Assignment

Industrial Dispute Act 1947

Submitted by:
Charan Kamal Singh
MBA(HR)
Topics: (1) Reinstatement and re-employment of retrenched workmen
(2) Termination within probation
(3) Special Provision Relating to Lay-off, Retrenchment and
Closure in Certain Establishments.

2


Industrial Dispute Act 1947


Topics: (1) Reinstatement and re-employment of retrenched workmen
(2) Termination within probation
(3) Special Provision Relating to Lay-off, Retrenchment and Closure in Certain
Establishments.


















3

INDEX

S. No. CONTENTS
PAGE
No.
1 Reinstatement and re-employment of retrenched workmen 4-5
2
Termination within probation
5
3
Special Provision Relating to Lay-off, Retrenchment and Closure in
Certain Establishments
6-12
References 12















4

1. Reinstatement and re-employment of retrenched workmen

Reinstatement refers to restoration of a former employee to his/her previous position after
unfair or unlawful dismissal, demotion or transfer. Reinstatement usually involves no loss of
entitlements or earnings that have been accrued for a period between the original dismissal
and the date the employee was reinstated. This means that the employee is deemed to have
continued to perform the work for the employer, although not employed by the employer
during that time. Unlike reinstatement, re-employment usually means a loss of earnings and
accrued entitlements for the period between the original dismissal and the date the employee
was re-employed.

Reinstatement of retrenched workmen
When the retrenchment of the worker is invalid his reinstatement can be ordered. When an
order with respect to reinstatement of a workman is passed it must also ordinarily lead to
reinstatement with full back wages. In case a worker is entitled to be reinstated with full back
wages but the employer prefers to pay him compensation instead of reinstatement then it is
necessary for the employer to pay him adequate compensation in order to meet justice. There
are some exceptional circumstances also where it may be impossible or may be wholly
inequitable for the employer and workmen to direct reinstatement with full back wages. For
e. g., the industry might have closed down or it could be in deep financial problems or the
concerned workmen may have secured a better employment elsewhere. In such cases, the
Court has the power to make consequential orders.

Reinstatement with full back wages
Every workman invariably pleads that after he was retrenched or unemployed he was not able
to find any job. Therefore on the basis of this assertion the burden is on the employer to prove
that the said worker had been gainfully employed during the period he was rendered
unemployed. In case the reinstatement of the workmen has been ordered with continuity of
service and the workmen are ready to work but they are kept away therefrom on account of
invalid act on the part of the employer then the employer has to reinstate them with full back
wages.
1
But this cannot be considered as straight rule and the discretion of the Tribunal is
necessary with respect to reinstatement of the workmen with full back wages. Reinstatement
with full back wages is considered to be a normal rule and the employer is required to
establish the circumstances necessitating the departure.


1
Hindustan Tin Works Ltd. v. Its Employees, (1978) II L.L.J. 474 (S.C.)
5


Re-employment of retrenched workmen
When the workman has been retrenched on grounds of surplus staff by the employer then it is
the duty of the employer to offer the retrenched employee an opportunity to join the service
whenever any opportunity arises. The retrenched workmen would be given a preference over
others provided that they offer themselves for employment. The provision for this has been
made under the section 25-H of the Industrial Dispute Act, 1947.
It is required that the worker should have been retrenched prior to re-employment. Also, the
workman is required on his part to offer himself for re-employment in response to any notice
regarding re-employment given by the employer. The worker is required to have been
retrenched from the same category of the service with respect to the industrial establishment
in which the employer has proposed to provide him re-employment.
Only a worker who has been retrenched can claim benefit under the Section 25-H. In case
of dismissal, discharge or superannuation the worker cannot make a claim for re-
employment.

2. Termination within probation

There is no legal bar on terminating an employee during his or her probation period without
notice for any reason unless in his letter of appointment notice there is a mention of notice
period. The order of termination of service within the period of probation on ground that the
service was unsatisfactory cannot be held bad under the law.
2
The termination of services of
an employee either during the initial period of probation or during the extended period of
probation on the basis of the ground that the services of the employee was not suitable is
considered to be as retrenchment.
3
The above view was overruled by the Supreme Court in
the case of M. Venugopal v. L.I.C. of India, A.P. and another.
4
The supreme court held in the
above mention case that the termination of service cannot be considered as retrenchment
under section 2(oo) of the Industrial Dispute Act, 1947 because the conformation of the
probationer was dependent on the conditions of fulfilment of minimum business guarantee
and the employee failed on his part to fulfil the minimum requirement as prescribed.
Therefore L.I.C. was justified in terminating the service of the employee on probation
without complying with the provisions of the Industrial Dispute Act, 1947 relating to
retrenchment.

