Labour Law (Lay-off & Retrenchment).docx

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Introduction The Industrial Disputes Act, 1947 as originally enacted made no provision for the payment of 'lay-off' or 'retrenchment' compensation to the laid-off or retrenched workmen. In the absence of statutory provisions for paying compensation, the authorities had taken into consideration various factors in determining the amount of compensation. Therefore there were no uniform rule that can be said to have observed by the adjudicating bodies. In 1953, a huge stock had accumulated in textile industries. Textile mills were in a mood to close one or more shifts. The closure must have resulted in retrenchment or laying-off a large number of textile employees causing great unrest in the whole of the textile industry. In order to overcome the situation the President of India promulgated the Industrial Disputes (Amendment) Ordinance, 1953 to take effect form 24th October, 1953. The Ordinance made provision for payment of compensation for lay-off or retrenchment. The said ordinance was repealed and replaced by the Industrial Disputes (Amendment) Act, 1953 on 23rd December, 1953. Sections 25-A to 25-J were added by this Amending Act of 1953. The Supreme Court in Hariprasad Shiv Shanker Shukla v. A.D. Divakar AIR 1957 SC 121, held that retrenchment means the discharge or surplus labour or staff by the employer for any reason whatsoever, otherwise than on a punishment inflicted by way of disciplinary action, and it has no application where the services of all workmen have been terminated by the employer on a real and bona fide closure or business or where the services of all workmen have been terminated by the employer on the business or undertaking being taken over by another employer. The effect of the Supreme Court's pronouncement was that the Act was again amended on 6th June, 1961 and two new Sections 25-FF and 25-FFF were added. By this amendment provision was made for compensation for retrenchment of workmen on transfer of a business or on closing down of an industrial concern. These two sub-sections have again been amended in 1964. These amendments in 1964. These amendments have curtailed the common law rights of the employer and he has now been burdened to pay compensation in cases of lay-off, retrenchment and bona fide transfer or closure of the undertaking.

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Lay-off According to Section 2(kkk) salient features of lay-off are as following: 1) An employer, who is willing to employ, fails or refuses or is unable to provide employment for reasons beyond his control. 2) Any such failure or refusal to employ a workman may be on account of:i. shortage of coal, power or raw materials, or ii. the accumulation of stock, or iii. the breakdown of machinery, or iv. natural calamity, or v. any other connected reasons. 3) A workman who is so deprived of employment must be such whose name is borne on the muster rolls of his industrial establishment. 4) The workman must not have been retrenched.

Meaning of Lay-off "Lay-off" means putting aside workmen temporarily. The duration of lay-off should not be for a period longer than the period of emergency. The employer-employee relationship does not come to an end but is merely suspended during the period of emergency. In Central India Spinning, Weaving and Manufacturing Co. Ltd., Nagpur v. Satate Industrial Court (1959) I LLJ 468 (Bom), the Bombay High Court held that the key to the definition is to be found in the words, "the failure, refusal or inability of an employer". These words make it clear that the unemployment has to be on account of a cause which is independent of any action or inaction on the part of the workmen themselves. It is not a right but an obligation imposed on the employer for the benefit of the workmen (M.A. Veiyra v. C.P. Fernandes and another, AIR 1957 Bom. 100). Far from laying off of an employee being a right, it is really an obligation. The very essence of lay-off is that it is temporary stoppage and that within a reasonable period of time the employer expects that, the business or industry would continue and his employees who have been laid-off will be restored to their full rights as employees. Further, in definition of lay-off there is no indication whatever that it should continue for a particular period of time. Other cases:  

Nutan Mills Ltd. Ahmedabad v. Employees' Insurance Corporation AIR 1956 Bom 336; S.A.E. Mazdoor Union v. Labour Commissioner, Indore and others (2002) I LLJ 791 (M.P.)

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Retrenchment Retrenchment connotes it is ordinary acceptation that the business itself is being continued, but that a portion of the staff of labour force is discharged as surplusage (Piparaich Sugar Mills Ltd. v. Piparaich Sugar Mills Unsion, AIR 1957 SC 95). It means disharge of surplus labour or staff by the employer for any reason whatsoever (Harprasad Shiv Shanker v. A.D. Diwekar, AIR 1957 SC 121). The order of termination must be actuated with a motive of economy. Section 2(oo) which defines the term "retrenchment" may be analysed as follows: 1) Retrenchment means the termination by the employer of the service of a workman; 2) The termination may be for any reason whatsoever; 3) But the termination should not be as a measure of punishment by way of disciplinary action. The following are not retrenchment: a) voluntary retirement of a workman, or b) retirement of a workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains stipulation in that behalf; or bb) termination of the service of a workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein, or c)

termination of the service of a workman on the ground of continued ill-health.

