Layoffs and Laid off are the nomenclatures that convey the same meaning that is temporary refusal by an employer to give employment to an employee who is already employed. Many people get confused about the difference in between two terms but they are one and the same. The only difference is, Laid off is used in passive voice and its Past participle of Lay off. for an example:
Active voice: In this year, company lay off 100 employees.
passive voice: In this year,100 employees are laid off by the company
Termination of employment (with or without notice) by the employer or management. Layoffs are not caused by any fault of the employees but by reasons such as lack of work, cash, or material. Permanent l h layoff is called redundancy. But in view of the Industrial disputes act, 1947 (India), layoff means temporary removal of employees because of deficit and shortage of inputs which are related to productivity, breakdown of machinery or effect of natural calamity. Layoff of employees does not mean that they are terminated from the job, such employees could be reinstated after revivifying of deficit or shortages which effected productivity.
According to [section 2 (kkk)] of Industrial disputes act, 1947
"lay-off" (with its grammatical variations and cognate expressions) means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the break-down of machinery [or natural calamity or for any other connected reason] to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched;
Explanation : Every workman whose name is borne on the muster rolls of the industrial establishment and who presents himself for work at the establishment at the time appointed for the purpose during normal working hours on any day and is not given employment by the employer within two hours of his so presenting himself shall be deemed to have been laid-off for that day within the meaning of this clause:
PROVIDED that if the workman, instead of being given employment at the commencement of any shift for any day is asked to present himself for the purpose during the second half of the shift for the day and is given employment then, he shall be deemed to have been laid-off only for one-half of that day:
PROVIDED FURTHER that if he is not given any such employment even after so presenting himself, he shall not be deemed to have been laid-off for the second half of the shift for the day and shall be entitled to full basic wages and dearness allowance for that part of the day;]
Dictionary meaningswhen someone stops employing someone, sometimes temporarily, because there is no money to pay them or because there is no work for them. -----dictionary.Cambridge
Temporary or permanent discharge of a worker or workers: -----Oxford Dictionary
Layoff (in British and American English), also called redundancy in the UK, is the temporary suspension or permanent termination of employment of an employee or (more commonly) a group of employees for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs. Originally the term layoff referred exclusively to a temporary interruption in work, as when factory work cyclically falls off. The term however nowadays usually means the permanent elimination of a position, requiring the addition of "temporary" to specify the original meaning.
Layoffs in 2016: Companies that gave the pink slips
Downsizing has taken a rampant turn this year, with both startups and MNCs laying off staff by the hundreds. Here are some that have given the pink slips.
QUIKR (Classified advertising platform)
Layoffs: 150 employees of CommonFloor, which Quikr had acquired in January.
Layoffs: 1,000 across India.
TWITTER (Online social networking service)
Layoffs: 20 jobs in Bengaluru.
OLA (Online cab service)
Layoffs: 700 employees pan-India.
CISCO (E-commerce shopping list firm)
Layoffs: 14,000 jobs worldwide, with 7,000 engineers in India’s R&D centre likely to be severely affected.
When: Starting first quarter of 2017.
ASKME (E-commerce shopping list firm)
Layoffs: 4,000 employees, after shutting down in July due to the unplanned exit of its principal investor, Astro Holdings.
GROFERS (Online grocery delivery)
Layoffs: 150-200 employees in Bengaluru. Revoked 67 job offers.
Bombay High Court
Veiyra M.A. vs Fernandez C.P. And Anr. on 7 December, 1955
Bench: M Chagla, P Dixit
JUDGMENT Chagla, C.J.
In Veiyra v. Fernandez, the Court held that employer has an option for lay-off or retrenchment.
Non-applicability of layoff provisions to certain establishments
According to section 25A of chapter VA of Industrial Dispute Act 1947, certain establishments do not have any provisions relating to layoff of the employees by the employer. In such circumstances, layoff would be considered without any authority of law.
