The significance of closure in labour law, as delineated by the Industrial Disputes Act, 1947, lies in establishing a fair and regulated framework for both employers and workmen. These procedures, demanding prior permission for closure, ensure a thoughtful and consultative approach.
By balancing the interests of employers and workmen, these regulations on Closure in Labour Law foster a harmonious industrial environment, preventing arbitrary actions and promoting stability. Ultimately, the structured closure process serves as a cornerstone for maintaining equity, justice and order within the realm of labour law.
Introduction
Labour law in India includes several important acts (like The Minimum Wages Act 1948, The Factories Act 1948, The Trade Unions Act 1926, The Payment of Wages Act 1936, etc.) that address and provide legal restrictions and rights for the working population and their employers. Out of these, the Industrial Disputes Act, 1947 (hereinafter referred to as the Act or I.D. Act) came into being with the purpose of fostering peace by settling industrial disputes. Although its main objective is to maintain a balance between the interests and welfare of both labour and industry, it also puts in place important procedures for the closing down of industrial establishments; this is defined in the Act as “closure.
What is closure.
”Closure is a term that refers to the indefinite shutting down of an establishment, factory business, or organisation. Factors such as low profits, poor marketing, bad management, tough competition, failure to pay taxes, etc. could result in closures. However, regardless of the reasons for the closure of any establishment, its process is governed by the different labour laws prevalent in the country. These laws ensure that the rights of all the stakeholders involved in the business of the said establishment (employees, workers, investors, suppliers, customers, etc.) are protected in the process.
Definition of Closure in Labour Law (Section 2(cc))
“Closure” means permanently shutting down a workplace or a part of it.
According to Industrial Disputes Act, 1947, “Closure” is when a workplace or part of it is permanently shut down. The employer must follow a specific process outlined in the law when closing the establishment.
However, Closure in Labour Law procedures do not apply to projects for building construction, like buildings, bridges, roads, canals, dams or other construction work.
Significance of the Act and closure: a brief overview
The Industrial Disputes Act lays down the procedure to resolve and investigate industrial disputes or disagreements between employers and their employees. The same is done in three ways, namely; through arbitration, adjudication, or conciliation, as provided by the statute. Its provisions apply to all businesses, establishments, undertakings, or manufacturers that fall under the meaning of ‘industry’ in Section 2(gg)(j) of the Act.
The Act, in its original form, did not provide for any laws relating to the closure of industrial establishments. It was expressly defined only in 1956 in the landmark judgement Hariprasad Shivshankar Shukla v. A.D. Diwelkar (1956). Here, the Supreme Court differentiated between the closure of an establishment and retrenchment. In due course, the laws pertaining to closure were inserted into the Act in 1976 and later in 1982. Depending on the reasons for doing so, the Act lays out the steps that the employer must take if they decide to close their business or establishment. For instance, if the closure is due to certain inevitable circumstances, the Act states that the workers are not entitled to any compensation beyond the average of three months of their wages (Section 25FFF). In case the closure is for any other reason, they must be given notice not less than 60 days in advance, and the affected employees must be adequately compensated(Section 25FFA).
Essentially, the Act provides the legal rules and restrictions under Sections 25FFA, 25FFF, 25-O, 25P, 25R, and 30A pertaining to the closure of industrial undertakings and businesses to safeguard the interests of the stakeholders involved.
Application of Closure in Labour Law
If an employer plans to close their establishment, they must apply at least ninety days in advance to the appropriate government. They also need to give a copy of the application to the workers’ representatives.
The government will review the application, providing a fair chance for both the employer and workers to be heard. After the review, the government may approve or deny the closure. If there’s no response within sixty days, permission is considered granted and there’s a provision for a review of the decision.
Provisions of Closure in Labour Law
Section 25(O) of the Industrial Disputes Act, 1947 allows the closure of a business without prior permission if certain conditions are met. Here are the key points:
Conditions for Closure in Labour Law:
An employer can close a business without seeking prior permission if it has less than 50 workers and compensates the workers with 15 days’ average pay for each completed year of service.
Notice to Authorities and Workers:
The employer must notify the government authority and workers at least 60 days in advance or provide wages instead of notice.
Compensation Procedure:
Compensation must be paid at the time of closure or within 15 days from the notice, whichever comes first.
Penalty for Non-compliance:
Failure to comply with Section 25(O) can result in imprisonment for up to six months, a fine of up to Rs. 5,000 or both.
