There are news reports of many people being fired or laid off during the COVID crisis. While the government has requested employers to not take such measures in light of the crisis, lays offs and retrenchments are legal in cases of certain establishments.
To understand whether the laws relating to lay off and retrenchment apply to you, you must first check if you fall under the definition of a ‘workman’ under ID Act. Most jobs are covered under it. However, to understand whether this definition applies to you, you must see the nature of your employment or the kind of contract you have. For instance, if you have a consultant contract, you are not a workman as per law and the legal protections of the ID Act do not apply to you. But if you have an employment contract either working for a government office or a private organisation the ID Act may apply to you.
A workman is someone who is employed by any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for a sum of money as salary or reward.
It also includes any person who has been dismissed, discharged or retrenched in connection with, or as a consequence of dispute. Managers, administrators or supervisors drawing wages of more than Rs. 6500 are not included in this category. This definition does not apply to the Army, Navy, Air Force or Police as well.
Lay-offs happen when an employer either fails, refuses or is incapable of giving their employees work because of:
- Shortage or coal, power or raw material, or
- Accumulation of stocks, or
- Breakdown of machinery, or
- Natural calamity,
- Or any other connected reason.
If you are laid off, it does not mean that you are fired. It is only a temporary measure taken by employers. Layoff is different from retrenchment as you are still considered an employee, whereas in retrenchment your employment is terminated.
Depending on how long you had been working and whether or not you were in continued uninterrupted service, you will be entitled to receive part of your salary during the lay off period.
Lay-off time period
You cannot be laid off for an indefinite period. After fourty five days of being laid off, the employer has to take one of two actions.
- Either continue your lay off period for a certain period or
- Terminate your employment
In case your employment is terminated, the money paid to you during the lay off period can be set off from your severance.
In cases of termination/retrenchment
Legally, the option of termination is available to the employers but the same will be treated as termination for convenience. In any event, all necessary processes like notice period, intimation to government authorities, payment of retrenchment compensation, payment of gratuity, Leave encashment etc needs to be completed. In light of covid the government has issued advisories against terminating employees due to COVID-19, however they are not binding.
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