Such establishments are:
Employees employed in the above said establishments do not have right for laid-off compensation. However if there is any agreement between employer and employee for that purpose or on the grounds of social justice, laid-off competition can be paid.
In South India Corporation Ltd. v. All Kerala Cashewnut Factory Workers' Federation the Court held that if any establishment is not covered within the scope of this Chapter V-A, the Tribunal has no right to grant relief on the basis of any fanciful notions of social justice.
Except above said industrial establishments, all other industrial establishments ( 50 workmen and above industrial establishments which are not of seasonal character) have provisions relating to lay off of the employees by the employer.
Right of Compensation by workmen laid-off
[Right of workmen laid-off for compensation] Industrial Disputes Act,1947 Section 25-C
workman has right to lay-off compensation subject to the following conditions, they are:
In Vijay Kumar Mills v. Labour Court, the Madras High Court held that the badli workman is one whose name is not borne on muster rolls of the establishment. If his name is found on the muster roll, even if he is a badli workman, he is entitled to lay-off compensation.
Maximum days allowed to Layoff of employee by employer
According to section 25C of Industry and dispute Act 1947, maximum days allowed to Layoff of employee by employer is 45 days, for those days, employee who is laid-off is entitled for compensation 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.
However, if this contingency is prolonging beyond a reasnable time, say 45 days, it would be matter of serious concern. both to the employer and to the workmen because both of them are put to a loss of 50% wages i.e. The employer is required pay lay-off compensation without extracting work from workmen and workmen too, would be losing 50% wages which he would have earned had he not been so laid-off. Therefore the parties can enter into an agreement not to continue lay-off after a period of 45 days in a year.
Compulsory permission from competent authority by employer to lay off of workmen
Section 25M of Industrial Dispute act 1947
For Industrial establishments in which not less than 100 workmen are employed, on an average per working day and are of not being seasonal character and in which work is performed only intermittently, have to seek prior permission from competent authority by the employer to layoff workman. if the employer does not apply to seek prior permission or where such permission is refused by the competent authority specified above, to effect lay-off, such lay-off shall be considered as illegal and the workmen laid-off shall be entitled to all benefits as if they have not been laid-off.
Can an employer avoid the lay-off compensation?
Section 25A of Industrial Dispute act 1947
Workmen not entitled to compensation in certain cases [Section 25E] of Industrial Dispute act 1947
Following establishments can avoid lay off compensation according to the Section 25E
(i) if he refuses to accept any alternative employment 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 a radius of five miles from the establishment to which he belongs, if, in the opinion of. the employer, such alternative employment does not call. for any special skill or previous experience and can be done by the workman, provided that the wages which would normally have been paid to the workman are offered for the alternative employment also;
(ii) if he does not present himself for work at the establishment at the appointed time during normal working hours at least once a day;
(iii) if such laying-off is due to a strike or slowing-down of production on the part of workmen in another part of the establishment.
Definition of retrenchment of employee
"retrenchments" means 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 but does not include-
(a) voluntary retirement of the workman; orProcedure for retrenchment [Section 25G]
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
43[(bb) termination of the service of the 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 on that behalf contained therein; or]
(c) termination of the service of a workman on the ground of continued ill-health;]
In Duryodhan Naik v. Union of lndia, the Court held that the discharge of surplus labour by the employer· for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action is called retrenchment, but where the services of all workmen have been terminated by the employer on a real and bona fide closure of business or the undertaking is taken over by another employer, it has no application of retrenchment.
In Santosh Gupta v. State Bank of India, a female employee was discharged on the grounds that she failed to qualify herself in the prescribed test for confirmation of services. The Tribunal held that the termination does not amount to retrenchment. But the Supreme Court reversed the decision of the Tribunal and ordered reinstatement of the employee with full back wages. The Supreme Court further held that the expression “termination of service for any reason whatsoever” is wide enough to include every kind of termination of service except those which are expressly excluded by the proviso to the definition of retrenchment as given in Section 2(oo)|.
