LABOUR AND INDUSTRIAL LAW

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 SHREEMATI NATHIBAI DAMODAR THACKERSEY WOMEN’S
UNIVERSITY LAW SCHOOL
Juhu, Mumbai - 400049
A.Y. 2024-25

Name – Simran Singh

Roll no. - 31
Class - B.B.A., LL.B. (Hons) (3rdYear, Sem-6)
Subject – Labour and Industrial law
Topic – Strike, Lockout, Layoff, Retrenchment And clousure
Name of the Professor – Adv. Divya Gupta
Date of Submission – 25.03.2025

Signature

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 ACKNOWLEDGEMENTS
I would like to extend my sincere gratitude to SNDT University Law School and
Rajesh Wankhede Sir for providing this opportunity Further I would like to express my
profound gratitude and deep regards to my teacher, “Adv. Divya Gupta” ma’am, for her
abled guidance and support in completing my assignment and also giving me the
opportunity to express myself on the topic- Strike, lockout, layoff, Retrenchment and
Closure

I would also like to thank the library department of my university for providing me a
source of data which has immensely helped me in this research work. I would also like to
mention the support given by my parents and mates who stood by me and helped me.

Only with the help of these people, I have been able to complete my assignment, so I
would like to thank everyone who has invested their time and helped me in this
assignment.

Thanking You,
Simran Singh

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 TABLE OF CONTENTS

Sl No. Particulars Page No.

1. Introduction 6

2. Strikes and lockout under industrial dispute act 7-12

A. Strike 7-10
a) Meaning and definition
b) Essentials
c) Kinds
d) Legal and legal strike
e) Is Strike a Fundamental Right?
B. Lockout 10-12
a) Definition
b) Key Elements
c) Purpose
d) Legal lockout And Illegal Lockout
e) Is Lock out a Fundamental Right
3. Prohibition of Strikes and Lockout under the Act 12-13
A. Strikes in Public Utility Services (Section-
22)
B. General Prohibition Of Strike & Lockout
(Section23)
C. Penalties For Illegal Strikes & Lockout
(Section-26)
4. Judicial Interpretation of Strikes and Lockout 14-15
Under Industrial Dispute Acts
5. Layoff 15-18
A. Definitions
B. Essentials
C. Procedure for layoff(section-25A)
D. Continous Services (Section- 25B)
E. Compensation to laidoff workmen
(Section-25C)
F. Amount of Compensation(Section-25-C)

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 G. Workmen Not entitled to Compensation
(Section-25E)

6. Retrenchment 19-21
A. Definitions
B. Objective
C. Requirement for valid Retrenchment
(Section25F)
D. Procedure for Valid Retrenchment
(Section-25G)
E. Re-Employment of retrenched Workers
(Section-25H)

7. Closure 22-23
A. Definition
B. Significance
C. Provisions for Closure
a) Notice For Closure (Section-25FFA)
b) Compensation To Workmen (Section-
25FFF)
c) Procedure For Closure (Section-25O)
d) Penalties (Section-25R &Section-30R)

8. Conclusion and Suggestion 24

9. REFERENCES 25
• Bibliography
• Webliography

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 1. INTRODUCTION TO THE INDUSTRIAL DISPUTES ACT, 1947

The Industrial Disputes Act, 1947 was enacted to provide a legal framework for
resolving conflicts between employers and employees in India. The primary objective of
the Act is to maintain industrial peace and harmony by facilitating fair dispute resolution
mechanisms. It applies to all industries in India and governs various aspects of employer-
employee relationships, including strikes, lockouts, layoffs, retrenchment, and
closures.
An industrial dispute is defined as any disagreement related to employment, non-
employment, terms of employment, or working conditions between employers and
workers. The Act provides mechanisms such as conciliation, arbitration, and
adjudication to settle disputes effectively. A strike refers to a temporary work stoppage
by employees to press their demands, whereas a lockout is an employer-initiated work
stoppage to exert pressure on workers. A layoff occurs when an employer temporarily
suspends workers due to economic constraints or operational difficulties. Retrenchment
involves the permanent termination of workers due to redundancy, while closure refers to
the permanent shutdown of an establishment or a part of it. The Act also lays down
conditions under which strikes and lockouts can be legally conducted and prohibits them
during conciliation or adjudication proceedings. Similarly, it specifies the rights and
compensation of workers affected by layoffs, retrenchment, or closure.

