Type:Trigger
Frequency: Quarterly
Action to be taken:
Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking shall be entitled to notice period and compensation as per Section 25-F as if the worker had been retrenched. If the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, compensation to a workman shall not exceed the workman's average pay for three months.
Terms of compensation for workers in Mines and in undertakings set up for construction of buildings, bridges, roads, canals or dams are contained in Section 25-FFF 1-A and 1-B
Audit Requirement:On closure of an undertaking, have all workers been provide notice and compensation as if they had been retrenched ?
Supporting Documents:Details of Notice Given and Compensation Paid
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:Lay-off and Retrenchment|
25FFF:Compensation to workmen in case of closing down of undertaking:
(1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of Section 25-F, as if the workman had been retrenched :
Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under closed (b) of Section 25-F shall not exceed his average pay for three months.
Explanation - An undertaking which is closed down by reason merely of -
(i) financial difficulties (including financial losses), or
(ii) accumulation of undisputed of stocks ; or
(iii) the expiry of the period of the lease or lease or license granted to it; or
(iv) in a case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which such 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)
(1-A) Notwithstanding anything contained in sub-section(1), where an undertaking engaged in mining operations is closed down by reasons merely of exhaustion of the minerals in the area in which such operations are carried on, no workman referred to in that sub-section shall be entitled to any notice or compensation in accordance with the provisions of Section 25-F, if -
(a) the employer provides the workman with alternative employment with effect from the date of closure at the same remuneration as he was entitled to receive, and on the same terms and conditions of service as were applicable to him, immediately before the closure;
(b) the service of the workman has not been interrupted by such alternative employment; and
(c) the employer is, under the terms of such alternative employment or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by such alternative employment.
(1-B) For the purposes of sub-section (1) and (1-A), the expressions "minerals" and "mining operations" shall have the meanings respectively assigned to them in clauses (a) and (d) of Section 3 of the Mines and Minerals (Regulation and Development) Act, 1957 (67 of 1957).
(2) Where any undertaking set up for the construction of buildings, bridges, roads, canals, dams or other construction work is closed down on account of the completion of the work within two years from the date on which the undertaking had been set up, no workman employed therein shall be entitled to any compensation under clause (b) of Section 25-F, but if the construction work is not so completed within two years, he shall be entitled to notice and compensation under that section for every {completed year of continuous service) or any part thereof in excess of six months.)
