The IDA divides job security rules into two sets based on the scale of the industrial establishment.
1. Statutory Concepts
- Lay-Off (Section 2(kkk)): The failure, refusal, or inability of an employer, on account of shortage of coal, power, or raw materials, or the accumulation of stocks, or breakdown of machinery, to give employment to a workman on the muster roll.
- Retrenchment (Section 2(oo)): The termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action.
- Exclusions: Voluntary retirement, superannuation, termination due to non-renewal of contract, or termination on grounds of continued ill-health.
- Landmark Rule: "Last Come, First Go" (Section 25G): Retrenchment must target the most junior employee in that category first, unless recorded reasons justify a departure.
- Closure (Section 2(cc)): The permanent closing down of a place of employment or a part thereof.
2. Chapter V-A vs. Chapter V-B: The Threshold System
| Chapter V-A (Small Establishments) | Chapter V-B (Large Establishments) |
|---|---|
| Applies to establishments employing 50 to 99 workmen. | Applies to factories, mines, and plantations employing 100 or more workmen (raised to 300 in various states). |
| No prior permission required. The employer must merely provide notice and compensation. | Requires prior permission from the appropriate government before laying-off, retrenching, or closing. |
| Retrenchment compensation is 15 days' average pay for every completed year of service (Section 25F). | Retrenchment compensation is 15 days' average pay, and lay-off requires 50% basic pay. Unlawful retrenchment without permission is void ab initio with full back wages. |