Note: Section 25(O) applies only to businesses with less than 50 workers. For those with 50 or more, prior government permission is needed under Section 25(N) of the Industrial Disputes Act.
Undertakings Covered under Section 25(O)
According to Section 25(O) of the Industrial Disputes Act, 1947, an employer can shut down a business without needing permission from the government if it meets these conditions:
- The business has fewer than 50 workers.
- The employer provides compensation to the workers equal to 15 days’ average pay for each completed year of continuous service.
This means that only businesses with less than 50 workers fall under the scope of Section 25(O). It’s crucial to understand that the term ‘workmen’ includes not only permanent employees but also contractual, casual and temporary workers who have worked for more than one year in the establishment.
Additionally, it’s worth noting that certain types of businesses are exempt from the Industrial Disputes Act and therefore, they are not covered by Section 25(O). For instance, establishments involved in agricultural or horticultural operations, fishing or animal husbandry are exempt. Similarly, government-owned or controlled establishments are exempt unless they are engaged in commercial activities.
Procedure for Closure of an Undertaking
The steps for closing an establishment under the Industrial Disputes Act, 1947, depend on the number of workers employed and the reason for closure. Here are the general procedures:
Closure with Less Than 50 Workers (Section 25(O))
- Less than 50 workers: If the establishment has fewer than 50 workers, the employer can close it without government permission. However, the employer must pay compensation equal to 15 days’ average pay for each completed year of service.
- Notice: The employer must inform the appropriate government authority and workers at least 60 days in advance.
Closure with 50 or More Workers (Section 25(N))
50 or more workers: If there are 50 or more workers, the employer needs prior permission from the government. Notice to the government and workers is required 60 days in advance. The government decides based on the employer’s reasons and worker interests.
Voluntary Retirement Scheme (VRS)
The employer may propose a VRS, offering a package with compensation, pension and benefits. Both parties must agree and terms are formalised in an agreement.
Conciliation Process
If disputes arise, the Industrial Disputes Act allows a conciliation process. A conciliation officer may be appointed to mediate and reach a settlement.
Undertakings Excluded from Prior Permission
Certain establishments are exempt from obtaining government permission before Closure in Labour Law. Here are the exclusions:
- Less than 100 workers (Section 25FFA): Establishments with fewer than 100 workers can close without prior government permission. A 60-day notice to the government and workers is required.
- Natural disasters: In Labour Law, Closure due to natural calamities, like floods or earthquakes, can occur without prior government permission. Prompt notice to the government and workers is essential.
- Financial challenges: Closure due to financial difficulties is allowed without prior government permission. Compensation must be paid and a 60-day notice to the government and workers is required.
Seasonal Work (Exempted from Industrial Disputes Act)
- Seasonal work: Establishments engaged in seasonal work, such as agriculture, are exempt from Industrial Disputes Act provisions. They don’t need prior permission but must comply with notice and compensation requirements.
- Important Note: Even if exempt, establishments must follow notice and compensation rules specified in the Industrial Disputes Act.
Grant and Refusal of Permission for Closure in Labour Law
According to the Industrial Disputes Act, 1947, if an employer intends to close down an establishment with 50 or more workers, prior permission from the government authority is required. Here’s the process for granting or refusing permission:
Grant of Permission of Closure in Labour Law
- Approval Criteria: The government authority reviews the reasons provided by the employer for Closure in Labour Law. If satisfied and if the employer complies with all Industrial Disputes Act requirements, permission may be granted.
- Notice Requirement: The employer must notify the government authority and workers at least 60 days in advance if permission is granted.
Refusal of Permission of Closure in Labour Law
- Denial Criteria: If the government authority is unsatisfied with the reasons or if the employer doesn’t comply with Act requirements, permission may be refused.
- Legal Recourse: In case of refusal, the employer can seek resolution through the Labour Court or Industrial Tribunal. These bodies may either support the government’s decision or order the employer to reinstate workers with back wages.
In summary, the grant or refusal of closure permission is at the discretion of the government authority. It depends on the employer’s reasons and consideration of workers’ interests. Employers must follow Industrial Disputes Act procedures to protect workers’ interests during Closure in Labour Law.
Deemed Grant of Permission of Closure in Labour Law
According to the Industrial Disputes Act, if an employer wants to close an establishment with 50 or more workers, they must seek prior permission from the government authority. If the government authority does not respond within specified time limits, the permission is deemed to be granted. Here are the time limits:
Establishments with Less Than 100 Workers
Decision within 60 days: For establishments with less than 100 workers, the government must communicate its decision within 60 days of receiving the application.
