Understand the recent layoffs in companies like Accenture and the rights available to workers in India. Explore provisions under the Industrial Disputes Act, 1947, and the Industrial Employment (Standing Orders) Act, 1946. Learn about compensation, notice periods, and employees’ rights to challenge layoffs. Stay informed about labour laws and safeguard the rights of employees during layoffs.
Nowadays, many IT giants such as Accenture, Amazon, Alphabet, etc. are laying off their employees in huge numbers. In such a scenario, it is important to understand the provisions related to Layoff under various Indian Labour Laws. This blog discusses the recent announcement of Accenture with regards to laying off its 19000 employees, provisions related to layoff under Indian Labour laws, and the rights and relief available to employees against unjust and arbitrary layoff undertaken by the companies.
Recently Accenture announced to layoff 19000 employees of the company in order to cut the costs. Accenture provides that their decision to layoff 19000 employees would mainly impact the ‘non-billable’ corporates. Accenture provided that they have decided to reduce and transform their non-billable corporate functions to reduce costs.
Another reason for layoff could be its rapid hiring in 2022. Accenture increased its headcount by a whopping 39000 employees between February 2022 to February 2023. Rationale provided by Accenture for such an enormous hiring is that, ‘the year-over-year increase in their workforce reflects demand of their services and solutions’, and that, ‘they hire to meet their current and projected future demand’. It is stated by Accenture, that it is important to manage the organizational challenges associated with their size, in order to achieve their business objectives. Because of their huge workforce size, they might face hindrance while investing in or integrating businesses, entering into joint ventures or divesting businesses.
Introduction
Layoff is a common occurrence in the corporate world, where organizations sometimes have to take tough decisions to reduce their workforce due to economic conditions or other reasons. In India, several labour laws govern the rights of employees and the procedures that companies must follow while implementing a layoff.
In the following sections we will discuss the provisions of layoff under various labour laws in India and the rights available to employees.
Industrial Disputes Act, 1947
The Industrial Disputes Act, 1947 (IDA) governs the provisions of layoff in India. According to the IDA, layoff is the temporary suspension of employment of a worker for a specific period due to a shortage of work or any other reason beyond the control of the employer.
Under the IDA, an employee who has been laid off is entitled to compensation equivalent to 50% of their total basic wages and dearness allowance for the period of layoff. The compensation is payable if the layoff exceeds 45 days in a year. The compensation must be paid within two weeks of the completion of 45 days of layoff.
Additionally, the employee retains their right to be re-employed when work is available, and the employer is required to provide the employee with a notice of recall. The notice period varies according to the duration of the employee’s service. Employees with one year or more of continuous service are entitled to a notice period of not less than one month.
Industrial Employment (Standing Orders) Act, 1946
The Industrial Employment (Standing Orders) Act, 1946 (IESO) lays down the provisions for standing orders that every employer with more than 100 workers is required to maintain. The standing orders provide for the terms and conditions of employment, including layoff.
The IESO states that if there is a shortage of work, a company may layoff workers, but only after paying them 50% of their base pay plus a dearness payment for the time they were unemployed. If the layoff lasts longer than 45 days in a year, compensation will be paid.
A notice of layoff is required to be provided to the employee by the employer. The notice period varies according to the duration of the employee’s service. Employees with one year or more of continuous service are entitled to a notice period of not less than one month.
State-specific Labour Laws
Several state-specific labour laws also govern the provisions of layoff in India. For example, the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, provides for the right of an employee to challenge the legality of a layoff if the employer does not comply with the provisions of the law.
Similarly, the Karnataka Industrial Employment (Standing Orders) Rules, 1961, require employers to give at least two weeks’ notice to employees before a layoff. The notice must specify the reason for the layoff, the expected duration, and the compensation to be paid.
Rights of Employees against a Layoff
Employees in India have several rights against a layoff. They are entitled to compensation for the period of layoff, and the employer must provide notice of layoff and recall when work becomes available.
Employees can contest a layoff by submitting a complaint to the labour authorities or the labour court if they are dissatisfied with the compensation or the validity of the dismissal. Depending on the particulars of their work, the employee may also be qualified for other statutory benefits like gratuity and provident fund.
After discussing various labour laws with regards to layoff, it can be concluded that labourers are entitled to following rights and relief:
Notice period: Employers are required to provide notice of termination to employees who are being laid off. The notice period is typically based on the length of service of the employee and is governed by the terms of the employment contract or the relevant labour laws.
Severance pay: Employers may be required to pay severance to employees who are being laid off. The provisions of the contract of employment or the applicable labour regulations will determine the amount of severance compensation, which is often based on the employee’s length of service.
Retrenchment compensation: The Industrial Disputes Act, 1947, mandates payment of retrenchment compensation to employees who have been terminated as a result of a retrenchment exercise. The amount of compensation is based on the length of service of the employee and is calculated as 15 days’ average pay for every completed year of continuous service.
Re-employment assistance: Employers may be required to provide re-employment assistance to employees who have been laid off. This assistance may include job search assistance, training, and other forms of support to help the employee find new employment.
Unemployment benefits: In some cases, employees who have been laid off may be eligible for unemployment benefits under the relevant social security schemes. The eligibility criteria and the number of benefits vary depending on the scheme.
It is important to note that the specific rights and protections available to employees who have been laid off may vary depending on the circumstances of the layoff, the industry in which the employee works, and the applicable labour laws.
Conclusion
In conclusion, even when a layoff becomes a necessary evil, it is a responsibility of the companies to abide by the terms of the relevant labour regulations while carrying out layoffs. Employees have a number of security measures against a layoff, which are required to be kept in mind by the employers, while undertaking the activity of layoff.
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