2
Rajaji Nagar Co-operative Bank Ltd. v. K. Gujuraj and another, (2001) II LLJ 412 (SC)

3
Management Karnataka State Road Transport Corpn., Bangalore v. Shek Abdul Khader and others, (1984) I LLJ
110 (SC)

4
(1980) II LLJ 72 (SC)
6

3. Special Provision Relating to Lay-off, Retrenchment and Closure in
Certain Establishments

After the amendment in the year 1976 in the Industrial Dispute Act, 1947 the chapter relating
to Special Provision Relating to Lay-off, Retrenchment and Closure in Certain
Establishments was added. This act was added as the section V-B to the Industrial Dispute
Act, 1947.
This chapter consists of Section 25-K to 25-R.
The various sections of this chapter have been discussed in detail below:

Application of chapter V-B (Section 25-K).
The provisions of this chapter is applicable to any industrial establishment in which hundred
or more than hundred workers have been employed on an average per working day in the
the last preceding 12 months. The industrial establishment should not be of seasonal character
or in which the work has been performed intermittently. Also, the decision of the appropriate
government shall be final in case a question arises that whether the work performed is of
seasonal character or whether the work is performed intermittently.

Definitions (Section 25-L)
Under this section an industrial establishment has been defined as a factory as per section
2(m) of the Factories Act, 1948 or a mine as per section 2(1) (i) the Mines Act, 1952 or as a
plantation as per section 2(f) of the Plantations Labour Act, 1951. Also, under this act the
central government shall be the appropriate government in relation to any company in which
more than 50% of the paid up share capital is owned by the central government. Also, in case
of corporations which have been established by or under any law which had been made by
the parliament the central government shall be the appropriate authority provided that the
corporation is not the corporation mentioned under the sub-clause (ii) of clause (a) of Section
2 of the Industrial Dispute Act, 1947. Section 2 (a) (ii) is related to State public sector
undertakings, subsidiary companies, autonomous bodies that have been set up or owned by
the State Government.

Prohibition of lay-off (Section 25-M)
As per Section 25-M, no workman employed in an industrial establishment (as defined in the
section 25-L) and whose name appears on the muster role of that industrial establishment can
be laid-off without taking prior permission of the appropriate government or any other
7

authority specified by the appropriate government (through notification in the official
gazette). The worker should not a badli or casual workman. For taking permission the
application needs to be sent to the appropriate government or specified authority, unless such
a lay-off is regarding to shortage of power or natural calamity or in case of mine such a lay-
off is a result of flood, fire, explosion or excess of inflammable gas. The application has to be
made in the prescribed manner and should clearly state the reasons relating to lay-off. It is
also necessary to serve a copy of the application to the workmen concerned.
In case the lay-off occurs in a mine due to the reasons of flood, fire, explosion or excess of
inflammable gas, the concerned employer has to make an application in the prescribed
manner within 30 days of the commencement of the lay-off to continue the lay-off. The
application should be made as discussed above to the appropriate government of specified
authority.
The appropriate government or the specified authority shall conduct an inquiry on the
application made. The appropriate government (or specified authority) should give equal
chances of being heard to the employer as well as the workmen concerned and also to any
other persons interested in such lay-off. If the appropriate government is satisfied that the
permission is rightly sought as per the provisions of the act, the appropriate government or
the specified authority after considering the adequacy and genuineness of the reasons given
by the party requesting for the permission by an order may grant or refuse permission. The
order has to be made in writing and the copy of such an order is required to be communicated
to both the employee and the workmen. In case where the application for permission has been
made as per the provisions of the act and the appropriate government or the specified
authority does not communicate any decision on grant of refusal of the application within 60
days of making such an application after the expiry of 60 days period shall be deemed to be
granted. The order of the appropriate government or the specified authority regarding refusal
or grant of permission shall be final and would be binding on all parties concerned and will
be in force for one year from date of passing.
The appropriate government (or specified authority) on the basis of the application made by
the employer or any workmen or on its own may review the order regarding deny or grant of
permission or it may refer the matter for adjudication process to the Tribunal. The Tribunal is
required to pass an award within a period of 30 days from the date the matter was referred to
it.
In case no application for lay-off has been made by the employer as per sub-section 3 to the
appropriate government (or the specified authority) or in case the permission has been
refused by the appropriate government regarding lay-off then such a lay-off shall be deemed
as illegal and all the benefits will be given to the workmen to which he is entitled.
In case of exceptional circumstances such as an accident in the establishment or death of the
employer, the appropriate government if satisfied, may by order direct that the provisions
relating to conditions for lay-off of workers as explained above will not be applicable to such
8

an industrial establishment for a period as mentioned in the order of the appropriate
government.
Also, the worker shall not be considered as laid-off by the employer if the employer offers
him any alternative employment. Such a employment can be offered in the same
establishment or any other establishment of the same employer. The establishment should be
situated in the same town or village, or the establishment is situated within such a distance
from the existing establishment that the transfer will not cause any undue hardship to
workman are far as the facts and the circumstances of the case is concerned. It is also
necessary that the workmen shall be paid same wages in case of alternate employment which
would have been paid normally to him in case of previous employment.

