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Section 65: Definition and conditions of lay-off

The Industrial Relations Code, 2020 (Act No. 35 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IX: Lay-off, Retrenchment and Closure
Competent Labour Forum
Act No. 35 of 2020
Section 64 All 104 Sections of Industrial Relations Code, 2020 Section 66

Legal Commentary & Landmark Judgments: Section 65

Section 65 of the Industrial Relations Code, 2020 defines the applicability threshold of Chapter IX regarding lay-off compensation—limiting coverage to industrial establishments employing 50 or more workers, exempting seasonal establishments, and declaring Government determinations on seasonal character final.

  • Threshold of Fifty Workers: Restricts the statutory right of lay-off compensation under Sections 67 to 69 to industrial establishments employing an average of at least fifty workers per working day in the preceding twelve months.
  • Statutory Exclusion of Seasonal Industries: Exempts establishments of a seasonal character or where work is performed only intermittently, recognizing that temporary off-season closures are inherent to such businesses.
  • Finality of Government Determination: If a dispute arises as to whether an establishment is of a seasonal character, the determination of the appropriate Government is statutory, final, and conclusive.
Key Landmark Precedents:
  • Workmen of Firestone Tyre & Rubber Co. v. Firestone Tyre & Rubber Co. (1976) 3 SCC 819: Supreme Court held that lay-off compensation is entirely a creature of statute; an employer has no common law or inherent managerial right to lay off workers without statutory authority or standing orders.
  • Kalinga Tubes Ltd. v. Their Workmen AIR 1969 SC 90: Supreme Court analyzed establishment workforce thresholds, holding that statutory employee counts must be calculated based on regular employment over the preceding year.
Courtroom Practice & Strategic Litigation Guidance:

To determine Chapter IX applicability, calculate the rolling daily average over the preceding 12 months by dividing total aggregate attendances by the number of operational working days. If operating in an agro-processing, sugar, or seasonal manufacturing sector, file a formal application under Section 65(2) before the Labour Department to obtain a seasonal declaration.

Section 64 All 104 Sections of Industrial Relations Code, 2020 Section 66