workmen in any other part of the establishment.
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What about industrial establishment employing less than 50 workmen

The I.D. Act does not regulate such situations. It can be regulated
through Certified Standing Orders or settlement between the workmen and
the employer. The employer has no inherent right to lay off. The employer
can lay off his workmen only as per law or settlement. In Workmen Firestone
Rubber Co. Ltd. v. Management (1976)1 LLJ 493 SC, the establishment was
employing 37 workmen. If laid off 17 workmen because of non-availability
of stocks. There was nothing in the Standing orders or there was no
agreement between the parties providing for such situations. Hence, the
Supreme Court ordered payment of full wages to the laid-off workmen.

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What about industries which are not industrial establishments as
defined in the I.D. Act

There is no case law to address this situation. One way of looking at

the situation could be when the I.D. Act is silent then the employer is not
liable to pay any lay off compensation. The other way we can view the
situation is in the light of the Supreme Court decision in Workmen Fire
Stone Rubber Co. Ltd. v. Management, that in the absence of statutory law
regulating the situation, it will have to be regulated by the certified Standing
orders or settlement between the parties.

Lay-off in case of industrial establishments employing 100 or more

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workmen - VB of the I.D. Act.

The term Industrial establishment has the same meaning here also
like it has been defined for lay off under Chapter VA of the I.D. Act. A
factory as defined under the Factories Act; a Mine as defined under the
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Mines Act or a Plantation as defined under the Plantation Labour Act.

Section 25(n) of the I.D. Act regulates lay-off in case of industrial

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establishments employing 100 or more workmen:

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No workmen other than Badli workman or a casual workman shall be

laid off without the prior permission of the appropriate Government, notified
the official Gazette. Provided in case of shortage of power or natural
calamity, there can be lay off without prior permission. In case of a mine,
lay off without permission can be for reasons like fire, flood, excess
inflammable gas or explosion.

In other circumstances, there can be lay off only with the prior
permission of the appropriate Government. To obtain prior permission, the
application shall be made by the employer in the prescribed manner stating
clearly the reasons for the intended lay off and a copy of such application
shall also be served simultaneously on the workmen.

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 Where the lay-off has been affected because of the circumstances
mentioned earlier, the employer shall make an application to continue the
lay off if necessary. Such application has to be made within a period of 30
days of laying off.

In both the circumstances, when application is made seeking

permission or seeking permission to continue the lay-off, the appropriate
Government will have to decide on the application within a period of 60
days. If such decision is not made within a period of 60 days and
communicated to the employee, then the permission is deemed to have been
granted. The permission or the deemed permission of the Government will
be final and binding on the parties concerned for a period of one from the

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date of such order.

The appropriate Government or the authority specified may either on

its own motion or an application made by the employer or any workmen
review its order granting or refusing to grant permission or refer the matter
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to the Industrial Tribunal for adjudication. When a reference has been
made to the Industrial Tribunal it shall pass an award within a period of 30
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days from the date of such reference.

Where no application for permission is made or where after making

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the application permission has been refused, such lay off shall be deemed to
be illegal from the date on which the workman had been laid off and the
workman shall be entitled to all the benefits as per the law.

The appropriate Government if satisfied that owing to such

exceptional circumstances as accident in the establishment or death of the
employer or the like, if it is necessary the appropriate Government may
exempt the application of the requirement for taking permission for such
period as may be specified in the order.

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 If the workmen has been laid off for a period of 45 days or more, in a
period of 12 months, there is no need to pay lay-off compensation after 45
days of lay off if there is an agreement to that effect. The workman shall not
be deemed to be laid off by the employer if the employer offers alternative
employment in the same establishment or in any other establishment
belonging to the employer situated in the same town or village with in such
distance from the laid off establishment to the establishment where
alternate employment is offered will not involve undue hardship.