Establishments with 100 or More Workers
Decision within 90 days: For establishments with 100 or more workers, the government must communicate its decision within 90 days of receiving the application.
If the government authority fails to communicate its decision within these time limits, permission for Closure in Labour Law is deemed to have been granted. However, it’s crucial to note that even if permission is deemed, the employer must still adhere to notice and compensation requirements outlined in the Industrial Disputes Act.
Appeal Against Closure in Labour Law
Under the Industrial Disputes Act, 1947, if the government authority denies permission for closing an establishment, the employer can appeal to the Labour Court or Industrial Tribunal within 60 days of receiving the order. This appeal is also applicable if permission is granted but with unacceptable conditions. Here’s the appeal process:
Filing of Appeal
The employer must submit an appeal to the Labour Court or Industrial Tribunal within 60 days from receiving the government authority’s order. The appeal should follow the prescribed format and include necessary documents.
Notice to Other Party:
The employer needs to notify the other party (workmen or their representatives) within 7 days of filing the appeal.
Appeal Hearing on Closure in Labour Law
The Labour Court or Industrial Tribunal is required to conduct the appeal hearing within 45 days of filing. Both the employer and the workmen or their representatives have the chance to present their cases and provide evidence.
Decision:
The Labour Court or Industrial Tribunal can either uphold the government authority’s decision or order the employer to reinstate workmen with back wages. The decision is final and binding on both parties.
Illegal Closure:
An illegal closure occurs when an employer shuts down an establishment without following procedures outlined in the Industrial Disputes Act, 1947. This is a serious violation with legal consequences:
Reinstatement with Back Wages
Workmen affected by an illegal closure are entitled to reinstatement with full back wages. The Labour Court or Industrial Tribunal may order the employer to reinstate the workmen.
Penalties:
The employer may be liable to pay a penalty if found guilty of illegal closure. This penalty can be up to three months’ wages of the affected workmen.
Criminal Prosecution:
In severe cases, the employer may face criminal prosecution for an illegal closure. Penalties for such offences may include imprisonment and/or fines.
Illegal closures have serious consequences, emphasising the importance of complying with the Industrial Disputes Act’s procedures and requirements to ensure fair treatment of workmen.
Maulins of India Ltd and Another v. State of West Bengal And Others (1988)
Brief summary of the facts and issues involved
In Maulins of India Ltd. v. State of West Bengal (1988), the petitioner company (Maulins of India) had two factories, one in Calcutta and the other in Punjab. The company had submitted an application to the concerned authority for permission to close down the Calcutta factory. The reasons cited by the company for the closure were the increased cost of labour, decrease in sales, market depression, and remaining stock of unsold goods due to the poor take-off of the company’s products. Due to the above, the company had accumulated a large amount of losses in the last three years. The petitioners claimed that it had become unfeasible for the factory to continue to function. The concerned authority here was the Deputy Secretary of the Department of Labour. They contended that the respondent’s (labour union’s) submissions were heard in their (petitioner company’s) absence. Further, they were given no opportunity to make counter-arguments to the representations made by the labour unions. Subsequently, the Deputy Secretary refused to grant permission for closure. The petitioner appeared before the Calcutta High Court seeking to challenge the said order and have it quashed on the grounds of prima facie errors and violation of principles of natural justice. Further, the petitioners contend that Section 25-O in its entirety be struck down on the grounds of being unconstitutional and violative of Article 19(1)(g) of the Constitution of India.
Court’s judgment and other observations
The Calcutta High Court after a thorough examination of the old Section 25-O against the new amended Section 25-O held that the amended Section was unconstitutional and was to be set aside. It was held that the mere fact that the closure would lead to the unemployment of workers or a decrease in production would not be enough to deny permission, especially when it had become impossible to carry out the functioning of the undertaking. The Court opined that the amended Section still suffered from the infirmities that led to the striking down of the old Section. Under the new Section, although the concerned government authority was required to consider the adequacy and genuineness of the reasons, these terms were never defined. What reasons are considered to be ‘genuine’ or ‘adequate’ are not provided. Neither are the instances under which permission is to be refused mentioned. The Court found this unreasonable and held Section 25-O to be ultra vires Article 19(1)(g) of the Constitution. Further, the Court held that the petitioner had not been given sufficient opportunity to deal with the representation made by the Labour Unions- which was contrary to the principles of natural justice. To this effect, it directed the General Secretary’s order refusing permission for closure to be quashed.
