Layoff implies temporary removal of art employee from the payroll of the organization due to circumstances beyond the control of the employer. It may last for an indefinite period. But the employees is not terminated and is expected to be called back in future. The employer employee relationship does not come to an end but is merely suspended during the period of layoff. It is temporary denial of employment. The purpose of layoff is to reduce the financial burden on the organization when the human resources cannot be utilized profitably. Under Section 2(KKK) of the Industrial Disputes Act, 1947, Layoff is defined as ” the failure, refusal or inability of an employer, on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery or by any other reason, to give employment to a workman whose name appears on the muster rolls of his industrial establishment and who has not been retrenched”. Layoff is resorted in cyclical and seasonal industries. In mines workers are laidoff due to excess of inflammable gas, flood, fire and explosion. According to section (c) of the Industrial Disputes Act, 1947, a laidoff worker is entitled to compensation equal to 50 per cent of the basic wages and dearness allowance that would have been payable to him had he not been laidoff. Howerver, in order to claim this compensation, the laidoff workman must satisfy the following conditions:
- he should not be a badli or a casual worker,
- his name must appear on the muster rolls of the industrial establishment,
- he must have completed not less than one year of continuous service, and
- he must present himself for work at the appointed time during normal working hours at least once a day.
The right to compensation is lost if the worker refuses to accept alternative employment at a place within 5 miles of the establishment from which he has been laidoff. No compensation is payable when the layoff is due to strike or slowing down of production on the part of workers in another part of the establishment. An industrial establishment of a seasonal character or in which work is performed only intermittently or which employs less than 20 workers is not required to pay the compensation.