Layoff and Retrenchment

The Industrial Disputes Act of 1947 addresses layoffs and retrenchments. When an employee is laid off, it means that they were fired by their employer for non-fault-related reasons. A layoff is temporary in nature because it shows that an employer can't keep hiring the workers for a limited time.

Retrenchment describes a scenario in which an employer fires staff in an effort to boost profits and cut costs. Even when an employee is laid off, the loss of their employment is not their responsibility.

Meaning of Layoff

The term "layoff" is defined as the inability, failure, or refusal of the employer to offer employment to a worker whose name is listed on the muster roll of his industrial formation and who is not retrenched due to a lack of power, coal, raw materials, accumulation of stocks, breakdown of machinery, a natural calamity, or any other relevant reason. This definition is found in Section 2(kkk) of the Industrial Disputes Act, 1947.

The Prerequisites for Layoff

• There must be an inability, refusal, or refusal on the part of the employer to hire the workers.

• Such incapacity, failure, or refusal must be brought about by a deficiency of electricity, coal, raw materials, stockpiling, a machine breakdown, a natural disaster, or any other pertinent cause.

• The employer's industrial establishment's muster roll must include the worker's name.

• No retrenchment must have been imposed on the worker.

During the working hours of any day, a worker whose name appears on the muster roll of the employer's industrial plant and who reports for duty but is not hired within two hours of his arrival is said to be laid off for that day. Similar to this, if a worker is asked to work during the second half of his shift and gets hired, he is considered to have been laid off for the first part of the day. He is regarded to have been laid off for the entire day if, despite reporting for work during the second half of the day, he is still unemployed.

Layoffs are Prohibited by The Industrial Disputes Act of 1947

While firing employees, an employer is subject to several restrictions. These limitations apply to industrial facilities with more than 100 employees that are not seasonal in nature. A worker whose name appears on the muster roll of an industrial facility cannot be let go by an employer unless there is a power outage or a natural disaster.

Fire, explosion, an overabundance of combustible gas, or a flood can also be the causes of mine-related work. After receiving approval from the relevant authorities designated by the government or the government itself, an employer may fire employees. In order to accomplish this, the employer must submit an application outlining the grounds for the layoff and deliver a copy of this application to each affected worker.

The responsible body or the government may request information regarding such a layoff after receiving an application. Following such an investigation, the employer and the employees who are being let go must be informed of the government's or the responsible authority's decision. The application for permission shall be deemed approved if the relevant authority or the government does not transmit its decision about the grant or denial of permission for such a layoff within 60 days of the date of the application.

The involved authority's or the government's order may be appealed or referred to a tribunal for adjudication on its own initiative or in response to a request filed by an employer or any employee.

Meaning of Retrenchment

The Industrial Disputes Act, 1947, mentions retrenchment under Section 2(oo). Retrenchment, according to the aforementioned provision, is defined as the dismissal of a worker for any cause other than as punishment for enforcing disciplinary measures.

However, voluntary retirement, retirement at the age of superannuation as specified in the employment contract, removal due to continued illness, and termination of the employment contract or non-renewal after its expiration are not included in retrenchment.

Prerequisites for Retrenchment

• The employee must get a one-month written notice from the employer outlining the reasons for the retrenchment, or in lieu of that notice, they must be provided salaries for the notice period, according to this Section.

• When a worker is laid off, the employer is required to give them compensation equal to 15 days' worth of wages on average for each year they have worked continuously.

• A reduction-in force notice must also be given to the relevant government.

The Retrenchment Process

An employer must make sure to retrench a worker who was deemed the final applicant to be hired for a certain job at the time of employment if he or she belongs to a particular class of workers employed in the employer's firm. Retrenchments typically follow the guideline that they must begin with fresh or inexperienced employees and work their way up to more seasoned or senior employees.

The above-mentioned technique, however, has two exceptions: if the employer and the workers have a contract in place that deviates from the law; or if the employer gives any other worker a reason to be laid off. Employees with specialized talents whose services are essential to the establishment's smooth operation must continue to be employed by the employer in good faith.

Comparison Between Retrenchment and Layoffs

Retrenchment, on the other hand, refers to the removal of surplus workers from an industrial establishment to increase productivity, provided that such removal is carried out for any reason whatsoever other than as a form of punishment in support of enforcing disciplinary action. A layoff essentially refers to the temporary termination of a worker at the disposal of an employer.

A layoff results in a temporary termination, but a retrenchment results in a permanent termination. In both cases, the employer-employee relationship ends, although it does not end in the first.

When an industrial establishment is laid off, after the announcement, it ceases to exist or operate. Retrenchment, however, does not result in a suspension of the industrial establishment's activities. Once the layoff term has expired, a worker who has been let go is given a new position. Retrenchments result in the worker's employment being instantly ended and the employer and worker no longer having any contact.

Conclusion

Any firm that operates relies on a variety of factors to operate, increase revenues, and decrease losses. Additionally, it must provide its staff with adequate care so that they can contribute effectively to the growth of the business. But in order to remain competitive, these businesses must make judgments quickly and accurately.

Layoffs and retrenchments, which both follow specific procedures to ensure that the workers are not subjected to unjust conditions, may be advantageous to the corporation in terminating the employees or workers.

Frequently Asked Questions

Q1. What do you mean by Outsourcing?

Ans. When a company engages another company to do a planned or ongoing task that would otherwise be or might be handled internally, it is known as "outsourcing." This arrangement occasionally entails the transfer of assets and workers from one company to another.

Q2. Define the term Collaboration?

Ans. Collaboration is the process of two or more individuals, groups, or organizations coming together to carry out a task or realize an objective. Cooperation is akin to collaboration. The majority of collaboration involves leadership, yet in a decentralized and egalitarian group, leadership might take the form of social interaction.

Q3. What is Recruitment?

Ans. Recruitment refers to the entire process of finding, sourcing, screening, shortlisting, and interviewing people for positions (either permanent or temporary) within a business. Managers, human resource generalists, and recruitment experts may be tasked with recruiting, but in some instances, public employment, for-profit recruitment agencies, or specialized search consultancies are utilized to carry out specific elements of the process.