In Tatanagar Foundry Co. v. Their Workmen, it was held that employer cannot lay-off the workmen with mala fide intention or by way of victimisation.
The principle of 'last come; First go':-
Where any workman in an industrial establishment who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman.
Re-employment of retrenched workmen [Section 25H]
Where any workmen are retrenched, and the employer proposes to take into his employ any persons, he shall, in such manner as may be prescribed, give an opportunity [to the retrenched workmen who are citizens of India to offer themselves for re-employment, and such retrenched workmen] who offer themselves for re-employment shall have preference over other persons.
To an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than [50 but not more than 100] workmen were employed on an, average per working day for the preceding twelve months.[Section 25A]
According to the Section 25F [Conditions precedent to retrenchment of workmen]
To an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than [one hundred] workmen were employed on an, average per working day for the preceding twelve months.[Section 25K]
According to the Section 25N [Conditions precedent to retrenchment of workmen]
If no application seeking permission to retrench workmen is made by the employer or where such permission is refused, such retrenchment shall be
deemed to be illegal and the workmen shall be entitled to all benefits as if they have not been given any notice. (sub-Section 7).
HSBC axes 200 employees from city offices
April 2012, HYDERABAD: HSBC India did a massive layoff exercise showing the door to as many as 200 employees ranging from assistant manager to vice presidents from its centres in Hyderabad alone.The axe had fallen on over 350 employees at HSBC's Pune centres. It is estimated that a total of 750 employees were asked to leave across locations and designations. So from assistant managers to vice presidents were summoned to the meeting room, asked to choose between termination or resignation, pack their bags and leave.
An "adequate" compensation (one month's salary for each year spent in the company plus three months salary) was part of the layoff deal. While the new entrants into the international bank are crying hoarse, the senior ones are taking solace in the cash with some having made Rs 8-15 lakh.
Penalty for lay-off and retrenchment without previous permission [Section5Q]
This section applies to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than [one hundred] workmen were employed on an, average per working day for the preceding twelve months.[Section 25K]
India. Aug 2012:Uninor one of the telecom service providers laid off its 2000 employees in different states like Karnataka, Tamil Nadu, Kerala and Orissa. company searched to find for alternative employment in its competitor companies for its retrenched employees, to get it done Uninor appointed a outsourcing agency to help them and arrange to help desks to assist to clinch the employees in finding jobs.
In fact this is the procedure to be followed and the Industrial Dispute Act 1947, otherwise company has to pay compensation to laid off employees according to the procedure mentioned below, but company claimed that it has adopted a unique human resource model.
Companies like Bharti Airtel, GE and Citigroup are searching suitable placement opportunities' for its employees who are going to laid-off. especially Citigroup helping its employees with coaching on job search skills, interview techniques, placement support and even basic application letter-writing skills. Because these companies believe that managing layoffs well is important for the sustainability of the 'employer brand'.
The method of separation may have an effect on a former employee's ability to collect whatever form of unemployment compensation might be available in their jurisdiction. In many U.S. states, workers who are laid off can file an unemployment claim and receive compensation. Depending on local or state laws, workers who leave voluntarily are generally ineligible to collect unemployment benefits, as are those who are fired for gross misconduct. Also, lay-offs due to a firm's moving production overseas may entitle one to increased re-training benefits. Some companies in the United States utilize Supplemental Unemployment Benefits.
The Worker Adjustment and Retraining Notification Act (WARN) became effective on February 4, 1989. WARN offers protection to workers, their families and communities by requiring employers to provide notice sixty-days in advance of plant closings or mass layoffs. This notice must be provided to either affected workers or their representatives, and to the appropriate unit of local government.
The Worker Adjustment and Retraining Notification Act of 1988 (WARN Act) is a United States labor law which protects employees, their families, and communities by requiring most employers with 100 or more employees to provide sixty- (60) calendar-day advance notification of plant closings and mass layoffs of employees. In 2001, there were about 2,000 mass layoffs and plant closures which were subject to WARN advance notice requirements and which affected about 660,000 employees.