Cases:          

State Bank v. N.S. Money, AIR (1976) SC 1111 Hindustan Steel v. Labour Courts Orissa, AIR (1977) SC 31 State of Gujarat v. P.R. Manked 1969 Lab IC 21 (Guj) Duryodhan Naik v. Union of India 1969 Lab IC 1282 (Orissa) Surjit Kantha v. Union of India AIR (1970) Assam 131 Hindustan Steel Ltd. v. State of Orissa 1970 Lab IC 345 (Orissa) D. Marcopollo and Co. (Private) Ltd. v. Their Employees' Union AIR (1956) SC 1012 D.C. & G. Mills v. Shambhu Nath AIR (1978) SC 8 Malkhan Singh v. Union of India 1981 II LLJ 174 Morinda Co-op. Sugar Mills Ltd. v. Ram Kishan & others 1996 I LLj 870 (SC)

Termination of service, Voluntary Retirement Scheme, continued ill-health, contract of employment under clause (bb), contract of employment, voluntary resignation are important points discussed whether they are included in the exception to retrenchment under Section 2(oo) or not.

4|Page Section 25-A. Application of Sections 25-C to 25-E According to sub-section (1) of this Section. Sections 25-C to 25-E inclusive shall not apply to industrial establishments to which Chapter V-b applies or,a) to industrial establishments in which less than fifty workmen on an average per working day have been employed in the preceding calendar month, and b) to industrial establishments which are of a seasonal character or in which work is performed only intermittently. Thus where the exemption under Section 25-A applies, the workmen are not entitled to lay-off compensation and the Tribunal has no right to grant relief on fanciful notions of social justice (South India Corp. & others v. All Kerala Cashewnut Factory Workers' Federation, 1960 I LLJ 103 Ker). Sub-section (1) exempts such establishments where on an average less than fifty workmen have been employed. Therefore, if on any day more than 50 persons were employed but on an average during the preceding calendar month less than 50 persons are employed, provisions of Sections 25-C to 25-E would not apply, and therefore no compensation for lay-off can be claimed (Tinkori Oil Mills Mazdoor Congress v. Tinkori Sadhu Khan and Sons, II FJR 197 LAT). Where it is contested that less than 50 persons were employed in any industrial establishment, the period with reference to which the number of employees is to be determined is the calendar month preceding the point of time when the statutory right under Section 25-C arose (Kohinoor Saw Mills Co. v. State of madras, 1957 II LLJ 210 Mad). The two expressions "seasonal character" and "intermittent" are not defined in the Act but they are not synonymous. 'Seasonal' implies dependance on nature over which niether the employer nor the employee in the establishment has any control. 'Intermittent' means not continuous but falling after certain gaps or intervals.

Section 25-A(2) This sub-section provides that "if a question arises whether an industrial establishment is of a seasonal character or whether work is performed therein intermittently the decision of the appropriate Government thereon shall be final. This sub-section comes into play in case of any disputed claim to a right or any dispute about the liability thereof, although the dispute need not be an 'industrial dispute' within the meaning of Section 2(k) of this Act. The appropriate Government has jurisdiction to decide any such dispute, and the exercise of this function by the Government is of a quasi-judicial nature because it has to give decision in a dispute between the two parties. The decision has normally to be given after giving both the parties reasonable opportunity to represent their case. The decision must be based on considerations relevant to the dispute.

5|Page Section 25-B This section of the Act defines continuous service. The definition of 'continuous service' as given in this section is applicable to this Chapter only. A workman shall be said to be in continuous service for a period, if or that period his service is uninterrupted. It is also provided that any interruption on certain accounts shall not be considered an interruption and the service shall still be deemed to be continuous. These interruptions may be on account of: 1) 2) 3) 4) 5) 6)

sickness; or authorised leave; or an accident; or a strike which is not illegal; or a lock-out; or a cessation of work which is not due to any fault on the part of the workmen.

