1. The "300 Worker" Threshold
This is the most significant change for manufacturers and large employers.
Permission for Lay-off, Retrenchment & Closure:
Previously required for establishments with 100+ workers. Now raised to 300+ workers. Establishments with < 300 workers do not need Govt permission (though notice and compensation still apply).
2. New Concepts
- Negotiating Union: A union with 51% membership gets sole negotiating rights. If no single union has 51%, a Negotiating Council is formed.
- Worker Reskilling Fund: Employers must contribute 15 days' wages of retrenched workers to a fund within 10 days of retrenchment.
- Fixed Term Employment (FTE): Legally recognized. FTEs get pro-rata benefits equal to permanent workers (except notice period).
3. Penalties
- Illegal Lay-off/Closure: Fine ₹1 Lakh to ₹10 Lakh.
- Unregistered Union Activity: Fine ₹5,000 + Daily Penalty.
- Breach of Settlement: Fine ₹1 Lakh + Imprisonment.
4. Frequently Asked Questions
What is the new threshold for Retrenchment? ▼
The threshold is raised to 300 workers. Establishments with fewer than 300 workers do not need prior government permission for lay-off, retrenchment, or closure.
Is Fixed Term Employment legal? ▼
Yes, FTE is now a distinct legal category. FTEs are entitled to all statutory benefits (PF, ESI, Gratuity) on a pro-rata basis.