D.C.M. Ltd. v. Lieutenant Governor, Delhi and Others (1989)
Brief summary of the facts and issues involved
In D.C.M. Ltd. v. Lt. Governor (1989), the petitioners were refused permission under Section 25-O of the I.D. Act to close down their undertaking, Delhi Cloth Mills. Prior to this, the petitioners had filed another petition {D.C.M. Ltd. v. UOI (1989)} seeking to quash the letter of the Lt. Governor that communicated this refusal. Here further relief is sought by the petitioners before the Delhi High Court, to declare Section 25-O to be ultra vires Article 14 and Article 19(1)(g) of the Constitution of India.
The petitioners submitted that the Mill was located in a non-conforming industrial area and therefore could not continue its operations at the site. Furthermore, heavy and large-scale industries were not authorised to be located in the Union Territory of Delhi. They claimed that the undertaking had become economically unenviable and unlucrative. The petition detailed the reasons for closure as well as the losses suffered over the past few years. Given these reasons, the petitioners had decided to close down the establishment.
Court’s judgment and other observations
The full Bench of the Court upheld the constitutionality of the amended Section 25-O. It was observed that in Excel Wear, Section 25-O was held constitutionally invalid on the ground that “it did not require giving of reasons in the order,” and as a result, the authority could arbitrarily and whimsically reject permission for closure. The Court ruled that the amended Section 25-O had incorporated the procedural safeguard of documenting reasons. For instance, in the present case, the Lt. Governor must indicate his reasoning and basis for rejecting the permission for closure. The Court established that when the appropriate government authority failed to provide the reasoning for the same, it could be inferred that he had no good reason.
In the present case, although the High Court upheld the vires of Section 25-O, it directed for the Lt. governor’s order to be quashed. The Bench found that the Governor had wrongly exercised his discretion and ordered him to grant permission for the closure of the Mill.
Union of India v. Stumpp, Schedule and Somappa Ltd. (1989)
Brief summary of the facts and issues involved
UOI v. Stumpp, Schedule, and Somappa Ltd. (1989) was an appeal of the order passed by a single-judge bench of the same Court. The company, party to this case, sought the permission of the State government to close down one of its units under Section 25-O. They claimed that the undertaking had become unprofitable and had reached a point where closure was necessary. However, the State government refused to grant permission. The present case is an appeal before the Karnataka High Court, challenging the validity of the State government’s order and the constitutionality of Section 25-O. The petitioners contend that the terms of the Section impose unreasonable restrictions on the fundamental rights of an employer (under Article 19(1)(g)).
Court’s judgment and other observations
The single-judge bench of the Karnataka High Court had held Section 25-O to be constitutionally invalid (Stumpp Schedule and Somappa Ltd. v. State of Karnataka, Union of India (1985)). The present Bench analyzing the ratio of the Excel case, found that it was not possible to declare the Section to be unconstitutional and violative of Article 19(1)(g). It was held that the amended Section was stripped of all the infirmities of the former Section 25-O and required the government authority to provide an adequate reason for its decision.
Insofar as the undertaking goes, the Bench was of the opinion that “time is the best healer.” The undertaking had continued to operate as the employer and workers had amicably settled their dispute. Therefore, the Court found that the employer had no immediate reason to ask for its closure.
Laxmi Starch Ltd. and Others v. Kundara Factory Workers Union (1991)
Brief summary of the facts and issues involved
In Laxmi Starch and Ors v. Kundara Factory Workers’ Union (1991), the petitioners requested permission for the closure of their industrial undertaking, which was refused by the government under Section 25-O(2). The matter was then referred to the Industrial Tribunal, which rejected the application, holding that there were no grounds for reviewing the decision. As a result, the permission to close the establishment was rejected. Subsequently, the petitioners filed a petition before the Kerala High Court to set aside Section 25-O as unconstitutional, quash the award of the Industrial Tribunal, and direct the government to provide permission for closure.
Court’s judgment and other observations
The Kerala High Court came to the conclusion that Section 25-O was not violative of Article 19(1)(g), as the restrictions imposed are reasonable and lie within the limits of Article 19(6). They found that there was no arbitrariness involved in the Section and therefore could not be struck down as unconstitutional. However, like in the Delhi Cloth Mills case, the Court directed the appropriate government body to grant permission for closure. On the question of whether the Industrial Tribunals award was liable to be quashed, the Court ruled in the negative. It held that it could not be said that the Industrial Tribunal had gone beyond its power in passing the said award and therefore refused to quash the same. It was established that it was up to the Government or Industrial Tribunal, to carefully consider all the facts and arrive at a decision regarding the “genuineness and adequacy of the reasons for closure.” The same must be made, taking into account the factors mentioned under Section 25-O, as well as the public interest.