Sub-section (1) provides that taking part in a strike which is not illegal is not an interruption. In case of a person taking part in an illegal strike, an employee may be dismissed on that account the service shall be deemed to be continuous service. In case of second category of cases even though the service is interrupted it shall be deemed to be continuous unless it has been terminated, for instance, by an order of dismissal for taking part in an illegal strike (Jairam Sonu Shogale v. New India Rayon Mills Co. Ltd. 1958 I LLJ 28 Bom). Sub-section (2) of this Section defines continuous service for a period of one year or a period of six months. Clause (a) of sub-section (2) provides that a workman shall be deemed to have been in continuous service for a year, if1) he has been in employment for 12 calendar months; and 2) he actually worked for not less thana) One hundred and ninety days in the case of a workman employed below ground in a mine, and b) Two hundred and forty days in any other case. The following conditions must be fulfilled by a workman to entitle him for a continuous service of six months. As provided by clause (b) of sub-section (2) these conditions are:1) The workman has been in employment for a period of six calendar months; and 2) Such workman has actually worked for not less thana) Ninety-five days in the case of his being employed below ground in a mine; and b) One hundred and twenty days in any other case. In Surendranagar Panchayat and another v. Jethabai Pitambarbhai (2006) I LLJ 268 (SC), respondent who was a daily wager was terminated from service. The Labour Court held termination as illegal as it was without notice or payment in lieu thereof as well as it ignored his seniority. The award was also affirmed by the High Court.

6|Page Section 25-C. Right of workmen laid-off for compensation This Section entitles a workman to get compensation from the employer for the period he is laidoff. When the employer is unable to provide work to his workmen for reasons beyond his control, he owes a duty to pay lay-off compensation to such workmen. Before a workman may claim lay-off compensation he must fulfill the following conditions: 1) his name must be borne on the muster rolls of an industrial establishment; 2) he must have completed at least one year's continuous service (what he is continuous service is defined in Section 25-B); 3) the workman must not be a badli or a casual workman. If the above requirements, are fulfilled a workman whether laid-off continuously or intermittently, shall be paid compensation. The compensation payable shall be for all days during which he is laid-off, except for such weekly holidays as may intervene. The amount of compensation payable shall be equal to 50% of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid-off. The above rule is subject to the following limitations: 1) If during any period of 12 months a workman is laid-off for more that 45 days, no compensation shall be payable in respect of any period of the lay-off after the expiry of the 45 days provided that there is an agreement between the workman and the employer to this effect. Thus compensation is payable for a maximum period of 45 days during a period of 12 months and for a period longer than 45 days of there is no agreement to the contrary between employer and workman. 2) Where a workman is laid-off for a period of 45 days during a period of 12 months, the employer has a right to retrench such workman at any time after the expiry of 45 days of lay-off. When an employer decides to retrench a workman he must comply with the requirements of Section 25-F of the Act. Any lay-off compensation paid to the workman during the preceding 12 months may be set off against the compensation payable for retrenchment.

Section 25-D. Duty of an employer to maintain muster rolls of workmen This Section imposes a duty upon the employer to maintain a muster roll for the purposes of this Chapter. The employer shall also provide for making of entries in the muster rolls by workmen who may present themselves for work at the appointed time during normal working hours. Every Workman who has been laid-off is required to present himself for work at the establishment on each working day at the appointed time. He shall make entry in the muster rolls maintained by the employer. A workman who does not so present himself and sign the muster rolls shall not be entitled to claim lay-off compensation. The duty imposed upon the employer by this section is also mandatory and non-compliance will debar the employer to take advantage of Section 25-E (ii) of the Act.

7|Page Section 25-E. Workmen not entitled to compensation in certain cases Section 25-E provides that a laid-off workman shall not be entitled to compensation:1. if he refuses to accept alternative employment provided that such alternative employment is offered: a) in the same establishment or in any other establishment belonging to the same employer situated in the same town or village or situated within the radius if five miles from the establishment to which he belongs; and b) if in the opinion of the employer, the alternative employment does not call for any special skill or previous experience and can be done by the laid-off workman; and c) if the wages which would normally have been paid to the workmen in his previous employment are offered for the alternative employment also; 2. if he does not present himself for work at the establishment at the appointed time during normal working hours at least once a day; 3. if the lay-off is due to strike or slowing down of production on the part of workmen in another part of the same establishment. Clause (ii) requires a workman to present himself for work at the establishment daily, if he does not he cannot claim lay-off compensation. But his absence does not disentitle him to reinstatement after the lay-off is over. Clause (iii) says that the employer is exonerated from his liability to pay compensation where layoff is due to strike or slowing down of production on the part of the workmen in another part of the establishment (Lone Tree Estate v. Industrial Tribunal, 1962, II LLJ 319 Kerala).

Section 25-F. Conditions precedent to retrenchment of workmen It lays down the requirements for a valid retrenchment. However, these conditions apply in case of retrenchment of an employee who has been in continuous service for not less than one year (Mohan Lal v. Bharat Electronics Ltd. 1981, II LLJ 70 SC). The section prescribes three conditions for a valid retrenchment, namely:a) The workman should be given one month's notice in writing indicating the reasons of retrenchment. retrenchment should be effected after the expiry of the period of notice. If no such notice is given, the workman must be paid in lieu of such notice wages for the period of notice. b) The workman has been paid, at the time of retrenchment, compensation, equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months. c) Notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification is the Official Gazette.