By regulating industrial disputes, the Industrial Disputes Act, 1947 aims to create a
balanced work environment, protect labour rights, and promote economic stability,
ensuring fair treatment for both employers and employees.

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 2. STRIKES AND LOCKOUT UNDER THE INDUSTRIAL DISPUTE
ACT ,1947

A. STRIKE UNDER LABOUR LAW

Strike is a very powerful weapon used by trade unions and other labor associations
to get their demands accepted. It generally involves quitting of work by a group of
workers for the purpose of bringing the pressure on their employer so that their
demands get accepted. When workers collectively cease to work in a particular
industry, they are said to be on strike. A lock-out declared in consequence of an
illegal strike or a strike declared in consequence of an illegal lock-out shall not be
deemed to be illegal. Section 24 (3) of Industrial Disputes Act 1947.

a.)Meaning and definition

According to section 2(q) of Industrial Disputes Act 1947,
"a strike is "a cessation of work by a body of persons employed in an industry acting in
combination; or a concerted refusal of any number of persons who are or have been so
employed to continue to work or to accept employment; or a refusal under a common
understanding of any number of such persons to continue to work or to accept
employment".
This definition throws light on a few aspects of a strike.
i. Firstly, a strike is a referred to as stoppage of work by a group of workers
employed in a particular industry.
ii. Secondly, it also includes the refusal of a number of employees to continue
work under their employer.

b.)Essential ingredients of strike

The strike must be in an establishment that falls under the definition of “industry" as
specified in the Industrial Disputes Act, 1947.
i. There should be a relation of employer-employee between the employer
and the striking workmen.
ii. Cessation of work- Cessation of the work in the industry is the essential
element for the strike. Cessation of work means the work of the industry
has been stopped. Even if the period for the stoppage is only half-hour still
it will fall in the definition of a strike if the other requirements of the
definition are fulfilled.
iii. The workers should be employed in the industry.

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 iv. The refusal of work must be the refusal of common understanding by such
persons.

c.)Kinds of strike

i. General strike
A general strike is a type of strike where the workers join together for a common reason
or demand and keep themselves from work, depriving the employer of their workers to
carry on their business operations.
ii. Sit down strike
In the sit-down strike, all the employees come on time in the industry normally, take their
position in the area in which they regularly work, they simply sit there without doing any
kind of work. The object of this strike is to cripple the production of the industry.
iii. Pen down strike
The pen down and sit down strikes are almost the same. The pen-down strike takes place
among people with white-collar jobs or the employees who work in the offices. The
employees do not touch the pen/tool they use to do their work.
iv. Go slow strike
In this strike the workmen come to the industry daily, they do the work also, but the
speed of the work will be so slow that they are doing nothing productive. The production
of the industry will become almost zero even after the working of the workmen.
v. Economic strike
When the strike is happening due to economic issues like salary, bonus, working hours
and conditions etc, it is called an Economic strike.
vi. Sympathy strike
When more unions of employees join the strike initiated by another union for support that
union is called Sympathy Strike.
vii. Hunger strike
Hunger strikes occur when the workers go on the strike without taking food/water. It is a
very painful type of strike. There is a case when the Kingfisher airline's employees went
on hunger strike for the salary dues for several months.

The purpose of strikes

The primary objective of a strike is to apply economic pressure on the employer to
address the workers' demands. This could include demands for higher wages, better
working conditions, improved job security, or other employment-related issues. By
halting work, workers can disrupt production or services, thereby creating a financial
incentive for the employer to negotiate and resolve the dispute. The strike is thus a crucial
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tool in the arsenal of collective bargaining, allowing workers to leverage their labor
power to achieve their goals.
The Act seeks to balance the workers' right to collective action with the necessity of
maintaining industrial stability. By establishing clear criteria for lawful strikes, it ensures
that such actions are not undertaken hastily, but as a final option after other dispute
resolution methods have been tried. Consequently, strikes play an essential role in
collective bargaining, enabling workers to assert their demands while promoting
industrial peace.

d.) Legal and illegal strikes

Strikes are classified as legal or illegal based on adherence to the Industrial Disputes
Act's regulations.
1. Legal Strikes: For a strike to be legal, it must meet specific criteria:
In public utility services, a strike must be preceded by a notice served within six weeks,
and the strike cannot commence within 14 days of the notice. Additionally, it must not
occur during ongoing conciliation proceedings or within seven days after their
conclusion.
i. In other industrial establishments, strikes are legal if they do not occur during
ongoing conciliation, arbitration, or tribunal proceedings, or while a settlement or
award is in effect.
2. Illegal Strikes: Strikes are considered illegal if they:
ii. Violate “Section 22 or 23” by failing to provide required notice or occurring
during prohibited periods.
iii. Continue in defiance of orders under Section 10 or Section 10-A of the Act.

