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21 What indemnities, layoff benefits or severance pay must be paid in cases of collective layoff due to business restructuring?

Apart from contractual requirements and statutory benefits such as bonus and gratuity, a compensation of 15 days pay for every completed year of service and any part thereof in excess of 6 months has to be paid to each employee retrenched.
22 What indemnities, layoff benefits or severance pay must be paid in cases of collective layoff due to business restructuring?

Apart from contractual requirements and statutory benefits such as bonus and gratuity, a compensation of 15 days pay for every completed year of service and any part thereof in excess of 6 months has to be paid to each employee retrenched.
23 What are the legal consequences if a collective layoff is not conducted properly?
* How may an employee or a work council challenge a collective layoff decision?
* What are the penalties if the decision is successfully challenged?


The purpose of the notice period to the Government or the requirement to obtain approval from the appropriate government is to enable the Government to satisfy itself of the bonafides of the retrenchment decision. The union, can challenge a layoff decision by raising an industrial dispute or it may approach a court of law for an injunction to prevent the closure and drag the company into a lengthy litigation process thus delaying the process. The only ways a collective retrenchment can be considered to have not been carried out properly are
a) Not obtaining prior permission from the government which subjects the employer to imprisonment for six months or fine upto Rs 5000 or both
b) Contravention of refusal of permission from the government which subjects the employer to imprisonment for one year or fine upto Rs 5000 or both
c) Closure of undertaking without notice to employees which subjects the employer to imprisonment for six months or fine upto Rs 5000 or both. In case of an industrial tribunal determining that the retrenchment was not for valid reasons, the employer will have to reinstate all workmen with full back wages except in exceptional circumstances i.e. industry has closed down or is in severe financial trouble.
24 What are the legal consequences if a collective layoff is not conducted properly?
* How may an employee or a work council challenge a collective layoff decision?
* What are the penalties if the decision is successfully challenged?


The purpose of the notice period to the Government or the requirement to obtain approval from the appropriate government is to enable the Government to satisfy itself of the bonafides of the retrenchment decision. The union, can challenge a layoff decision by raising an industrial dispute or it may approach a court of law for an injunction to prevent the closure and drag the company into a lengthy litigation process thus delaying the process. The only ways a collective retrenchment can be considered to have not been carried out properly are
a) Not obtaining prior permission from the government which subjects the employer to imprisonment for six months or fine upto Rs 5000 or both
b) Contravention of refusal of permission from the government which subjects the employer to imprisonment for one year or fine upto Rs 5000 or both
c) Closure of undertaking without notice to employees which subjects the employer to imprisonment for six months or fine upto Rs 5000 or both. In case of an industrial tribunal determining that the retrenchment was not for valid reasons, the employer will have to reinstate all workmen with full back wages except in exceptional circumstances i.e. industry has closed down or is in severe financial trouble.
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