8|Page Provisions relating to notice of retrenchment are contained in Rule 76 of the Industrial Disputes (Central) Rules, 1957. The requirement of paying compensation is a mandatory pre-condition for retrenchment of a workman, therefore, its non-compliance will render a retrenchment invalid (D.C. & G. Mills v. Shambhu Nath, AIR 1978 SC 88; State of Bombay v. Hospital Mazdoor Sabha, 1960 I LLJ 251 SC) and would attract the penalty under Section 31(2) of the Act (Melby D'Cruz v. Travancore Mineral Ltd., 1967 II LLJ 637 Kerala). If retrenchment is proved unlawful, the workman has a right to reinstatement with continuity of service and right to wages for such period. Termination of service of a workman for any reason other than those excepted in Section 2(oo) amounts to retrenchment. If pre-requisites for a valid retrenchment have not been complied with, the termination of service would be void ab initio. Therefore, the workman would be entitled to a declaration that the workman continued to be in service with all consequential benefits (Mohan Lal v. Bharat Electronics Ltd. 1981 II LLJ 70 SC) and if he was not paid all the benefits including salary he shall be entitled to recover the same as arrears (Deshraj Sood v. Industrial Tribunal and others, 1985 I LLJ 74 Patna).

Section 25-FF. Compensation to workmen in case of transfer of undertakings Section 25-FF provides that in case of transfer of ownership or management of an undertaking from one employer to another every workman:a) shall before such transfer be entitled to notice, and b) shall also be entitled to compensation in accordance with the provisions of Sections 25-F as if the workman to compensation had been retrenched. To entitle a workman to compensation under this section the following conditions must be simultaneously complied with, namely: 1) a transfer of ownership, or management of undertaking from one employer to another either (i) by agreement or (ii) by operation of law; 2) the undertaking in question must be an industry within the meaning of Section 2(j) and the workman should be a workman within the meaning of Section 2(s); and 3) the workman must have put in a continuous service of not less than one year in that undertaking immediately before the transfer of ownership or management of the undertaking. The proviso to Section 25-FF lays down that a workman shall not be entitled to benefits under this section in case of change of employers by reason of the transfer of:1) the service of the workman has not been interrupted by the transfer; 2) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and

9|Page 3) the new employer is under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer. For the application of Section 25-FF it is necessary that the ownership or management of an undertaking must have been transferred from one employer to another. In case of transfer of ownership or management not covered by the proviso to this section, the employees become entitled to notice and compensation, and provisions of Section 25-F are also attracted because the transfer results in the retrenchment of employees. Reference to Section 26 is made only for the purpose of calculating the amount of compensation payable to workmen (Ankapalla Co-operative Agricultural and Industrial Society v. Its Workmen 1962 II LLJ 621 SC).

Section 25-G. Procedure for retrenchment The well recognised principle of retrenchment in industrial law is 'first come last go' and 'last come first go'. This principle has been incorporated in Section 25-G of the Act. The procedural protection provided under this section can be claimed by a workman on the fulfillment of the following conditions, namely:1) The workman must be a workman within the meaning of Section 2(s) of the Act; 2) The workman should be an Indian citizen; 3) The workman should be employed in an establishment which is an industry within the meaning of Section 2(j) of the Act; 4) The workman should belong to a particular category of workmen in the industrial establishment; and 5) There should be no agreement contrary to the principle of 'last come first go' between the employer and workman. Any provision in the standing orders to the above effect shall be deemed to be agreement for the purposes of this section. For the application of Section 25-G all the above five conditions must be simultaneously complied with. If these conditions are fulfilled, the principle of 'last come first go' shall be ordinarily adhered to by the employer. The use of the word "ordinarily" connotes that the above procedure can be departed from where circumstances specially applicable to the industry in question so demand. But in case of any departure from the establishment principle of retrenchment, the reasons therefore must be recorded by the employer. Thus, of any departure from the above principle is possible in two cases, namely:1) by an agreement to the contrary between the workman and the employer; and 2) for any other reasons to be recorded by the employer. It is noteworthy that the above principle has to be applied with respect to different categories of workmen employed in an industrial establishment and not to the whole of the establishment.

