Firms With Over 100 Employees Can’t Conduct Layoffs Without Govt Nod: Labour Minister

Amidst a spate of layoffs in the country, Union Labour Minister Bhupender Yadav has said that retrenchments would be deemed illegal if they are not carried out according to the Industrial Disputes Act.

“Further, any retrenchment and layoff are deemed to be illegal which is not carried out as per the provisions of (the) ID Act. (The) ID Act also provides for (the) right of workmen laid off and retrenched for compensation and it also contains provision for re-employment of retrenched workmen,” said Yadav.

The Minister said this in response to questions raised by a Member of Parliament in Rajya Sabha.

Elaborating further, Yadav said that firms employing more than 100 persons are, bound by law, to seek the permission of authorities before conducting mass layoffs or ‘effecting closure.’

He also specified that state governments were the jurisdictional authorities with regard to mass layoffs in domains such as edtech, social media, information technology (IT) and related sectors. Yadav also said that the central government maintained no data on mass firing with regard to these sectors.

“In the establishments that lie in the jurisdiction of (the) Central Government, the Central Industrial Relations Machinery (CIRM) is entrusted with the task of maintaining good Industrial relations and protect the interest of workers including on the matters relating to layoff and retrenchment and their prevention,” added Yadav.

Taking cognisance of the raging mass layoffs in the country, the answer saw specific mention of edtech and social media sectors.

The two industries have seen a wave of mass layoffs in the country. Edtech has emerged as the biggest culprit, accounting for more than 8,000 layoffs. From giants such as BYJU’S to Unacademy, the space has seen these new-age tech players fire employees left, right and centre.

Many other smaller startups such as Crejo.Fun and Udayy have altogether shut shop while others have dialled down operations to stave off the ongoing funding winter and negative market sentiment.

This comes barely a day after Vedantu laid off another 385 employees across divisions including sales, HR, and content teams. Prior to that, another edtech startup Teachmint laid off 45 employees in a mass layoff exercise.

On similar lines, microblogging site Twitter, earlier last month, fired more than 90% of its staff in the country while other tech giants including Meta and Amazon, are also laying off employees in droves.

Overall, according to Inc42 Layoff tracker, over 18,000 employees have been shown the door by startups since the beginning of this year.