The constitutionality of Section 25(m) has been upheld by the

Supreme Court in Papanasam Labour Union v. Madura Coats Ltd., AIR 1995
SC 2200.

is defined
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Retrenchment - Concept and Regulations
Retrenchment in Section 2(oo) of the I.D.
`Retrenchment’ means the termination by the employer of the services of a
workman for any reason whatsoever, otherwise than as a punishment
Act.
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inflicted by way of disciplinary action, but does not include -
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a) voluntary retirement of the workmen ; or

b) retirement of the workman on reading the age of superannuation if
the contract of employment between the employer and the workman
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concerned contains a stipulation in that behalf ; or

c) termination of the service of the workman as a result of the non-
renewal of the contract of employment between the employer and the
workman concerned on its expiry of such contract being terminated
under a stipulation in that behalf contained therein.
d) Termination of the service of a workman on the ground of continued ill
health.

In the early phase of interpretation in the Constitutional Bench

decisions like Barsilight Railway Co. Ltd. v. K.N. Joglakar (1957) 1LLJ 243
SC; Anakappala Co-operative Agricultrue and Industrial Society v. Workmen

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(1962)3 LLJ 621 SC, the Supreme Court held that Retrenchment is
termination of surplus labour. On this interpretation the expression ‘for any
reason whatsoever’ must necessarily read in conjunction with reasons like
economy, rationalisation in industry, installation of new labour saving
machinery, etc. It is the conjunctions with such reasons that the words
`any reason whatsoever’ must be read and considered.

In subsequent cases of the Supreme Court like State Bank of India v.

N. Sundramoney (1976)1 LLJ 478 SC, Santosh Gupta v. State Bank of India
(1980)2 LLJ 72 SC; Karnataka Road Transport Corporation v. M. Boraiah
(1984)1 LLJ 110 SC. The division Benches of the Supreme Court held that

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retrenchment means termination of service of a workman for any reason
whatsoever otherwise than as a punishment or for other exceptions
mentioned in the definition. The surplus might have arisen for any reason
not necessarily confined to, modernisation, reorganisation or instalment of
labour intensive machinery, etc. The Division Bench decisions have been
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affirmed by a five judge bench in Punjab Land Development and Reclamation
Corporation Ltd., v. Presiding Officer (1990)2 LLJ 70 SC.
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Cases excluded from Retrenchment

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Punishment inflicted by way of disciplinary action - the definition of

retrenchment specifically excludes the termination of services as
punishment, inflicted by way of a disciplinary action from the ambit of
retrenchment. Whether a termination is punishment or retrenchment
depends on the facts and circumstances of each case. Before imposing an
order of dismissal or discharge, a departmental inquiry is conducted. There
are also instances where workmen are terminated for misconduct without
holding a domestic enquiry.

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Voluntary retirement

Termination is effected by the employer by putting end to the contract

of service. Voluntary retirement is affected by the workman by putting end
to the contract of service, by voluntarily resigning or abandoning his job. In
Bengal Nagpur Cotton Mills Ltd. v. J. Bastion (1960)1 LLJ 501 SC, a
workman offered to retire from service, provided he was granted certain
retirement benefits such as pension and gratuity. The employer was not
willing to grant pension. Consequently, the employee communicated his
willingness to continue in service. The employer subsequently informed the
workman, that in case he would cease to be in service from a particular
date, gratuity at a particular rate would be sanctioned to him. On that

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particular date, the concerned workman inspite of his protest was asked to
hand over the charge which he did in protest. In these circumstances, the
Supreme Court held that it was not a case of voluntary retirement, but it
was a clear case of termination of service by the employer.
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Superannuation
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Cases of superannuation too have been excluded from the definition of

retrenchment. For a case to come under this sub-clause, two things are
necessary:
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1. There must be a stipulation on the point of retirement in the contract;

2. The stipulation must be with regard to the age of superannuation.

In Bijoy Kumar Chatterjee v. Jugantan Ltd., (1983)2 LLJ 8 SC, in the

terms of the relevant standing orders, the working journalist retired from
service on attaining the superannuation age of 60 years and drew his
gratuity and provident fund dues in acceptance of his retirement with effect
from December 1976. Thereafter, he was re-employed for a period of 12
months only which expired on 1st December, 1977. The Supreme Court
disagreed with the contention of the journalist that his service for the

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further period of 12 months was a continuation of his previous employment
and the termination of his service was retrenchment.

