Introduction

Right now in the world of employees, there is a lot of debate going on about Layoff versus Termination in India. Big giant companies of the world are laying off employees for different reasons. In them, the employee has no choice but to accept the company's word. But sometimes companies are seen giving layoffs due to their arbitrary decisions. When the question naturally arises in the mind of the employee that "the layoff given by the company is legal?” every employee needs to have proper and sufficient understanding and knowledge.

I am here today to share my thoughts and experiences on the issue of termination versus layoffs. I hope you find my thoughts and experiences useful.

Meaning of Layoff 

Definition under the industrial dispute act-1947 " Layoff"  means, the failure, refusal, or inability of an employer on account of a shortage of call, power, or raw materials or the accumulation of stock or the breakdown of machinery or natural calamity or any other connected reason to give employment to a workman whose name is borne on the muster-rolls of his establishment and who has not been retrenched.   

Basic elements of Layoffs 

1. The employer must fall into failure, Refusal,  or Inability. And employers do not provide work to the worker

2. The said inability, Refusal, or failure arose based on lack of power, coal, raw materials, accumulation of stocks, breakdown of machinery, Natural calamity, or any other relevant reason.

3. A worker's name must be registered in the muster roll to the employer under the act.  

4. The worker should not have been retrenched by the company.

5. The worker is not at fault.

6. The company or plant must have been closed for reasons specified in law.

Compensation is Not applicable under the said circumstances 

As per section 25E of the Industrial dispute act-1947. When a worker shall not be entitled to compensation for layoffs.

1. During the working days, the worker shall be absent from the establishment during the required working hours at least once a day.

2. Elsewhere in the company, the worker's performance slows down or the worker is laid off due to a strike.

3. A worker on behalf of the company expresses his refusal to the alternative employment offered to him, subject to certain practical conditions.

Prohibition of Layoffs 

Employers are subject to certain restrictions while laying off workers. And restrictions apply to those industrial establishments which are not n nature. Also where there are more than 100 workers. And an employer cannot dismiss a workman whose name is mentioned in the muster roll of his industrial establishment. But such retrenchment can be waived if the reason is lack of power or natural calamity. The causes may be fire, explosion, excess of flammable gas, or even flooding, especially if the work is related to mining.

As a rule, the employer can dismiss the workers after obtaining the permission of the Government or the concerned authorities specified by the Government. And for this purpose, an application shall be made by the employer showing the reasons for such retrenchment. And a copy of the same application will be provided to such workers. and who are subject to such retrenchment. On receipt of such an application, the concerned authority or the Government may inquire about such retrenchment. After such inquiry by the officer, the concerned authority or the Government shall order the employer and the employees to be retrenched. Also, the order of the concerned authority or Government shall be considered final and shall be binding for a period of one year from the date of such order.

But such application for permission shall be deemed to be granted if the concerned authority or Government does not communicate its grant or its order refusing permission for such concession within 60 days from the date of application. And the order of the concerned authority or Government may be referred to the Tribunal for adjudication. In other words, it can be reviewed on its own motion or by application made by the employer or any employee.

But if any retrenchment takes place even after the denial of permission to do so, such retrenchment will be considered illegal. Workers retrenched by the company will be entitled to the benefits of the Act. But if an employer provides alternative employment to such a workman, he shall not be deemed to have dismissed any workman.

Are you passionate about knowing about Amendment in Labour law 2021

Continues service- Layoffs

A worker is said to have continuous service if he has worked for at least one year without any interruption. But he will be eligible for compensation if he has rendered at least one year of continuous service. Nor shall such continuous service be interrupted by an accident, official leave, sickness, legal strike, lockout, or stoppage of work that is not due to the fault of the workmen.
There are two exceptions where a workman will be deemed to be in continuous service even if he is not in continuous service namely -
But if the worker was employed for the previous 12 calendar months from the date such calculation is being made.

Or A worker, if during such 12 months the worker has been employed in a mine for 190 days or more and 240 days in any other employment. Or
If, conditions for compensating a retrenched workman, As per Section-25C of the said Act:
A workman who is retrenched in the company is entitled to compensation equal to half of the total wages and allowances paid for the said period of retrenchment.

Refunds are subject to the following conditions –

There is no shift or casual worker in the company.
Also, the name of the worker must be registered in the muster roll of the industrial company.
And, the workman must have rendered at least one year of continuous service under the law in the industrial establishment of such employer.

What is the difference between laid off and terminated? 

Layoff  of workers: 

1. Nature- Removal from employment temporary 

2.  Reason- Merger, Short supply of raw material, Buy out, Natural enemy, Cost reduction, Change of business, Relocated 

3. Rehire-Possible 

4. Period- Temporary

5. The intention of Employee- Without fault 

6. Result-Losing job 

Termination of worker:   

1. Nature- Removal from employment Permanent 

2. Reasons- Poor performance, Remove productivity, Criminal act, Hostile work, Involving fraud and theft, Non-Performing, Violation of rules and policy

3. Rehire- Not Possible 

4. Period- Permanent 

5. The intention of the employee- With fault

6. Result- Terminate job 

Conclusion

At the end of our detailed discussion of layoff vs. termination above, you can be sure that layoff is sometimes not legal. A layoff given to an employee can sometimes prove harmful to both the company and the employee. Is layoff legal? You can verify it by consulting an expert labor law lawyer.