Strikes are a fundamental method for workers to advocate for their rights and negotiate
for better conditions. The Industrial Disputes Act, 1947, provides a structured framework
to manage various types of strikes, ensuring they are conducted within legal boundaries.
Understanding the different types of strikes and their legal standing helps maintain
industrial harmony and prevents legal complications for workers and trade unions.12

e.)Is Strike a Fundamental Right?

The Constitution of India guarantees several fundamental rights, including the right to
form associations and unions under Article 19(1)(c), the right to strike is not
considered a fundamental right. Instead, it is recognized as a legal right, subject to
various restrictions and conditions. In India, the right to strike is not a fundamental right
under the Constitution, despite the protection of the right to form associations and unions

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under Article 19(1)(c). The Industrial Disputes Act, 1947 (IDA) governs the right to
strike, setting rules and conditions to ensure lawful strikes that do not disrupt
essential services or public order. While the Constitution guarantees the right to
organize, striking is not inherently protected by law.
Strikes, therefore, must be carried out in accordance with the law, balancing the rights of
workers with the need to maintain public order and essential services.

B.LOCKOUT UNDER LABOUR LAW

Lockouts, like strikes, are a significant aspect of industrial relations, serving as a tool for
employers to assert their position in negotiations with employees. The Industrial Disputes
Act, 1947, provides a legal framework for the use of lockouts, ensuring that such actions
are carried out in a manner that balances the interests of both employers and employees
while maintaining industrial peace. This essay delves into the definition, key elements,
provisions, and implications of lockouts as outlined in the Act, as well as the legal
parameters that govern their use.

a.)Definition of lockouts
Under Section 2(l) of the Industrial Disputes Act, 1947, a lockout is defined as
"the temporary closing of a place of employment, or the suspension of work, or the
refusal by an employer to continue to employ any number of persons employed by him."
This definition encompasses several key actions that an employer may take in response to
industrial disputes, including temporarily shutting down the workplace, halting
operations, or refusing to engage workers in employment.
Lockouts are often categorized into two types: offensive and defensive.
An offensive lockout is a proactive measure taken by the employer to counteract potential
worker actions, such as a strike or a demand for higher wages. A defensive lockout, on
the other hand, is typically a response to a strike or other forms of industrial action
initiated by employees. In both cases, the lockout serves as a strategy for employers to
exert pressure on workers to concede to their terms.

b.)Key elements of a lockout

Several critical components define the nature of a lockout:
1. Employer-Initiated Action: Unlike strikes, which are initiated by workers, a lockout is
an action taken by the employer. It is a deliberate decision by the employer to temporarily
close the workplace or deny employment to workers as a response to an ongoing or
anticipated dispute.

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2. Suspension of Employment: The act of locking out workers involves the temporary
cessation of work or the refusal to employ workers. This suspension can affect all or part
of the workforce, depending on the extent of the dispute and the employer’s objectives.
3. Economic Pressure: The primary purpose of a lockout is to exert economic pressure
on workers to accept the employer’s terms. By suspending operations and withholding
wages, employers aim to compel workers to reconsider their demands or to accept
conditions that are more favourable to the employer.
4. Prohibition in Certain Industries: The Act also prohibits lockouts in certain
industries, as outlined in Schedule I. These are industries deemed essential for the public
or the economy, and the prohibition aims to prevent disruptions that could have far-
reaching consequences.

c.)The purpose of lockout

Lockouts are employer-initiated actions used to exert economic pressure on workers
during industrial disputes by temporarily closing the workplace or suspending operations.
The primary purpose is to compel workers to accept the employer's terms, often in
response to strikes or
stalled negotiations.

d.)Legal lockouts and illegal lockouts

Lockouts are classified as legal or illegal based on adherence to the Industrial Disputes
Act's regulations.
i. A legal lockout, as defined under Section 2(l) of the Industrial Disputes Act,
1947, is an employer-initiated action involving the temporary closure of a
workplace or suspension of work to compel workers to accept the employer’s
terms. For a lockout to be legal, employers must adhere to specific procedural
requirements, including providing prior notice and obtaining government
permission. Legal lockouts must also comply with restrictions, such as not being
implemented during ongoing conciliation or adjudication proceedings. Failure to
follow these procedures can render a lockout illegal, resulting in penalties and
legal consequences.
ii. A lockout is deemed illegal if it fails to adhere to specific guidelines. This
includes violating the mandatory 14-day notice period, especially in public utility
services, which prevents abrupt disruptions without adequate notice to workers
and authorities. Additionally, lockouts are prohibited during ongoing conciliation
or adjudication proceedings, ensuring that disputes are resolved through legal
channels rather than coercion. Furthermore, lockouts declared during the post-