Orissa Textile and Steel Ltd. v. State of Orissa and Others (2002)
Brief summary of the facts and issues involved
In Excel Wear, the Supreme Court declared the then Section 25-O to be unconstitutional. The Section was substituted by a Central Act 46 of 1982 that inserted the amended Section 25-O in the I.D. Act. In the present case (Orissa Textile and Steel Ltd. v. State of Orissa & Ors. (2002)), the constitutional validity of the amended Section 25-O was challenged before the Supreme Court. The petition was initially filed before the Orissa High Court but had been referred to a Constitution Bench at the Apex Court.
Court’s judgment and other observations
The bench compared the former Section 25-O, the amended Section 25-O and Section 25-N, whose constitutionality was upheld in the Meenakhi Mills case. It was observed that Section 25-N and Section 25-O were similar in substance, and the reasons for their enactment were the same. The Court, after making a comparative analysis of the provisions and analysing the previous judgements, upheld the constitutional validity of Section 25-O of the I.D. Act. The Court ruled that there was nothing vague or ambiguous in the amended Section. It found that it would be impossible for Section 25-O to list out all the different situations or contingencies that could arise in reality. Every case pertaining to this Section, i.e., one that involved granting permission for closure, was unique and had to be decided on the basis of its facts and circumstances at that time. The amended Section only set out guidelines to make such a decision and was not ultra vires of the Constitution.
Case laws relating to the closure
The following are certain significant judgements pertaining to closure in India.
Managing Director, Karnataka Forest Development Corporation Ltd. v. Workmen of Karnataka Pulpawood Ltd. (2007)
Brief summary of the facts and issues involved
In Managing Director, Karnataka Forest Development Corporation Ltd. v. Workmen of Karnataka Pulpawood (2007), two appeals against the decision of the Karnataka High Court were filed before the Supreme Court. The respondents in this case were workmen of Karnataka Pulpwood Ltd. It was a joint sector government company of Karnataka Forest Development Corporation Ltd. and Karnataka Harihar Polyfires Ltd. that was running at a loss. It was decided that the company was to be wound up, and the appropriate steps had to be taken in this regard. Subsequently, the government granted the necessary permission for closure. Furthermore, the government passed an order directing that the respondent workmen be absorbed into the service of the appellant company. The impugned order was challenged in the present appeal.
Court’s judgement and other observations
The Supreme Court allowed the appeal and ruled that in the event that an establishment or undertaking is closed, the only right that the workmen are entitled to is to obtain adequate compensation as provided by the Act. If they believe that any other right has accrued to them, they must approach the appropriate forum for redress.
S. G. Chemical and Dyes Trading Employees Union v. S. G. Chemicals and Dyes Trading Limited and Others (1986)
Brief summary of the facts and issues involved
In S.G. Chemical and Dyes Trading Employees Union v. S.G. Chemical and Dyes Trading Ltd. (1986), the respondent company was operating in three different locations in Bombay. Its Pharmaceutical division was at Worli, the Marketing and Sales division was at Churchgate, and the Laboratory and Dyes Division at Trombay. The holding company had a chemicals and dye factory in Gujarat, which was sold out in 1984. The buyer company preferred to conduct sales through their distribution channels and therefore did not require the employees and other staff members to work in their registered office. Subsequently, they intimidated the government of Maharashtra about their intention to close down their registered office via notice as per the provisions of the I.D. Act. The notice mentioned the number of workmen to be ninety, but on closure, the company terminated the services of only 84 employees- allowing the remaining six to continue working. The Employees Union lodged a complaint with the Industrial Tribunal contending that the closure was in violation of Section 25-O and thus the workers were still employed and entitled to their wages. They contended that there was functional integrity amongst the three offices of the company; therefore, the total number of employees exceeded one hundred, and the company was required to apply for prior permission for closure under Section 25-O. Since the company failed to do so, the closure was illegal. The Industrial Tribunal dismissed the case, ruling that Section 25-O would not apply since there were never more than a hundred employees at Trombay. Further, the Churchgate office was not part of the Trombay factory and was not an industrial establishment as per the meaning of Chapter V-B. The Tribunal found that even if Section 25-O were to apply, a violation of the same would not constitute an act of unfair labour practice under the relevant provisions of the Maharashtra Act. This decision of the Tribunal was challenged before the Supreme Court in the present case.