Contractual termination 2(oo)(bb)

The clause has been inserted by way of Amendment in 1984. It

excludes the following from the ambit of the definition of retrenchment. (I)
the termination of the service of a workman as a result of the non-renewal of
the contract of employment between the employer and the workmen
concerned on its expiry ; (ii) the termination of the contract of employment
contained as a stipulation in the contract of employment.

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In Madhya Pradesh Bank Karmachari Sangh v. Syndicate Bank (1996)
Lab IC 1161 M.P.). On a review of the law as laid down by the Supreme
Court and various high courts, a single judge of the Madhya Pradesh High
court has stated the following principles of interpretation and application of
the Provisions of Clause 2(oo)(bb) :
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i) That the provision of Section 2(oo)(bb) are to be construed
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benevolently in favour of the workman;

ii) that if the workman is allowed to continue in service by making period
appointments from time to time then it can be said that the case
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would not fall under 2(oo)(bb) ;

iii) that the Provision of Section 2(oo)(bb) are not to be interpreted in a
manner which may stifle the main provision;
iv) that if the workman continues in service, the non-renewal of the
contract can be deemed as malafide and it may amount to be a fraud
on the statute;
v) that there would be a wrong presumption of non-applicability of
Section 2(oo)(bb) where the work is of continuous nature and there is
nothing on record to show that the work for which a workman had
been appointed has come to an end.

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Regulation of Retrenchment

Section 25F stipulates conditions precedent to Retrenchment, it states as

follows:
“No workman employed in any industry who has been in continuous service
for not less than one year under the employer shall be retrenched by that
employer until -

a) the workman has been given one months’ notice in writing indicating
the reasons for retrenchment and the period of notice has expired, or
the workman has been paid in lieu of such notice wages for the period
of notice;

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b) the workman has been paid, at the time of retrenchment
compensation which shall be equivalent to 15 days average pay for
every completed year of continuous service or any part thereof in
excess of six months; and
c) notice in the prescribed manner is served on the appropriate
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Government
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In these preconditions, conditions (a) and (b) should form part of some
transactions as that of Retrenchment otherwise such retrenchment will be
invalid. In Rajasthan Road Transport Corporation v. Industrial Tribunal,
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(1985 Lab. I.D. 480(Raj), the Corporation retrenched the concerned

workman on 1st June 1982 with immediate effect. At the time of
retrenchment, the Corporation did not pay or tender for payment to the
workmen the compensation due to them. On the same day, at about 6 P.M.
the Corporation started the process of remitting dues to the workmen by
mailing demand drafts for the requisite amount. However, on the reckoning
of the court, the amount could not have been received by the workmen till
3rd June, 1982. In the circumstances, the court held that it was impossible
to say that the employer Corporation had complied with the condition
precedent of payment of compensation. In Bombay Union of Journalists v.
State of Bombay (1964)1 LLJ 351 SC, the Supreme Court held that the

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compensation for retrenchment must be paid at the time of retrenchment.
It is implicit in the requirement to pay compensation at the time of
retrenchment that the law recognises and declares the right of the workmen
to compensation at the time of retrenchment.

In the Bombay Union of Journalists case, it was also held that the
requirement of notice under Section 25F is a condition subsequent, though
the Section says it is condition precedent. This is because the notice to the
appropriate Government is only as information and there is very little that
the Government can do. If the conditions precedent are not followed, then
the retrenchment is void ab initio.

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Section 25G prescribes the procedure for retrenchment. Where any
workman in an industrial establishment, who is a citizen of India, is to be
retrenched and he belongs to a particular category of workmen in that
establishment in the absence of any agreement, between the employer and
the workman in this behalf, the employer shall ordinarily retrench the
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workman who was the last person to be employed in that category, unless
for reasons to be recorded, the employer retrenches any other workman.
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This Section speaks about the rule `last come first go’. The employer
can deviate from this rule in three circumstances:
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1. When the retrenched employee is not a citizen of India;

2. When there is an agreement between the employer and the workman
to deviate from this;
3. By recording reasons as to why he is deviating from the rule.