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 proceedings period specified in Section 23 are also illegal, as this period is
designed to allow for negotiation and resolution after formal proceedings
conclude.

e.)Is lockout a Fundamental Right?

In India, lockout is not considered a fundamental right under the Constitution.
Instead, it is governed by statutory laws, particularly the Industrial Disputes Act,
1947. A lockout refers to the temporary closure of a place of employment or the
suspension of work by an employer, usually in response to labour disputes or strikes.
While employers have the legal right to declare a lockout, this right is regulated and
subject to specific conditions laid down in the law.
The Industrial Disputes Act, 1947, provides the framework for the legality of lockouts,
particularly in sectors classified as public utility services such as water, electricity,
healthcare, and transportation. In these sectors, employers are required to provide prior
notice before initiating a lockout. Additionally, lockouts cannot be declared during the
pendency of conciliation or adjudication proceedings or when a settlement is in force, as
doing so would render the lockout illegal. The Act ensures that lockouts are not arbitrary
and helps balance employer rights with worker protections, thereby maintaining
industrial peace and fairness.

3. PROHIBITION OF STRIKES AND LOCKOUTS UNDER THE

INDUSTRIAL DISPUTES ACT, 1947

The Industrial Disputes Act, 1947 is a key piece of legislation governing industrial
relations in India, particularly in managing strikes and lockouts. It lays down specific
provisions to regulate these actions and ensure industrial harmony, particularly in public
utility services and during dispute resolution processes. law, they are not fundamental
rights. Employers can exercise the right to lockout, but they must do so within the legal
framework established by statutory provisions.

A. Strikes in Public Utility Services (Section 22): Section 22 of the Act imposes strict
restrictions on strikes in public utility services, such as water supply, electricity, and
transport. Employees in these sectors must follow a defined legal process before striking.
They must issue a notice to their employer at least six weeks before the strike and wait 14
days after the notice before proceeding. Strikes are prohibited during the pendency of
conciliation proceedings and for seven days after these proceedings conclude. In case of

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an ongoing strike or lockout, the employer is required to inform the appropriate
government authority on the day the strike or lockout is declared.

B. General Prohibition of Strikes and Lockouts (Section 23):

Section 23 extends the prohibition of strikes and lockouts to all industrial establishments,
restricting such actions during specific dispute resolution phases. Strikes and lockouts are
prohibited during conciliation proceedings and for seven days after their conclusion. The
same restriction applies to proceedings before a Labour Court, Tribunal, or National
Tribunal, and for two months after their conclusion. Strikes and lockouts are also
prohibited during arbitration proceedings and for two months following the resolution.
Additionally, strikes and lockouts are forbidden while a settlement or award is in
operation regarding the matters covered by it.

C.Penalties for Illegal Strikes and Lockouts (section 26)

The Act provides penalties for engaging in illegal strikes and lockouts to
ensurecompliance. Section 26 imposes a penalty on workers participating in illegal
strikes,with imprisonment of up to one month or a fine of up to fifty rupees, or both.
Employers initiating illegal lockouts face imprisonment for up to one month or a fine of
up to one thousand rupees, or both.

In summary, the Industrial Disputes Act regulates strikes and lockouts to maintain
industrial peace, especially in essential services and during dispute resolution
processes, while imposing penalties to deter illegal actions and ensure compliance.

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 4.JUDICIAL INTERPRETATIONS OF STRIKES AND LOCKOUTS
UNDER THE INDUSTRIAL DISPUTES ACT

The Indian judiciary has significantly influenced the interpretation and application of the
Industrial Disputes Act, 1947, particularly concerning strikes and lockouts.
Landmark case laws have shaped the legal landscape, providing clarity on the conditions
under which these industrial actions can be deemed legal or illegal. The following cases
stand out for their profound impact on labour law and industrial relations in India.