Court’s judgement and other observations
The Supreme Court held that the closure of the Church gate division of the company was illegal as it was contrary to the terms of Section 25-O. As a result, the workmen whose services were terminated continued to be employees of the company and were retrospectively entitled to the entirety of their wages and other allowances. The Court found that the Act did not require an undertaking to be in the same location or premises as the industrial establishment. It is not feasible for all the stages that lead to the manufacture of the finished product to be carried out in the same place. Further, the Church gate division and the Trombay factory carried out functions that were not separate or independent from each other but were so integrally connected that they constituted a single establishment.
The combined number of employees at the Trombay and Church gate divisions was one hundred and fifty. Thus, if the respondent company wished to close down the division, it would have to satisfy the provisions of Section 25-O of the Act and not Section 25-FFA.
Conclusion
Closure in labour law refers to the permanent shutdown of a workplace or part thereof. It is governed by the Industrial Disputes Act. The law establishes specific procedures for closure based on the number of workmen employed and the reasons behind the closure. If an establishment has 50 or more workmen, the employer must seek prior permission from the appropriate government authority.
The closure process includes provisions for grant and refusal of permission, with an avenue for appeal. Illegal closure, without adherence to mandated procedures, carries severe consequences. Closure in labour law is pivotal for maintaining a balance between employer interests and the rights of workmen, ensuring a fair and regulated approach to workforce management.
Important Questions
What is the difference between lock-out, strike, and closure under the Industrial Disputes Act?
| Lock-out | Strike | Closure | |
| Section | Lock-out is defined under Section 2(l) of the Act. | Strike is defined under Section 2(gg)(q) of the Act. | Closure is defined under Section 2(gg)(cc) of the Act. |
| Definition | It refers to the “temporary closing of a place of employment, or the suspension of work, or the refusal by the employer to continue to employ persons.” | It refers to the “cessation of work” by workers employed in an industry or undertaking. | It refers to the indefinite or permanent shutting down of an establishment, factory business, or organization. |
| Declared by | The employers or owners of the industry or undertaking declare a lock-out. | The employees or workmen of the industry declare a strike. | The employers declare the closure by following the procedure given in the Act. |
| Causes | The causes of a lock-out may be financial problems, political disturbances, management issues, etc. | Such a stoppage of work may be an act in collaboration, a concerned refusal, or a refusal under some common consideration by a group of employees. | Factors such as low profits, poor marketing, bad management, tough competition, failure to pay taxes, etc. could result in closures. |
What is the difference between layoffs, retrenchments, and closures under the Industrial Disputes Act?
The differences between layoffs, retrenchments, and closures are discussed in the table below.
| Layoff | Retrenchment | Closure | |
| Section | Layoff is defined under Section 2(gg)(kkk) of the Act. | Retrenchment is defined under Section 2(gg)(oo) of the Act. | Closure is defined under Section 2(gg)(cc) of the Act. |
| Definition | It refers to the “refusal, inability or failure” of the employer to provide employment to his workers or employees. | It refers to the “termination” of the services of the workman by the employer. | It refers to the indefinite shutting down of an establishment, factory business, or organization. |
| Causes | On account of shortage of raw materials, power, coal breakdown of machinery, accumulation of stocks, natural calamity, or any other connected reason. | It is for any reason other than punishment. It does not include voluntary retirement, retirement on reaching the age of superannuation (if the same is stipulated in the worker’s employment contract), or termination on the grounds of continued ill health. | Factors such as low profits, poor marketing, bad management, tough competition, failure to pay taxes, etc. could result in closures. |
| Special Provisions | Special provisions pertaining to lay-off are provided under Section 25(M). | Special provisions pertaining to retrenchment are provided under Section 25(N). | Special provisions pertaining to closure are provided under Section 25(O). |
What is the difference between employees and workmen?
Indian laws dealing with industries ordinarily categorise employees as ‘workmen’ or ‘non-workmen’. Persons referred to as ‘workmen’ are granted various legal protections and entitlements, for instance, severance compensation and prior notice and compensation in case of retrenchment or closure of the industrial establishment. ‘Workmen’ are those persons employed in such establishments to do any unskilled, manual, technical, clerical, skilled, supervisory, or operational work for hire or reward. It does not include