Background
Lay-off, retrenchment, and closure under the Industrial Relations Code, 2020, as operationalized through the Industrial Relation (Gujarat) Rules, 2021, establish a structured process for managing workforce reductions in industrial establishments. The framework ensures fairness by prescribing notice requirements, compensation norms, and prior approvals where applicable. These provisions aim to balance managerial flexibility with worker protection, promoting orderly handling of employment changes and minimizing industrial disputes.
Applicability
The Industrial Relations Code, 2020 applies uniformly across India, including Gujarat, from the date it was brought into force by the Central Government. In Gujarat, the IR Code applies to all establishments covered under the Code. Provisions relating to standing orders apply to establishments with 300 or more workers, while rules on trade unions, dispute resolution, and employer-employee relations apply broadly to all applicable industries and establishments operating within the state.
Compliance Requirements under the Rules In accordance with the Code
An employer intending to retrench a worker with at least one year of continuous service must notify the State Government and the concerned Deputy Commissioner of Labour in Form-VIII, either electronically, personally, or via registered/speed post.
No worker with at least one year of continuous service shall be retrenched unless:
(a) the worker is given one month’s written notice stating the reason for retrenchment and either the notice period expires or wages in lieu of notice are paid;
(b) compensation is paid at the time of retrenchment, equal to fifteen days’ average pay (or such other period as notified by the appropriate Government) for every completed year of continuous service or part exceeding six months; and
(c) notice in the prescribed manner is served upon the appropriate Government or authority as specified by notification
Whenever a worker (other than badli/casual) who has completed at least 1year of continuous service under an employer is laid-off, he shall be paid for all days laid-off, compensation which shall be equal to 50% of basic wages and D.A. that would have been payable to him, had he not been so laid-off
1) Applicable on industrial establishments employing 50 or more but less than 300 workmen on an average per working day in the preceding 12 months, excluding those of seasonal or intermittent nature. Weekly holidays are not counted as laid-off days.
2) If, during 12 months, a worker is laid off for more than 45 days, no compensation is payable beyond the first 45 days if an agreement exists between employer and worker.
3) Employer may retrench a worker after 45 days of lay-off, and any compensation paid for lay-off during the preceding 12 months may be set off against retrenchment compensation.
4) No compensation is payable if: i) the worker does not present himself for work at the appointed time during normal hours at least once a day, or ii) the lay-off is due to a strike or go-slow by workers in another part of the establishment.
It shall be the duty of every employer to maintain a muster roll, and to provide for making of entries therein by workers who may present themselves for work at the establishment at the appointed time during normal working hours.
1) Applicable on Industrial Est employing 50 or more workmen on an average per working day for preceding 12 months & are not of seasonal nature/intermittent work
2) It shall be the duty of every employer to maintain a muster roll, and to provide for making of entries therein by workers who may present themselves for work at the establishment at the appointed time during normal working hours.
Where any worker who is to be retrenched belongs to a particular category of workers in establishment, then, in absence of any agreement between employer and worker, employer shall ordinarily retrench worker who was the last person to be employed in that category
1) If the employer retrenched otherwise, any other worker, he can do so after recording his reasons for the same.
2) Provisions apply to a worker who is a citizen of India
Where ownership of establishment is transferred, by agreement or by operation of law to a new employer, every worker who has been in continuous service for not less than a year immediately before transfer shall be entitled to notice and compensation as per Section 70 as if he had been retrenched
Nothing in this section shall apply to a worker in any case where there has been a change of employers by reason of the transfer, if—
(a) the service of the worker has not been interrupted by such transfer;
(b) the terms and conditions of service applicable to the worker after such transfer are not in any way less favourable to the worker than those applicable to them immediately before the transfer and
(c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the worker, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.
Where an establishment is closed down for any reason, every worker who has been in continuous service for not less than one year in that undertaking immediately before such closure shall be entitled to notice and compensation as per Section 70, as if the worker had been retrenched
1) Where undertaking is closed down on account of unavoidable circumstances beyond control of employer, the compensation to be paid to the worker under Section 70 (b), shall not exceed his average pay for three months.
2) An industrial establishment which is closed down by reason merely of—
(i) financial difficulties (including financial losses); or
(ii) accumulation of un-disposed stocks; or
(iii) the expiry of the period of the lease or license granted to it; or
(iv) in case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on, shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section.
3) For related provisions w.r.t mining operations/ undertaking set-up for the construction of buildings, bridges, roads, canals, dams or other construction work , reference to be made to Section 75(2) to (4)
Penalty & Punishment
U/s86(3): An employer who contravenes the provisions of section 67 or section 70 or section 73 or section 75 shall be punishable with fine which shall not be less than fifty thousand rupees, but which may extend to two lakh rupees.
U/s 86(4):For subsequent offence, he shall be punishable with fine which shall not be less than one lakh rupees, but which may extend to five lakh rupees or with imprisonment for a term which may extend to six months, or with both.
As per Section 86(20): Any person who contravenes any other provision of this Code not covered under sub-sections (1) to (19) or the rules or regulations framed under this Code shall be punishable with fine which may extend to one lakh rupees
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