1. Tata Iron & Steel Co. Ltd. v. Their Workmen (1972)

The Tata Iron & Steel Co. Ltd. v. Their Workmen (1972) case is a pivotal judgment that
delved into the legality of a lockout declared by the employer. In the Tata Iron & Steel
Co. case, the Supreme Court upheld the legality of a lockout initiated by the company in
response to disruptive actions by workers. The Court emphasized that the lockout was
justified as long as the employer followed the procedural requirements outlined in the
Industrial Disputes Act.
This judgment reinforced the employer's right to protect business interests through a
lockout, provided that due process was observed. The ruling set an important legal
precedent, establishing that a lockout, as a countermeasure to worker disruptions, must
adhere to the Act’s procedural provisions to be considered lawful. This case has become
a cornerstone in Indian labour law, guiding employers on the lawful exercise of lockouts
and ensuring that such action are not arbitrary but grounded in legal compliance.21

2. The Workers of Delhi Cloth and General Mills Co. Ltd. v. Management (1967)
The Delhi Cloth and General Mills Co. Ltd. v. Management (1967) case is another
landmark ruling that addressed the legality of a strike conducted without prior notice in a
public utility service. This case revolved around the workers' abrupt cessation of work,
which severely disrupted essential services provided by the company. In this case, the
Supreme Court ruled a strike illegal for violating the notice requirement under the
Industrial Disputes Act, particularly in public utility services. The Court emphasized
that prior notice is crucial to prevent sudden disruptions that could harm public welfare.
The judgment underscored the need to balance the right to strike with the responsibility to
maintain essential services. It reinforced the importance of following legal procedures in
strikes within critical sectors.
This case, along with others like Tata Iron & Steel Co. Ltd. v. Their Workmen,
shaped the enforcement and understanding of the Industrial Disputes Act. These cases

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underscore the importance of procedural compliance and the judiciary's role in balancing
the rights of workers and employers while safeguarding broader public interests.

Difference between strike and lockout

Strike Lockout
A strike is when employees in a certain A lockout occurs when an employer closes
industry stop working to compel them to the workplace temporarily suspends
satisfy certain demands. operations, or terminate he employment of a
group of people
who were previously employed.
Strikes are defined as the workers' Lockouts are defined as the temporary
complete cessation of work until their closure of a workplace stoppage of work, or
demands are met by the employers. refusal to hire.
Strikes are frequently triggered by Lockouts can occur for a variety of reasons,
economic factors. Both economic non-economic.
Employees use strikes as a weapon. Employers use lockouts as a weapon.
llegal strikes can be in a variety of orms. here are no different types of illeg ckouts.
For example, put your per down, take it There is only one of then
leisurely, and so on.
The strike is conducted to gain a Lock-out is used to enforce the terms of
concession from the employer. employment during the dispute.

5.LAYOFF UNDER LABOUR LAW

A. Definition of Layoff
A “layoff” means when an employer doesn’t offer a job to a worker whose name is
on the worker list for their industrial business. This happens when the employer can’t
provide work due to reasons like not having enough electricity, coal, materials, having
too many goods in stock, machines breaking down, natural disasters or other good
reasons.

This definition is in Section 2(kkk) of the Industrial Disputes Act, 1947.

"Lay-off" (with its grammatical variations and cognate expressions) 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 the breakdown of machinery or natural
calamity or for any other connected reason to give employment to a workman whose

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name is borne on the muster rolls of his industrial establishment and who has not been
retrenched.'

B. Essentials of Layoff :
1. There must be a failure, refusal, or incapacity on the part of an employer to hire
the worker.
2. The name of the worker must appear on the establishment's muster rolls.
3. An employer's failure, refusal, or inability to provide employment must be due to
one or more of the following reasons:
i. Coal Shortage (Power shortage)
ii. Raw material scarcity
iii. The building up of stock
iv. The failure of equipment
4. In the event of a natural disaster or for any other reason related to it.
5. The workman in question must not have been retrenched.

When are workmen considered laid-off ?

According to Section 2(kkk), the workman whose name is mentioned in the muster roll
of the industrial establishment and is willing to work and is present during the normal
working hours of the day for the specific purpose he has been allotted with, but he doesn't
get the work within the two hours of his presence at the workplace then such workman is
deemed to be laid off for that day within the context of this clause.
If the workman, instead of being given employment at the start of the shift of any day, is
asked to be present at the workplace in the second half of the shift for the purpose of
work, then such workman is considered laid off only for one-half of that day. Provided
that if the workman has not been given work in any half of the day even after presenting
himself at the workplace, then such workman is considered laid off for the whole of the
day, and thereafter he shall be entitled to the full basic wages and dearness allowance for
that part of the day.