Can employer have an option to retrench employee without layoff?
layoffs in the United States by the large corporations such as Hewlett Packard (hp) lead to the availability of experience and talent, made hiring easier for Indian Information Technology companies such as India's top IT services company TATA, HCL Technologies, Infosys and Wipro.
Yes, employer have an option to retrench or layoff an employee, but those should be in accordance with the relevant provisions mentioned in the Industrial dispute Act 1947.
Eligibility for retrenchment compensation
If an employer wants to retrench employee without laying-off, such employer has to follow the procedure contemplated under section 25F ( conditions precedent to retrenchment of workmen) of the Industrial dispute Act 1947. According to the said provision;
Industrial establishment employs more than 100 workmen and should not be of seasonal character;
ET Bureau | December 12, 2016,
Reasons for Lay-Offs
To make it clear again, Lay off means temporary dismissal or removal of employee by employer because his incapacity to maintain due to various economic factors but not because of incapacity of employee. It is purely failure on the part of employer but not the failure on the part of the employee.
Demonetisation by the Government of India- layoffs.
The Government of India's move to ban Rs.500 and Rs 1,000 from November 9th- 2016 to curb black money, effected on the mobile phone industry, which manufactures budget oriented mobile phones within the range from Rs. 5000 to Rs.10,000. Because of shortage and unavailability of low value currency notes from the banks, the consumer purchase power has fallen dramatically - Mobile phone sales slipped to half from regular demand post demonetisation and companies saw no sign of sales restoration to normal. Therefore there was no option left to the mobile phone companies except to opt Layoff in order to overcome crunch. Mobile phone companies that laid off its employees for few days are given below.
High competition in its segment:
Between 2002 and 2006 years many private players entered into insurance sector as there was good market growth rate led to higher number of recruitment offered with high package due to competition in the market by other insurance companies. Later insurance sector faced stagnation and market growth rate and affected overall performance of the sector which forced them to lay off large number of employees in various insurance companies.
Automation and Digitisation leading to redundancies of jobs:
Infosys 'released' 9,000 employees due to automation
Infosys has "released" 8,000-9,000 employees in the past one year because of automation of lower-end jobs. It has actually come down already, though all of it may not be a reflection of automation and is likely also to be the result of the company not doing as well as it expected. Company has also trained them in special courses that will help them in their new assignments.So far it has trained about 490 people in a first batch of machine learning and the use of artificial intelligence (AI).
ET | Updated: Jan 20, 2017, 11.40 AM IST
In one of India's biggest-ever layoffs, L&T sheds 14,000 employees from its workforce
Larsen & Toubro, India’s biggest engineering firm, has shed 14,000 employees, or 11.2% of its total workforce, in one of the biggest corporate retrenchment exercises in recent times.the step was an attempt to “right size” its strength in the face of business slowdown. Digitisation of operations also caused redundancies that led to downsizing.
L&T has been facing challenges with customers deferring orders and falling oil prices contributing to a sharp slowdown in the Middle-east, one of its biggest bets. Competition has increased in domestic market as companies fight for a shrinking order book pie. It also incurred losses due to inability to pass on cost escalation and other issues.
In April, ET was the first to report that L&T Finance Holding, the nonbanking finance company of the engineering major Larsen & Toubro, had asked over 550 employees to quit due to high costs and a muted business environment. In July, ET followed it up with another story detailing L&T Infotech’s high attrition rate of 18%. Details of the number of people sacked in different businesses were not given.
To cut down the cost to company
U.S, Fisker Automotive, an electric car maker has laid off workers in Delaware and California, because it has received a half-billion-dollar loan from the federal government instead of full loan amount for the purpose of manufacturing new model electric car. To cut down the cost of employees due to stoppage of production company decided to layoff its some of employees.