Conditions precedent to retrenchment of workmen (Section 25-N).
Under this section the workman who has been in continuous service for a period not less than
one year cannot be retrenched unless the employer gives the workman three months prior
notice regarding to the reasons for the retrenchment. Also, the employer is required to pay the
wages in lieu of any such notice before retrenchment. If in case the notice period has expired
the employer cannot retrench the workman. The prior permission of the appropriate
government and specified authority needs to be taken by the employer as per the provisions
contained in this act before proceeding for retrenchment. The application shall be made in a
manner as may be prescribed under the provisions of the act and should clearly state the
reasons for the retrenchment intended to be carried out. The copy of such a application is also
required to be served to the concerned workmen.
The appropriate government or the specified authority shall conduct an inquiry on the
application made. The appropriate government (or specified authority) should give equal
chances of being heard to the employer as well as the workmen concerned and also to any
other persons interested in such retrenchment. If the appropriate government is satisfied that
the permission is rightly sought as per the provisions of the act, the appropriate government
or the specified authority after considering the adequacy and genuineness of the reasons
given by the party requesting for the permission by an order may grant or refuse permission.
The order has to be made in writing and the copy of such an order is required to be
communicated to both the employee and the workmen. In case where the application for
permission has been made as per the provisions of the act and the appropriate government or
the specified authority does not communicate any decision on grant of refusal of the
application within 60 days of making such an application after the expiry of 60 days period
shall be deemed to be granted. The order of the appropriate government or the specified
authority regarding refusal or grant of permission shall be final and would be binding on all
parties concerned and will be in force for one year from date of passing.
The appropriate government (or specified authority) on the basis of the application made by
the employer or any workmen or on its own may review the order regarding deny or grant of
permission or it may refer the matter for adjudication process to the Tribunal. The Tribunal is
9

required to pass an award within a period of 30 days from the date the matter was referred to
it.
In case no application for retrenchment has been made by the employer as per sub-section 1
to the appropriate government (or the specified authority) or in case the permission has been
refused by the appropriate government regarding retrenchment then such a retrenchment shall
be deemed as illegal and all the benefits will be given to the workmen to which he is entitled.
In case of exceptional circumstances such as an accident in the establishment or death of the
employer, the appropriate government if satisfied, may by order direct that the provisions
relating to conditions for retrenchment of workers as explained above will not be applicable
to such an industrial establishment for a period as mentioned in the order of the appropriate
government.
In case the permission for retrenchment by the appropriate government (or specified
authority) has been granted or is deemed to have been granted, every workman who has been
employed in the concerned industrial establishment on a date before which the application
was made for retrenchment, shall be paid with compensation which shall be equivalent to
average pay of 15 days for every year of continuous service completed by the workman or
any part thereof which is in excess of six months.

Procedure for closing down of an undertaking (Section 25-O).
Under the provisions of this section any employer who intends on closing down of the
undertaking of the industrial establishment is required to apply for permission to the
appropriate government. The application shall be made at least 90 days before the date on
which the closure is intended to become effective. The employer shall clearly state the
reasons for the intended closure in the application and also he is required to serve the notice
to the workmen in the prescribed manner under this section. The provisions are not applicable
to an undertaking which has been set up for the purpose of construction of bridges, canals,
roads, dams or buildings or any other construction work.
The appropriate government or the specified authority shall conduct an inquiry on the
application made. The appropriate government (or specified authority) should give equal
chances of being heard to the employer as well as the workmen concerned and also to any
other persons interested in such closure. If the appropriate government is satisfied that the
permission is rightly sought as per the provisions of the act, the appropriate government or
the specified authority after considering the adequacy and genuineness of the reasons given
by the party requesting for the permission by an order may grant or refuse permission. The
order has to be made in writing and the copy of such an order is required to be communicated
to both the employee and the workmen. In case where the application for permission has been
made as per the provisions of the act and the appropriate government or the specified
authority does not communicate any decision on grant of refusal of the application within 60
days of making such an application after the expiry of 60 days period shall be deemed to be
10