C. Procedure for layoff : (Section 25A)

Section 25A of the Act lays down certain industry establishments to which the provisions
related to the workmen's compensation shall not apply. Those industrial establishments
are as follows:
i. Industrial establishments in which, on average, less than 50 workmen were there
on any day in the preceding calendar month.

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 ii. Industrial establishments of such nature in which the work is done either
seasonally or intermittently.
iii. Industrial establishments that come under the ambit of Chapter V-B of the
Industrial Disputes Act, 1947.

D.Continuous Service (Section 25B)

Section 25B of the Act, lays down the definition of continuous service. As per the
Section, a workman is said to be in continuous service if he has completed at least one
year with that particular industrial establishment without any interruption only then will
that workman be entitled to take the compensation. The interruption of the continuous
service is not affected by any kind of authorised leave, sickness, accident, legal strike,
lock-out or cessation of work due to the fault of workmen.
The service is construed as continuous for period of 1 year if the workmen works in
the previous year for:
i. 190 days- below the ground in mine
ii. 240 days- in any other job
The service is construed as continuous for a period of 6 months if the workman
works in the preceding 6 months for:
i. 95 days - below the ground in mine
ii. 120 days- in any other job.

E.Compensation to the laid off workmen (section 25 C)

Conditions to comply with for getting Compensation: According to, Section 25C of the
Act, the workman who has been laid off is entitled to receive 50 percent of his total basic
earnings and a dearness allowance for the duration of the layoff.
However, this compensation right given to the workman is subject to the following
conditions:
i. The workman is not a badli or a casual worker.
(A badli worker is someone who has been hired in place of another worker whose name
is borne on the muster roll of the industrial establishment. However, such a worker won't
be considered a badly worker if he completes the duration of one year with that particular
industrial establishment.)
ii. Workman's name must be on the muster roll of the industrial establishment.
iii. The workman must have computed the duration of one year at that particular
establishment as an employee.

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F.Amount of compensation (section 25C)
According to Section 25C of the industrial disputes act, a workman who is laid -off is
entitled to compensation equivalent to 50% of total basic wages and dearness allowance
for the period of lay-off. If during the one year period of continuous service, the
workmen is laid-off more than 45 days, no further compensation will be paid if there is
an agreement in that respect between the workmen and the employer. Upon the expiry of
this period, the employer can retrench the workmen and the compensation then would
exclude the amount already paid during the 45 day period of lay-off.

G.Workman not entitled to compensation ( Section 25E )

Section- 25E of the act highlights situations when a workman is not entitled to
compensation even after being laid-off.
A Workman is not entitled to compensation if:
i. He refuses to accept any alternate employment offered by the employer in the
same establishement, or in any other establishement of the same employer,
provided such establishment is within a 5 miles radius from the previous
establishement. Further, such alternate employment should not call for any special
skill or experience and the employer must pay atleast the same wages as were
previously paid to the workman.
ii. He does not present himself for work at the establishment at the appointed time
during normal working hours atleast once a day
iii. Such lay -off is due to a strike or slowing down of production by workman in
another part of the establishment
iv. The burden of proof is on the employer to show that the workman is disentitled to
claim compensation because his case falls under the purview of section- 25 E.

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 6.RETRENCHMENT UNDER LABOUR LAW

It also has an important place in industrial disputes act 1947. Retrenchment means the
discharge of surplus labour by the employer for any reason whatsoever otherwise then as
a punishment inflicted by way of disciplinary action. It has no application where the
service of all workmen have been terminated by the employer on a real and bona fide
closure of business or on the undertaking on taking being an another employee.

A. Definitions
Retrenchment is defined under section 2(oo) of the industrial Disputes Act,1947.
Retrenchments" means the termination by the employer of the service of a workman for
any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary
action but does not include:
i. Voluntary retirement of the workman; or
ii. Retirement of the workman on reaching the age of superannuation if the contract
of employment between the employer and the workman concerned contains a
stipulation in that behalf;
Or
(bb) 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 or of such contract being terminated under a stipulation on that behalf
contained therein; or]
iii. termination of the service of a workman on the ground of continued ill-health;]

Reason for retrenchment

There shall be some reasons for the retrenchment. The service of any employee cannot be
terminated without any reason by the way of retrenchment. Generally the reason could be
following-
a) More than required labour or employee are employed
b) The closure of any part or department of the industry
c) Lack of raw material
d) Deficit in machinery
e) Natural calamity
f) Establishment of self-working machine
g) Economic crises

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B.The Objective of Retrenchment in Labour Law
The primary objective of retrenchment in labour law is to reduce the workforce when an
establishment faces financial difficulties, necessitating a downsizing of employees. This
helps companies manage surplus labour and cut down on human resource expenditure.
Retrenchment aims to:
a) Reduce outgoing expenses
b) Cut down on overall expenditure
c) Improve financial solvency
Retrenchment also occurs when an industry struggles to pay employee wages, compelling
them to reduce their workforce.

