Section 25C of the Industrial Disputes Act 1947 - Right to Lay-off Compensation
Section 25C provided a statutory right to lay-off compensation for qualifying workmen whose names were borne on the muster rolls of an industrial establishment and who had completed at least one year of continuous service, subject to the exclusions, conditions and connected provisions of Chapter V-A.
What did Section 25C provide?
Where an eligible workman, other than a badli workman or casual workman, whose name was on the muster rolls of the industrial establishment and who had completed not less than one year of continuous service under the employer was laid off, continuously or intermittently, the employer was required to pay compensation for the qualifying lay-off days.
The compensation was equal to 50 percent of the total basic wages and dearness allowance that would have been payable had the workman not been laid off. Intervening weekly holidays were excluded.
Conditions for lay-off compensation
| Requirement | Section 25C position |
|---|---|
| Status | The claimant must be a workman covered by the provision and not excluded as a badli or casual workman, subject to the statutory explanation concerning a badli workman. |
| Muster roll | The workman's name must be borne on the muster rolls of the industrial establishment. |
| Continuous service | The workman must have completed not less than one year of continuous service under the employer. |
| Lay-off | The workman must have been laid off, whether continuously or intermittently. |
| Rate | 50 percent of basic wages plus dearness allowance that would otherwise have been payable. |
Meaning of continuous service
Section 25B defined continuous service for Chapter V-A. It included uninterrupted service subject to specified protected interruptions and also contained deeming rules based on the number of days actually worked during the relevant preceding period.
Meaning of lay-off
For the Industrial Disputes Act framework, "lay-off" was defined in Section 2(kkk). Broadly, it referred to the failure, refusal or inability of an employer, for the statutory reasons specified in that definition, to give employment to a workman whose name was borne on the muster rolls and who had not been retrenched. The statutory definition and its explanation should be applied to the facts before treating an interruption of employment as a lay-off.
The 45-day rule
Section 25C contained a proviso dealing with a workman laid off for more than 45 days during any period of twelve months. Compensation after the first 45 days could cease where there was an agreement to that effect between the workman and employer. The proviso therefore did not create an automatic cessation merely because 45 days had elapsed; the statutory condition concerning an agreement was material.
Retrenchment after the first 45 days
The second proviso allowed an employer in a case covered by the preceding proviso to retrench the workman in accordance with Section 25F after expiry of the first 45 days of lay-off. Lay-off compensation paid during the preceding twelve months could then be set off against the retrenchment compensation payable, as provided by Section 25C.
Who was a badli workman?
The Explanation to Section 25C defined a "badli workman" as a workman employed in an industrial establishment in place of another workman whose name was borne on the muster rolls. However, for Section 25C, the person ceased to be regarded as a badli workman after completing one year of continuous service in the establishment.
Casual workmen
Section 25C expressly excluded a casual workman from the statutory entitlement created by that section. Whether a particular person fell within the exclusion depended on the employment relationship and applicable legal principles, rather than the label used by the employer alone.
Section 25A - Does Section 25C apply to the establishment?
Before applying Section 25C, Section 25A must be considered. Section 25A specified establishments to which Sections 25C to 25E did not apply, including establishments to which Chapter V-B applied and certain establishments based on workforce size, seasonal character or intermittent work.
Section 25D - Muster rolls
Section 25D required the employer to maintain a muster roll for the purposes of Chapter V-A and to provide for entries by workmen presenting themselves for work at the appointed time during normal working hours.
Section 25E - When compensation was not payable
Section 25E prescribed circumstances in which lay-off compensation was not payable, including specified cases involving refusal of suitable alternative employment, failure to present for work and a lay-off caused by a strike or slowing down of production in another part of the establishment.
State amendments preserved in the source page
Maharashtra
The source page records the Maharashtra amendment made by Maharashtra Act 22 of 1981. It provides, in the circumstances specified by that State amendment concerning discontinuance or reduction of power supply for contravention of the Bombay Electricity (Special Powers) Act, 1946 or orders or directions under it, for compensation equal to 100 percent of basic wages and dearness allowance that would have been payable had the workman not been laid off. The accompanying provisos were correspondingly re-designated.
West Bengal
The source page records that West Bengal Act 57 of 1980 omitted the second proviso to Section 25C for the State. State amendments should be checked in their official text and for their applicability on the relevant date before reliance.
Official statutory sources
The central text of the Industrial Disputes Act, 1947 and Section 25C can be checked through India Code and the Ministry of Labour and Employment. For an individual dispute, the statutory text in force on the relevant date, applicable State amendments, notifications and binding judicial decisions should also be verified.