granted. The order of the appropriate government or the specified authority regarding refusal
or grant of permission shall be final and would be binding on all parties concerned and will
be in force for one year from date of passing.
The appropriate government on the basis of the application made by the employer or any
workmen or on its own may review the order regarding deny or grant of permission or it may
refer the matter for adjudication process to the Tribunal. The Tribunal is required to pass an
award within a period of 30 days from the date the matter was referred to it.
In case no application for closure has been made by the employer as per sub-section 1 to the
appropriate government or in case the permission has been refused by the appropriate
government regarding closure then such a closure shall be deemed as illegal and all the
benefits will be given to the workmen to which he is entitled.
In case of exceptional circumstances such as an accident in the establishment or death of the
employer, the appropriate government if satisfied, may by order direct that the provisions
relating to conditions for closure as explained above will not be applicable to such an
industrial establishment for a period as mentioned in the order of the appropriate government.
In case the permission for closure of the undertaking by the appropriate government has been
granted or is deemed to have been granted, every workman who has been employed in the
concerned undertaking on a date before which the application was made for closure, shall be
paid with compensation which shall be equivalent to average pay of 15 days for every year of
continuous service completed by the workman or any part thereof which is in excess of six
months.

Special provision as to restarting of undertaking closed down before commencement of
the Industrial Disputes (Amendment) Act, 1976 ( Section 25-P).
Under this section the conditions for restarting of an undertaking of an industrial
establishment which has been closed down before Industrial Disputes (Amendment) Act,
1976 has been discussed. The conditions are as follows:
- If the appropriate government has the opinion that the undertaking was closed down
on account of circumstances that were beyond the control of employer.
- If the appropriate government has the opinion that there are possibilities of restarting
the undertaking.
- If the appropriate government has the opinion that it is necessary to restart the
undertaking for rehabilitation of the workers who were employed in the undertaking.
- If the appropriate government has the opinion that restarting of the undertaking is
necessary to maintain the supplies and services which are essential with respect to the
life of the community.
- If the appropriate government has the opinion that restarting of the undertaking will
not impose any kind of hardship on the employer.

11

In the above cases, the appropriate government after giving an opportunity to restart to the
employer may by order direct that the undertaking ought to be restarted. The order should be
published in the official gazette and the time given to the employer to restart the undertaking
should not be less than one month from the date on which the order of restarting of the
undertaking has been passed.


Penalty for lay-off and retrenchment without previous notification (Section 25-Q)

Under this section any employer who has contravened the provisions contained in the section
25-M or section 25-N is liable to be punished with imprisonment for a period which may
extend to 1 month or a fine may be imposed on him which may extend to Rs.1000 or he may
be imprisoned and fined both.



Penalty for closure (Section 25-R)

Under this section any employer who has closed down an undertaking of an industrial
establishment without adhering to the provisions of the sub-section (1) of Section 25-O is
liable to be punished with imprisonment for a period which may extend to 6 months or a fine
may be imposed on him which may extend to Rs. 5000 or he may be imprisoned or fined
both.

Any employer who has contravened an order of the appropriate government related to refusal
to grant permission to close down an undertaking of the industrial establishment under sub-
section (2) of Section 25-O or a direction which has been given under Section 25-P is liable
to be punished with imprisonment for a period which may extend to 1 year or a fine may be
imposed on him which may extend to Rs.5000 or he may be imprisoned and fined both. In
case of continued contravention he may be subjected to a further fine of Rs. 2000 for every
day during the period the contravention continues after conviction.

Any employer who has contravened the provisions contained in the sub-section (3) of section
25-O is liable to be punished with imprisonment for a period which may extend to 1 month or
a fine may be imposed on him which may extend to Rs. 1000 or he may be imprisoned or
fined both.







12

Certain provisions of Chapter V-A to apply to an industrial establishment to which this
Chapter applies (Section 25-S).

As per section 25-S the provisions contained in the sections 25-B, 25-D, 25-FF, 25-G, 25-H
and 25-J in Chapter V-A, so far as the case may be, shall be applicable also in relation to an
industrial establishment to which provisions of the Chapter on Special Provision Relating to
Lay-off, Retrenchment and Closure in Certain Establishments are applicable.
Under section 25-B the continuous service has been defined. Section 25-D is related to the
duty of the employer to maintain muster rolls of workmen. Section 25-FF is related to
compensation given to the workers in case of transfer of undertakings. Under section 25-G
procedure for retrenchment has been given. Section 25-H is related to re-employment of
retrenched workmen. Section 25-J is related to effect of laws which are inconsistent with the
Chapter V-A.

References

Balasubramanian, A., Industrial Relations, Indian Institute of Modern Management, Pune,
pp. 38-88.

Mishra, S.N., Labour and Industrial Law, Central Law Publications, Allahabad, 27 ed., pp.
207-269.

Sinha, P.N., Industrial Relations, Trade Unions and Labour Legislations, Pearson
Publications India, New Delhi, pp. 368-397