The layoffs include 26 workers at a former General Motors plant in Wilmington that Fisker is retooling to manufacture its Nina plug-in hybrid sedan. Another 40 contractors and employees who were working in design and development of Fisker's Karma luxury car in Anaheim, Calif., also have been cut.
Feb 2012, MUMBAI: When, in end-January, Robert McDonald, CEO of the Cincinnati-headquartered Procter & Gamble, announced plans to lay off 1,600 non-manufacturing workers, chief marketing officers (CMOs) worldwide took notice. After all, many of those 'overhead' jobs at the owner of billion-dollar brands such as Ariel, Tide, Pampers and Duracell, will be marketing ones.
Redundancy of jobs:
Yahoo lays off 2,000 workers in latest purge
SAN FRANCISCO: Yahoo layoff 2,000 employees jobs that don't fit into his plans for turning around the beleaguered Internet company. The cuts announced represent about 14 percent of the 14,100 workers employed by Yahoo.
The company estimated it will save about $375 million annually after the layoffs are completed later this year. Yahoo will absorb a pre-tax charge of $125 million to $145 million to account for severance payments. The charge will reduce Yahoo's earnings in the current quarter. Workers losing their jobs will be notified .
Economic slowdown or recession
Royal Bank of Scotland at London had cut approximately 35000 jobs since year 2008 as the bank has been facing recession in its business consequently lead to lay off its staff. For year 2012, Royal Bank of Scotland had cut approximately 618 jobs. Similarly, in December- 2012, Tata Communications a well-known and reputed Indian company , layoffs 300 of its employees across the globe due to economic slowdown and for restructuring of the company.
When determining the appropriate time to conduct layoffs, you need to honestly ask yourself the following questions.
Laying off staff is incredibly difficult, both
emotionally for you and how it affects the culture of the organization,
however it may be what you need to do to continue your business and
protect the jobs and careers of others around you.
There are many negative consequences when management fails to properly manage the business risks associated with a reorganization including but not limited to reduced or vanished shareholder value, lost productivity, lost employee and customer loyalty, ruined business image, lawsuits, non-compliance with regulations or even business death.
A chaotic reorganization of massive magnetite presents many negative consequences and risks:
What Not to Do
The manager doing the firing should never express anger, express too much disappointment, or threaten to imperil the fired employee's chances. Depending on circumstances, you may want to tell terminated employees that they might work as outside consultants, as part-time employees without benefits, or that they may be hired back at a later date, when economic and financial conditions warrant it. That said, employers are urged neither to make promises of any kind, nor to make statements that can be interpreted as promises.
Five ways to deal with a sudden layoff
Managing a sudden layoff is anyone's worst nightmare. It doesn't have to be. Steer clear of the guilt trip, accept the challenge head on and take swift action.
Accept the reality
The emotional turmoil of what's next, why me, is bound to disturb you, but acceptance is critical for moving on. "Allow yourself to grieve, but move on without wasting too much emotional energy. Be realistic, accept the facts and get on with it," says Raman Munjal chair professor of leadership studies at MDI, Gurgaon Asha Bhandarkar.
"Just as employees move on for better options, they should be prepared for layoffs. Once this basic expectation is set, preparing for such eventualities becomes easier," she adds.
Do not badmouth
Restraining from expressing your displeasure towards colleagues and bosses can be hard but remember you may need their assistance in reference checks and recommendations.
"One must control the tendency to express these emotions. Negative emotions possibly get disseminated across the grapevine faster than positive emotions and result in loss of social capital," says Bhandarkar.
Tap your resources
Leverage your contacts: trustworthy seniors and colleagues, to the best of your ability. For all you know, they might be the ones pointing you to the new job. Founder and CEO of networking portal Apna Circle Yogesh Bansal feels job portals and networking sites provide an excellent opportunity for building one's brand and networking.
Educate and update yourself
An exit is a good time to take stock of things you might have missed out on- spending time with family, enrolling for a specialised course or a degree. "Explore the fields that you have always been interested in but never got the chance to try," says Bansal.