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Industrial Disputes Act

Section:25-0 :Closure of Undertaking

Obligation : To apply for permission to close an undertaking to the appropriate Government and

Type:Trigger Frequency: Quarterly

Action to be taken:
Where an industrial establishment has employed more than 100 workmen per day on an average in the preceding 12 months, in case of intention of closure of the undertaking, make an application to the appropriate government at least 90 days before the date of intended closure, stating clearly, the reasons for closure. A copy of the application is also to be served on the representatives of the workmen in the prescribed manner. The appropriate government will grant or refuse permission in writing, and if no communication is received within 60 days, permission is deemed to have been granted. Closure without approval will be deemed illegal and workmen will be entitled to all benefits as if the undertaking had not been closed. On closure, all workmen employed in the establishment immediately before the date of application shall be entitled to receive compensation which is equivalent to 15 days average pay for every year of continuous service or any part of a year in excess of six months

Audit Requirement:
Has permission been obtained from the appropriate government before closing down an undertaking ? Have all workmen been paid compensation after closure ?

Supporting Documents:
Copy Of Notice Of Closure, Details of Compensation paid to workmen

Related Triggers:
Closure Of An Undertaking/Establishment
Closure Of Any Part of A Factory
Number of Workers In The Establishment
Temporary Closure or Reopening Of An Establishment

Related Keywords:
Closure
Dispute, Industrial Dispute
Remuneration/Wages/Compensation

Related Sections:
Industrial Disputes Act, 1947
Chapter:Special Provisions Relating to lay-off,retrenchment and closure in certain establishments| 25-O:Procedure for closing down an undertaking:
(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner :
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings bridges, roads, canals, dams or for other construction work.
(2) Where an application for permission has been made under sub-section (1, the appropriate Government, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.
(3) Where an application has been made under sub-section (1)and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall, be deemed to have been granted on the expiration of the said period of sixty days.
(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5) be final and binding on all the parties and shall remain in force for one year from the date of such order.
(5) The appropriate Government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a Tribunal for adjudication.
Provision that where a reference has been made to a Tribunal under this sub-section , it shall pass an award within a period of thirty days from the date of such reference.
(6) Where no application for permission under sub-section (1) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.
(7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.
(8) Where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is deemed to be granted under sub-section (3), every workman who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to fifteen days average pay for every completed year of continues service or any part thereof in excess of six months.)