C.Requirements for a Valid Retrenchment in Labour Law (section 25F)

For a retrenchment in Labour Law to be considered valid, certain conditions outlined in
Section 25F must be met. These conditions apply when an employee has been
continuously employed for at least one year. The prerequisites for a valid retrenchment
are as follows:
1.) Notice to Employees: The employer must issue a written notice to the workforce
at least one month before the retrenchment takes effect. This notice should specify
the grounds for retrenchment and the retrenchment should only occur after
providing this notice to the employees.
2.) Compensation: If the employer fails to provide the required notice to the
employees, they are liable to pay compensation for this failure. The compensation
should be an amount equal to 15 days’ wages for each completed year of
continuous employment or any part thereof exceeding six months.
3.) Notice to Appropriate Authority: The appropriate government or authority must
be notified in the prescribed manner, as specified in the official gazette.
4.) Adherence to Notice Regulations: The notice regulations must comply with the
provisions of Rule 76 of the Industrial Disputes (Central) Rules, 1957, which
govern the notice of retrenchment.
Failure to comply with these prerequisites renders a retrenchment invalid. If a
retrenchment in Labour Law is found to be unlawful or is not approved by government
authorities, the affected employee has the right to reinstatement with continuity of service
and the right to wages for the period in question.

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C.The Procedure of Retrenchment in Labour Law (section 25G)
The procedure for retrenching employees is governed by the principle of ‘last come, first
go,’ as specified in Section 25G of the Industrial Disputes Act, of 1947. The following
factors provide procedural protection to employees:
a) Prescribed Qualification: The employee must have the appropriate qualifications
as defined in Section 2(s) of the Act.
b) Citizenship: The employee must be an Indian citizen.
c) Employment in an Industry: The employee must be employed in an industry as
defined by Section 2(j) of the Act.
d) Specific Workforce Category:The employee must belong to a particular
workforce category within the establishment.
e) Non-existence of a Retrenchment Contract: The employee must not have a
prior retrenchment agreement with the employer.
f) If these conditions are met, the employee is entitled to procedural protection under
Section 25G of the Act.

D.Re-Employment of Retrenched Workers (Section 25F)

Section 25H of the Act is based on the idea that when an employer lays off a worker due
to a shortage of labour, that worker should be given the first opportunity to return to work
when the need for additional employees arises. This section places a legal obligation on
the employer to offer retrenched employees the chance to apply for re-employment. To
be eligible for re-employment, workers must meet the following conditions:
a) Offer of Re-Employment: When the company retrenches workers, they should be
given the opportunity to return to work if needed.
b) Citizenship: The worker must be a citizen of India.
c) Notice: The employer should provide notice to the retrenched workers regarding
any potential re-employment opportunities.
d) Same Industry: Re-employment should be in the same industry where the worker
was previously employed before being retrenched.
e) Preference for Retrenched Workers: The employer must give preference to
retrenched workers over other individuals when filling new positions.

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 7.CLOSURE UNDER LABOUR LAW

A.Definition
The term “closure” is defined under Section 2(cc) of the I.D. Act, which was introduced
through the Industrial Disputes (Amendment) Act, 1982 (46 of 1982). It describes closure
as the “permanent closing down of a place of employment or part thereof.” This closure
can be either voluntary or forced and may occur due to a variety

B.Significance of the Act and Closure

The Industrial Disputes Act sets out the procedures for resolving and investigating
industrial disputes between employers and employees. Dispute resolution can occur
through arbitration, adjudication, or conciliation, as stipulated by the statute. The
provisions of the Act apply to all businesses, establishments, undertakings, or
manufacturers that meet the definition of ‘industry’ under Section 2(gg)(j) of the Act.
The Act outlines legal rules and restrictions regarding the closure of industrial
undertakings and businesses under Sections 25FFA, 25FFF, 25-O, 25P, 25R, and 30A to
protect the interests of the stakeholders involved.