In Workmen v. Jorhant Tea Co. Ltd. (1980)3 SCC 406, it was held that
the departure from the last come first go rule is permissible on valid and
justifiable grounds. Burden is on the Management to prove existence of
such grounds. In Swadesamitran Ltd. v. Workmen, AIR 1960 SC 762, the
Supreme Court held that the employer may take into account considerations

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of efficiency and trustworthy character of workmen and if he is satisfied that
a person with long service is inefficient, unreliable or habitually irregular in
the discharge of his duties, it would be open to the employer to retrench his
services. In Om Oil and Seeds Exchange Ltd. v. Workmen, AIR 1966 SC
1657, the Supreme Court held that where the management bonafide retains
staff possessing special aptitude in the interest of the business, it cannot be
assumed to have acted unfairly merely because the rule of last come fist go
is not observed.

Section 25-H. Re-employment of retrenched workmen

If the employer proposes to employ any persons, he shall give an

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opportunity to the retrenched workmen who are citizens of India to offer
themselves for re-employment. When they offer for re-employment they
shall have preference over others. The procedure for notifying the
retrenched workmen is contained in Rule 78 of the I.D. (Central) Rules,
According to this, at least ten days before the date on which vacancies are to
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be filled, the employer shall arrange for display on a notice board in a
conspicuous place in the premises of the industrial establishment details of
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those vacancies and shall also give intimation to those vacancies by

registered post to every one of all the retrenched workmen eligible to be
considered therefor, to the address given by him at the time of retrenchment
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or any time thereafter. The employer shall also inform the trade unions
connected with the industrial establishment of the number of vacancies to
be filled and names of the retrenched workmen to whom intimation has
been sent.

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Regulation of Retrenchment under Chapter V-B of the I.D. Act - 25(n)

Sec. 25(F) is applicable to all industries, whereas Section 25(n) is

applicable to Industrial establishments as defined in Section 25(l), that is a
factory, a mine or a plantation as defined in the respective acts. According
to Section 25(n), any workman who has put in one year continuous service
as explained in earlier pages, if he has to be trenched will have to be given
three months’ notice in writing indicating reasons or the workman has been
paid wages in lieu of notice and the prior permission of the appropriate
Government will have to be obtained. Both the conditions will have to be
followed. Otherwise the retrenchment will be illegal.

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For obtaining permission an application will have to be submitted to
the appropriate Government by the employer indicating the reasons for the
proposed retrenchment. A copy of such application shall also be served on
the workmen. The appropriate Government after giving reasonable
opportunity of hearing the employer and the workmen, having regard to the
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genuineness of the request and adequacy of reasons will decide to give
permission or not to give the person. The written decision will have to be
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communicated to the employer and workmen.

The appropriate government will have to decide to give the permission

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or otherwise within 60 days from the date of making the application. If a

decision is not made within 60 days then the permission is deemed to have
been given.

The order of giving permission or refusing to give permission will be

valid for a period of one year from the date of such order. Provided such
order may be reviewed by the appropriate Government on its own or on an
application made by the employer or workmen. The appropriate
Government may refer the issue for adjudication by the Industrial Tribunal,
if the issue is referred to the industrial tribunal it will have to give its
decision within a period of three months.

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 In Workmen of Meenakshi Mills v. Meenakshi Mills, AIR 1994 SC 2696,
a Constitutional bench of the Supreme Court has held that the Provisions
regulating retrenchment under chapter VB is constitutionally valid.

Closure – Concept and Regulations –

Section 2(cc) of the ID Act defines closure as the permanent closing

down of a place of employment or part thereof. In determining closure and
differentiating from lock-out the intention of the employer is very important.

There is no regulation of industries employing less than 50 workmen.

It is free exit. Industries employing between 50 and 99 workmen are

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regulated under Chapter VA. The closure regulation is not applicable to
undertakings set up for the construction of buildings bridges, roads, canals,
dams or other construction work if the work is completed within 2 years.
Even with respect to undertakings employing between 50 and 99 workmen
the appropriate government may exempt the application of regulations to
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close, if it is because of exceptional circumstances, as accident in the
undertaking or death of the employer or the like.
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In case an employer intends to close down an undertaking employing

between 50 to 99 workmen – he shall serve at least 60 days’ notice on the
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appropriate government, stating clearly the reasons for the intended closure
of the undertaking. In case of closure every workman who has put in 1 year
continuous service in that undertaking shall be entitled to notice and
compensation in accordance with section 25(F) as if it is deemed
retrenchment.