10 | P a g e Section 25-H. Re-employment of retrenched workmen This section of the Act is based on known principle that when a workman has been retrenched by employer on the ground of surplus staff, such workman should first be given an opportunity to join service whenever an occasion to employ another hand arises. This section imposes a statutory obligation on the employer to give opportunity to the retrenched employees to offer themselves for re-employment. In order to claim preference in employment under this section a workman must satisfy the following conditions: 1) 2) 3) 4)

he should have been retrenched prior to re-employment; he should be a citizen of India; he should offer himself for re-employment in response to the notice by the employer; he should have been retrenched from the same category of service in the industrial establishment in which the re-employment is proposed.

Only a 'retrenched' workman can claim benefit under Section 25-H. A dismissed, discharged or a superannuated workman has no claim for preferential re-employment. When notice is given to a workman and he fails to offer himself for re-employment, he will be disentitled from claiming the benefit under this section.

Section 25-M. Prohibition of lay-off (1)

(2)

(3)

(4)

No workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment to which this Chapter applies shall be laid- off by his employer except 1[with the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereinafter in this section referred to as the specified authority), obtained on an application made in this behalf, unless such lay- off is due to shortage of power or to natural calamity, and in the case of a mine, such lay-off is due also to fire, flood, excess of inflammable gas or explosion]. An application for permission under sub- section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended lay- off and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner. Where the workman (other than badli workmen or casual workmen) of an industrial establishment, being a mine, have been laid- off under sub- section (1) for reasons of fire, flood or excess of inflammable gas or explosion, the employer, in relation to such establishment, shall, within a period of thirty days from the date of commencement of such lay- off, apply, in the prescribed manner, to the appropriate Government or the specified authority for permission to continue the lay- off. Where an application for permission under sub- section (1) or sub- section (3) has been made, the appropriate Government or the specified authority, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such lay- off, may, having regard to the genuineness and adequacy of the reasons for such lay- off, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.

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(6)

(7)

(8)

(9)

(10)

Where an application for permission under sub- section (1) or sub- section (3) has been made and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days. An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub- section (7), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order. The appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub- section (4) or refer the matter or, as the case may be, cause it to be referred, to a Tribunal for adjudication: Provided that where a reference has been made to a Tribunal under this sub- section, it shall pass an award within a period of thirty days from the date of such reference. Where no application for permission under sub- section (1) is made, or where no application for permission under sub- section (3) is made within the period specified therein, or where the permission for any lay- off has been refused, such lay- off shall be deemed to be illegal from the date on which the workmen had been laid- off and the workmen shall be entitled to all the benefits under any law for the time being in force as if they had not been laid- off. Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub- section (1), or, as the case may be, sub- section (3) shall not apply in relation to such establishment for such period as may be specified in the order.] The provisions of section 25C (other than the second proviso thereto) shall apply to cases of layoff referred to in this section. Explanation.-- For the purposes of this section, a workman shall not be deemed to be laid- off by an employer if such employer offers any alternative employment (which in the opinion of the employer does not call for any special skill or previous experience and can be done by the workman) in the same establishment from which he has been laid- off or in any other establishment belonging to the same employer, situate in the same town or village, or situate within such distance from the establishment to which he belongs that the transfer will not involve undue hardship to the workman having regard to the facts and circumstances of his case, provided that the wages which would normally have been paid to the workman are offered for the alternative appointment also.

Section 25-N. Conditions precedent to retrenchment of workmen (1)

(2)

No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until, (a) the workman has been given three months' notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; and (b) the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereafter in this section referred to as the specified authority) has been obtained on an application made in this behalf. An application for permission under sub- section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such

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(3)

(4)

(5)

(6)

(7)

(8)

(9)

application shall also be served simultaneously on the workmen concerned in the prescribed manner. Where an application for permission under sub- section (1) has been made, the appropriate Government or the specified authority, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen. Where an application for permission has been made under sub- section (1) and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days. An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub- section (6), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order. The appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub- section (3) or refer the matter or, as the case may be, cause it to be referred, to a Tribunal for adjudication: Provided that where a reference has been made to a Tribunal under this sub- section, it shall pass an award within a period of thirty days from the date of such reference. Where no application for permission under sub- section (1) is made, or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workman and the workman shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him. Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub- section (1) shall not apply in relation to such establishment for such period as may be specified in the order. Where permission for retrenchment has been granted under sub- section (3) or where permission for retrenchment is deemed to be granted under sub- section (4), every workman who is employed in that establishment immediately before the date of application for permission under this section shall be entitled to receive, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months

Section 25-Q. Penalty for lay-off and retrenchment without previous permission Any employer who contravenes the provisions of Section 25-M or Section 25-N shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to one thousand rupees, or with both.

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Bibliography  S.N. Misra's Labour and Industrial Laws (26th Edition)