C.Provisions Relating to Closure

Chapters VA and VB of the Industrial Disputes Act detail the provisions concerning the
closure of industrial establishments. The relevant sections are as follows:

a.) Section 25FFA

Section 25FFA(1) mandates that an employer intending to close an establishment must
notify their workers and the appropriate government authority at least sixty days before
the closure date. This notice must clearly state the reasons for the closure. However, this
requirement does not apply to establishments where:
i. fewer than fifty workers are employed, or
ii. the average daily number of workers employed in the past twelve months is
less than fifty.
Additionally, this section does not apply to establishments created for construction
projects such as dams, canals, bridges, buildings, roads, or similar projects. Under certain
exceptional circumstances, such as an accident, the employer’s death, or other pressing
needs, the government authority may waive the sixty-day notice requirement for a
specified period (Section 25FFA(2)).

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 b.) Section 25FFF
Section 25FFF outlines compensation for workers affected by the closure of an
establishment.
According to subsection (1), when an establishment closes “for any reason whatsoever,”
every worker employed for at least one continuous year must receive compensation and
notice as specified in Section 25(F), which deals with retrenchment. If the closure is due
to unavoidable circumstances beyond the employer’s control, compensation is capped at
an amount equivalent to the average of three months’ wages (Section 25F(b)).
The section clarifies that closures due to financial difficulties, unsold stock, license or
lease expiration, or depletion of mining resources are not considered unavoidable
circumstances.
Sub-section (2) specifies that workers in establishments created for construction projects
(e.g., buildings, bridges, roads, canals, dams) that close within two years of setup due to
project completion are not entitled to compensation. If the work extends beyond two
years, workers are entitled to compensation and notice as per the relevant provisions.
c.) Section 25R
Section 25R specifies penalties for non-compliance with closure procedures. An
employer who closes an establishment without following Section 25-O(1) can be
punished with imprisonment for up to six months, a fine of up to five thousand rupees, or
both.
d.) Section 30A
Section 30A outlines the punishment for employers who close an establishment without
complying with Section 25(FFA). Such employers face imprisonment for up to six
months, a fine up to five thousand rupees, or both.

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 8. CONCLUSION AND SUGGESTION

The Industrial Disputes Act, 1947, plays a crucial role in regulating employment relations
and ensuring industrial harmony by defining and governing strikes, lockouts, layoffs,
closures, and retrenchments. Strikes and lockouts serve as essential tools for collective
bargaining but must adhere to legal procedures to prevent unnecessary disruptions.
Layoffs and retrenchments offer protection to workers by ensuring fair compensation in
cases of termination due to economic or operational reasons, while closure provisions
mandate prior approval and adequate compensation to mitigate adverse effects on
employees. However, challenges such as delays in dispute resolution, non-compliance
with legal requirements, and lack of awareness among workers and employers persist. To
address these issues, strengthening dispute resolution mechanisms through fast-track
tribunals and alternative methods like mediation and conciliation can improve efficiency.
Establishing clearer guidelines on strikes and lockouts, along with structured negotiation
frameworks, can help prevent industrial unrest. Additionally, better support for workers
in cases of layoffs and retrenchment through reskilling programs, unemployment
benefits, and social security measures can reduce the economic impact on affected
employees. Simplifying compliance procedures for businesses while ensuring fair
treatment of workers will also encourage better adherence to the law. Lastly, awareness
and training programs for both employers and employees can prevent disputes from
escalating. By implementing these reforms, the Industrial Disputes Act, 1947, can
continue to serve as a strong legal framework that balances industrial growth with worker
welfare

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 9. REFERENCES

Bibliography:

• Industrial Relations and Labour Laws

Author- S.C Srivastava

Publisher- Vikas Publishing House

• Bare Acts – The Industrial Dispute Act, 1947

Webliography:

• https://lawbhoomi.com/strike-and-lockout/

Author- Aishwarya Agarwal

Publisher- Lawbhoomi

• https://blog.ipleaders.in/detailed-study-laws-retrenchment/

Author-Upasana Sarkar
Publisher- Ipleader

• https://papers.ssrn.com/sol3/papers.cfm?

• https://testbook.com/difference-between-lay-off-and-retrenchment

• https://www.legalserviceindia.com/legal/provisions-relating-to-lay-off-
retrenchment-and-closure-under-industrial-disputes-act.html

Author-Krupagajjar
Publisher- Legalservice

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