If the closure is on account of unavoidable circumstances – beyond

the control of the employer, compensation to be paid shall not exceed
workmen’s average pay for 3 months. An undertaking which is closed down,
by reason merely of:

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 I. Financial difficulties, including losses;
II. Accumulation of stocks;
III. Expiry of the period of lease, or license; or
IV. In case the undertaking is engaged in mining operations, exhaustion
of the mineral in the area, in which operations are carried on, shall
not be deemed to be closing down on account of un-avoidable
circumstances, beyond the control of employer.

When the workmen will not be entitled to closure compensation

under Chapter V-A –
1. In case of an undertaking engaged in mining operations is closed
down because of exhaustion of minerals in the area where such

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operations are carried on, the workman will not be entitled to
closure compensation if
a. Employer provides the workman with alternative
employment; on the same terms and conditions applicable to
him immediately before closure;
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b. The service of the workman has not been interrupted by
such alternative employment;
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c. Under the terms of such alternative employment the

employer is legally liable to pay the workman, in the event of
his retrenchment, compensation in a way as if his service is
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not been interrupted.

2. Where an undertaking is setup for construction of buildings,

bridges, roads, canals, dams or other construction and the
undertaking is closed down, on account of completion of the
work, within 2 years from the date on which the undertaking has
been set-up.

If the construction is not completed within 2 years the workman shall be

entitled to closure compensation as and when the undertaking is closed
down.

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Regulation of Closure under Chapter V-B, Section 25(O) –
An employer who intends to close down an industrial establishment
(factory, mine, or plantation) will have to apply for permission through
the appropriate government by giving at least 90 days’ time. A copy of
the application shall be served on the representative of the workman in
that establishment. The notice for the prior permission is not required in
case the undertaking is set for the construction of building, bridges,
roads, canals, dams or other construction work. The appropriate
government after receipt of the application shall hear the employer,
workman and any other interested persons, in such closure and make a
decision. This decision making is a quasi-judicial process. Hence the
principles of natural justice have to be followed.

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If the appropriate government does not make the decision, within a
period of 60 days after receipt of application, the permission for closure
has been deemed to have given.
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The order of government granting or refusing to grant permission or
refusing to grant permission shall be final and binding on the parties for
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a period of one year subject to the condition that, the government either
on its own motion, or on an application made by the employer or any
workman reviews its order or refer the matter to a tribunal for
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adjudication.

Where no application for permission is made or where the permission is

refused, the closure of the undertaking shall be deemed to be illegal, from
the date of closure and the workman will be entitled to all benefits as if
there is no closure. Where permission for closure is given expressly or
implied the workman shall be entitled to closure compensation, which
will be 15 days wages for every completed year of service. The
requirement of prior permission for closure has been held to be
constitutionally valid by the Supreme Court in Orissa Textiles Ltd., v
State of Orissa [2002 (2) SCC 578].

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 Compensation to the Workman in case of transfer of undertakings
[Sec. 25-FF] –
If the ownership or management of the industrial undertaking is
transferred, whether by the agreement or operation of law, every
workman who has been in continuous service for not less than a year in
that industrial undertaking shall be entitled to notice and compensation
as if it is deemed retrenchment under section 25F.

The workman will not be entitled to compensation under the following

circumstances –
1. the service of the workman has not been interrupted by such
transfer;

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2. the terms and conditions of the service applicable to the workman
after such transfer are not in any way less favourable compared
to, what was applicable to them, immediately before the transfer;
3. new employer is under the terms of such transfer legally liable to
pay to the workman, a retrenchment compensation in the event
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of retrenchment, without any break of service, at the time of
transfer.
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In case of transfer of industrial undertakings and the consequent

possible job losses or change in the service conditions, permission of
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the government is not required.

Condition of service to remain unchanged during circumstances Sec.

33 –

Section 33 broadly, bars the alteration in the conditions of service of

workman to their prejudice during the pendency of industrial dispute with
respect to the matters connected with disputes. This section also imposes,
the restrictions on the right of the employer to impose punishment on the
workman for a proved misconduct.

