Centre may allow firms to lay off workers without prior approval

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New Delhi | May 02, 2015 8:09 AM

Firms employing up to 300 workers would be permitted to lay them off without prior govt approval, as against the current threshold of 100 workers.

Labour lawsFirms employing up to 300 workers would be permitted to lay them off without prior govt approval, as against the current threshold of 100 workers. (Reuters)

Following the lead of the Rajasthan government, the Centre has taken up the contentious issue of retrenchment and lay-offs. The government has finally decided to amend the Industrial Disputes Act, 1947 by merging it with two other laws on industrial relations and would allow larger firms to lay off workers without prior approval.

The draft labour code on industrial relations has proposed to amalgamate three labour laws including The Trade Unions Act, 1926, The Industrial Employment (Standing Orders) Act, 1946 and The Industrial Disputes Act, 1947. According to the proposal, firms employing up to 300 workers would be permitted to lay them off without prior government approval, as against the current threshold of 100 workers.

“The provisions of this Chapter  (on lay off, retrenchment and closure) shall apply to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than three hundred workers were employed on an, average per working day for the preceding twelve months,” said the draft code.

In turn, workers would now have to be given compensation for an average compensation for 45 days worked in a year as against the current practice of 15 days in case a factory is closing down. Firms will also have to give a notice of three months to lay off workers or shut down a unit as against the prevailing one month period.

Keen to move ahead with the proposed Bill, labour minister Bandaru Dattatreya has called for a tripartite meeting with representatives from employers and employees unions on May 6 and has also sought comments from stakeholders on the proposed amendment.

“These proposals are aimed to provide flexibility to firms to hire workers based on their requirement. At the same time, the objective is also to be fair to workers and ensure that they get increased benefits in case of a retrenchment,” said an official familiar with the development, adding that a number of states are also going ahead with such amendments.

The proposed bill also seeks to keep strikes and lock outs under control and has added new conditions when a strike or lock out cannot take place, including the pendency of proceedings before an industrial or national tribunal, pending arbitration proceedings and up to two months of its conclusion as well as during the period in which a settlement or award is in operation.

Draft code to merge three labour laws.

The draft code on industrial relations has proposed to amalgamate three labour laws including The Trade Unions Act, 1926, The Industrial Employment (Standing Orders) Act, 1946 and The Industrial Disputes Act, 1947.

Firms employing up to 300 workers would be permitted to lay them off without prior govt approval, as against the current threshold of 100 workers.

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