Labour Law Pragati

AMITY LAW SCHOOL
Labour Law-1
LAW302
TOPIC: The Concept Of Lay-Off
Submitted To: Submitted By:

Mr Ayush Saran Pragati Kumari
A8156123051
Introduction
Lay-off is a well-known name in respect of

industrial dispute also known as returning without
work or keeping without work. Lay-off means
putting aside the workman temporarily. The
employer-employees relationship does not come to
an end but it merely suspended during the period
of emergency.
Meaning of lay-off
Lay-off means temporarily keeping a workman

without or away from work. The question of
keeping without work arises when employers are
unable to provide employment to the workman for
the reason beyond his control such reason or
situations may be:
• Shortage of raw materials
• Economic recession
• Breakdown of machinery
• Accumulation of stocks
• Layoff
Layoff under the Industrial Disputes
Act, 1947
Lay-Off is defined under Section 2 (KKK)of the

Industrial Disputes Act, 1947 (“Act”), which says
that a workman is said to be laid-off when an
employer fails, refuses or is unable to provide
employment to the workman whose name is
mentioned in the muster roll of an industrial
establishment due to reasons beyond the
employer’s control, such as insufficiency of coal,
power or raw material, the accumulation of stocks,
the breakdown of machinery, a natural calamity or
any other same or correlated reason. That
workman has not been retrenched due to the
above-stated reasons.
In simple terms, a layoff is the incapacity of the
employer to provide employment to the employee
for a temporary period so that the employer can
keep his business operational even in a time of
scarcity. If the employer ends up shutting down the
industrial facility and announces the lock-out of
the industrial establishment, then the concept of
layoff becomes irrelevant.
In the case of Priya Laxmi Mills Ltd v. Mazdoor
Mahajan Mandal (1976), the term ‘Lay Off’ is
interpreted in accordance with the dictionary “in
its etymological sense” as a period in which the
workers are temporarily discharged from doing
their work. Thereafter, the Apex Court in
Workmen of Firestone Tyre and Rubber Co. of
India Ltd v. Mgmt (1973) ruled that ‘Lay Off’ is
neither a full dismissal of a workman nor the
temporary suspension of the contractual relation
between the employer and employee; rather, it is
constituted as temporary unemployment for the
workmen. The Supreme Court further added that
‘Lay Off’ means the failure, unwillingness, or
inability of the employer to provide employment to
the workmen due to the reasons listed in the
definition under the Section. The definition under
the Act is explicit in nature and distinct from the
Western understanding of layoff; there is no need
to resort to other definitions
Essential Conditions for layoffs
There are certain essential conditions that must be

taken into account before laying off workers. The
conditions are as follows:
• The employer’s inability, failure, or refusal to
provide the work to the workmen.
• Such inability, failure, or refusal must be there
due to the insufficiency of coal, power, raw
materials, accumulation of stocks, breakdown of
machinery, a natural calamity or any other
relevant reason.
• A workman who has been laid off or deprived of
employment must be someone whose name is
on the record of the muster roll of his industrial
establishment.
• The workmen must not have been retrenched
from the work.
Compensation to laid-off employees
Under the Industrial Disputes Act, 1947, there are

provisions regarding compensation to the
workman in certain circumstances that allow the
workman to avail compensation from the
employer, subject to some restrictions. The
workman is allowed to take compensation from his
employer if he has been laid off under the ambit of
Section 2(KKK) of the Act, subject to certain
conditions that need to be fulfilled. The conditions
are as follows:
• Industries permitted to layoff workmen without

any compensation: Section 25A, Industrial Disputes
Act, 1947
Section 25A of the Act lays down certain industry

establishments to which the provisions related to
the workmen’s compensation shall not apply.
Those industrial establishments are as follows:
• Industrial establishments in which, on average,
less than 50 workmen were there on any day in
the preceding calendar month.
•Industrial establishments of such nature in
which the work is done either seasonally or
intermittently.
Industrial establishments that come under the
ambit of Chapter V-B of the Industrial Disputes Act,
1947.
• Continuous Service: Section 25B, Industrial

Disputes Act, 1947
Section 25B Of the Act, lays down the definition of
continuous service. As per the Section, a workman
is said to be in continuous service if he has
completed at least one year with that particular
industrial establishment without any interruption;
only then will that workman be entitled to take the
compensation. The interruption of the continuous
service is not affected by any kind of authorised
leave, sickness, accident, legal strike, lock-out or
cessation of work due to the fault of workmen.
• Conditions to comply with for getting
Compensation: Section 25C, Industrial Disputes
Act, 1947
Section 25C of the Act, the workman who has been

laid off is entitled to receive 50 percent of his total
basic earnings and a dearness allowance for the
duration of the layoff.
However, this compensation right given to the
workman is subject to the following conditions:
• The workman is not a badli or a casual worker.
A badli worker is someone who has been hired
in place of another worker whose name is borne
on the muster roll of the industrial
establishment. However, such a worker won’t be
considered a badli worker if he completes the
duration of one year with that particular
industrial establishment.
• Workman’s name must be on the muster roll of
the industrial establishment.
• The workman must have computed the duration
of one year at that particular establishment as
an employee.
• Conditions where a worker is not entitled to lay off
compensation
Section 25E of the Act lays down certain

circumstances where the workman is not entitled
to receive any lay-off compensation from the
employer; those conditions are as follows:
• If the workman refuses to accept the alternate
work given to him, provided that:
The alternate employment given to him is in the
same establishment he was working in. Also, the
alternate employment given to him is in the
alternate establishment but under the same
employer within a radius of 5 miles from the
establishment where he was working before.
• Duty of employer to maintain muster roll: Section

25D, Industrial Disputes Act, 1947
Section 25D of the Act, states that it is the duty of

the employer to maintain a muster roll and keep a
proper record of the workmen who present
themselves during the working hours of the
establishment. It is important to note that the
workmen have to be present at the workplace
during the working hours of the establishment;
otherwise, they won’t be eligible to receive
compensation. The employer should maintain the
muster roll properly; otherwise, he cannot take the
defence under Section 25E, for not providing
compensation to the workmen.

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AMITY LAW SCHOOL

TOPIC: The Concept Of Lay-Off

Submitted To: Submitted By:

Lay-off is a well-known name in respect of

Lay-off means temporarily keeping a workman

Lay-Off is defined under Section 2 (KKK)of the

There are certain essential conditions that must be

Under the Industrial Disputes Act, 1947, there are

• Industries permitted to layoff workmen without

Section 25A of the Act lays down certain industry

• Continuous Service: Section 25B, Industrial

Section 25C of the Act, the workman who has been

Section 25E of the Act lays down certain

• Duty of employer to maintain muster roll: Section

Section 25D of the Act, states that it is the duty of

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