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There are two categories of situations for the application of Section 33. The
first is matters connected with the pending dispute; and the second one is
matters not connected with pending disputes. With respect to the matters
connected with the pending disputes employer can make changes only with
the permission of the authority before whom the dispute is pending. With
respect to the matters not connect with the pending dispute, the service
conditions can be altered by following the procedure prescribed under any
law or rules.

Disciplinary actions during the pendency of proceedings before any

dispute resolution authority –

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During the pendency of industrial dispute before any, dispute resolution
authority if the employer wants to impose any punishment with respect to
matters connected with the pending dispute then he shall before imposing
the punishment take written permission of the authority, before whom the
dispute is pending. Without the permission no disciplinary action can be
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imposed.
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In case the misconduct for which the punishment is proposed is not

connected with the pending dispute the employer can go ahead with the
imposing of punishment. But in case of discharge or dismissal the
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workman has to be paid one month’s wages and an application has to be

made to the authority before whom the dispute is pending for approval of
the discharge or dismissal. Such order will become valid retrospectively, if
the approval is given. If not the dismissal or discharge is invalid, and the
workman is deemed to be continuing in service.

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Protected Workman –

A protected workman is one, who is a member of the executive or other

office bearer of a registered trade union, connected with the establishment
and is recognized as protected workman in accordance with the rules. Every
registered trade union connected with the industrial establishment shall
communicate to the employer before 30 of every year, the names and
addresses of the office bearers on whom they want the employer to confer
the status of protected workman.

In an establishment the number of workman to be recognized protected

workman shall be one percent of the total number of the workmen employed

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therein, subject to a minimum number of five and maximum number 100.
In case where there are more registered unions the employer shall distribute
available positions of protected workmen among the unions in proportion to
their membership.
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In case of protected workman, irrespective of whether the workman is
connected with pending dispute or not for imposing punishment prior
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permission of the authority before whom the dispute is pending, must be

obtained in writing.
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If there is any violation of the requirements of taking permission or approval

the aggrieved workman can approach the industrial tribunal directly. The
tribunal shall dispose of the application as if it is reference made by the
appropriate government. In the process it should give opportunity to
employer and workman to put forth their case.

Penalties under the Act –

1. any person who commits any unfair labour practice shall be
punishable with imprisonment for a term which may extend to 6
months or fine, which may extend to 1000 rupees or both;

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2. any workman who commences, continues, or otherwise acts in
furtherance of an illegal strike, shall be punishable imprisonment for
a term which may extend to one month or with fine, which may
extend to 1000 rupees or with both;
3. any employer who commences, continues, or otherwise acts in
furtherance of a lockout, which is illegal shall be punishable with
imprisonment, which may extend to one month or with fine, which
may extend to 1000 rupees or with both;
4. any person who instigates or incites others to take part in or
otherwise acts in furtherance of a strike or lockout which is illegal
shall be punishable with imprisonment, which may extend to 6
months or with fine, which may extend to 1000 rupees or with both;

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5. any person who knowingly extends or applies any money in direct
furtherance or support of illegal strike, or lockout shall be punishable
with imprisonment for a term, which may extend to 6 months or with
fine, which may extend to 1000 rupees or with both;
6. any person who commits breach of any tem of any settlement or
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award which is binding on him under this act may extend to 6 months
or with fine, which may extend to 1000 rupees or with both;
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7. any employer who closes down any undertaking without notice as

required under 25FFA shall be punishable with may extend to 6
months or with fine, which may extend to 5000 rupees or with both;
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8. any employer who contravenes the provisions of the sec. 33 shall be

punishable with may extend to 6 months or with fine, which may
extend to 1000 rupees or with both;
9. whoever contravenes any provisions of the ID act or any rule made
there under, shall if no other penalty is elsewhere provided, by or
under this act for such contravention be punishable with fine which
may extend to 100 rupees.
10. Where a person committing an offence under this act is a company –
Director, Manager, Secretary, Agent or other officer or person
concerned with the management thereof shall, unless he proves that

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 the offence is committed without his knowledge or consent be deemed
to be guilty of such offence.

Cognizance of offence – No court shall take cognizance of offence

punishable under this act, or of the abetment of such offence, save on a
complaint made by or under the authority of the appropriate
government.

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