Compensation For Manufacturing Unit closed due to shifting to other location

Thank You so much Madhu T. K. Sir, for your brilliant inputs. It's indeed very logic and true!!

Can you please also throw insights in the absence of a trade union, how can the demands for terminal compensations be placed? It's very disappointing from the fact that even today basic statutory benefits such as minimum wages, provisioned leaves, etc are not due diligently given citing company policy doesn't imply!! In fact, this is enforcement issue by the competent authorities.

Yes, there are companies which deny statutory rights and when it comes to a situation that the employees feel that in the absence of a collective effort or bargaining their demands will not be met, the company authorities take very drastic steps of closure and relocation of the establishment. With the power of money they can easily shut the mouth of the authorities. At the end of the day the blame will be on the workers and the employers association will conduct a press meet and announce that the place is not investment friendly and the workers do not cooperate and hence we are constrained to close down the units. This happens even in the state of Kerala which is known for the multiple trade unions and which has been identified as the state where the enforcement of labour laws and the implementation of the statutory provisions of the law have been the best, I think.

Total number of manpower should be inclusive of contract workmen or only permanent workmen ?
Regards
R K Dixit

For the purpose of coverage it should be the total number including the contract workers

Sorry to differ with you Mr.Madhu.
Contract labor engaged through any third party don't have the contract of employment with the PE to whom Chapter VA or VB would apply. But employees on FTC would be included along with the regular employees on roll for the purpose of computation of average no of employees.

But my understanding is that for applicability of any Labour Act or any chapter or section of any Act, the number of workers engaged through contractors would be included even though the chapter, section or even the Act may not be applicable to them.

In Maharashtra General Kamgar Union Vs. Indian Gum Industries Ltd., (2008- II LLJ 827 (2008) 3 SCC 127), there was an observation by the Supreme Court that while computing the number of workmen, whether the contract labour are to be included or not. I think this issue is still open.

If it excludes the contract workers, certainly, many organisations will go out of coverage of many of the serious sections of the Act.

My dear Madhu,

I have gone through the judgment cited but not able to find the verdict of the larger bench. Hence still it remains an undecided issue. By the by, I do firmly believe that your understanding stems from your egalitarian approach that deserves anyone's appreciation.

I also agree with your proposition on applicability of most of the Indian Labor Laws to all the people hired for an industrial organization both directly and indirectly. However, it depends on the main objective of any such particular law.
Take for example the Factories Act,1948. The number criterion for applicability includes all those employees engaged in or in connection with the manufacturing process of the factory irrespective of the distinction of their Cadre, category or nature of engagement as the main objectives are regulation of conditions of employment, safety, health and environmental protection.
In the aspect of payment of Gratuity which forms part of the terminal benefits of employment, the threshold no. of 10 includes all the employees on roll irrespective of categorization. Even, as we all know, higher Judiciary has extended the concept of vicarious liability u/s 21 of the CLRA Act,1970 in respect of statutory gratuity to contract labor to the respective PE when the occasion arises.
Similar is the situation with regard to EPF,ESI and statutory bonus subject to monthly salary limits.

In my opinion, a dispassionate analysis of such a distinctive approach to the aspect of restricted applicability of certain provisions within a particular Labor Law would bring out the purpose to be solely the convenience of ease of operations of the Industrial establishment so as to retain its viability in the long run.

Dear All,

Whether the termination compensation is available to all those get retrenched from all the departments such as production, quality, maintenance, stores and warehouse, purchase, etc or it's limited to strictly workmen in this matter? Are executives, supervisors and HOD also eligible to get the compensation benefit?

Regards,

The provisions of the IDA,1947 are applicable only to those employees falling within the ambit of the term ' workman ' so defined u/s 2(s) of the Act. Therefore, other employees, either retrenched along with the 'workmen' or otherwise have to stake their claim for compensation only as per the terms of exit mentioned in their contracts of employment.

Thanks Sir,

There are many companies which are intentionally not issuing Appointment Letters despite frequent requests made In that case, how can they stake compensation?

Merely having a title of manager or HOD doesn't necessarily deprive someone working in the industrial establishment from compensation, as he is not having any cheque signing authority. As per my understanding, a pilot of flight is also coming in the workman category. In today's Industrial establishment, there are many departments and so many departmental heads, sub heads in the organization structure.

Please enlighten your views.

Thanks & Regards,