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Content Overview [ Contact us ](#contact-us-sidebar) #### Content Overview #### We take care of your Legal, Finance & Compliance needs! [Let's Talk](https://calendly.com/consulttreelife) #### Get in touch with us Your information is confidential and secure Or [Book a CONSULTATION](https://calendly.com/consulttreelife) Δ Blog Content Overview - [1 What is the Industrial Disputes (ID) Act?](#What_is_the_Industrial_Disputes_ID_Act) - [2 Relevance of the ID Act to Layoffs](#Relevance_of_the_ID_Act_to_Layoffs) - [3 What Companies Must Keep in Mind](#What_Companies_Must_Keep_in_Mind) - [4 What Employees Must Keep in Mind](#What_Employees_Must_Keep_in_Mind) - [5 In Conclusion](#In_Conclusion) - [5.1 References:](#References) As of December 2022, [52 Indian firms](https://inc42.com/features/indian-startup-layoffs-tracker/), including **startups,** have laid off over 18,000 **employees**. The unicorns on this list include prominent **startups** like BYJU’S, Unacademy, MPL, Chargebee, Cars24, LEAD, Ola, OYO, Meesho, Innovaccer, Udaan, and Vedantu. Further, this list includes 15 EdTech startups, which collectively saw 7,868 employee **layoffs**. Amidst the news of **layoffs**, Labour and Employment Minister Bhupender Yadav stated that retrenchment and **layoffs** will not be deemed **legal** if they are carried out outside the provisions of the Industrial Disputes Act of 1947. ## **What is the Industrial Disputes (ID) Act?** [The Industrial Disputes Act](https://labour.gov.in/sites/default/files/THEINDUSTRIALDISPUTES_ACT1947_0.pdf), constituted on March 11, 1947, is legislation that governs industrial dispute resolution in India. The Act aims to prevent illegal lockouts and strikes and offer relief to **employees** who are illegally laid off without following due process. It provides guidelines for various processes, such as conciliation, arbitration, and adjudication, with the aim of promoting mutually beneficial relations between employers and **employees**. ## **Relevance of the ID Act to Layoffs** Here’s a snapshot of the provisions of the Act: - In the context of the ID act, a layoff is defined as a condition where the company has no option but to deny its **employees** further work opportunities due to circumstances that make it unable to continue operations. Some examples include a shortage of raw materials, a breakdown of machinery, or a natural calamity. - Firms employing [more than 100 ](https://www.business-standard.com/article/economy-policy/layoffs-deemed-illegal-if-not-carried-as-per-industrial-disputes-act-yadav-122120800970_1.html)persons are required to seek the **nod** of the appropriate **government** before conducting mass **layoffs**. However, if there is no response from the **government** for over 60 days, the permission will be deemed to have been granted. - According to Yadav, the jurisdictional authority for mass **layoffs** in sectors such as EdTech, social media, information technology (IT), and related sectors resides with state **governments**. - The ID Act has certain provisions under which **layoffs** are deemed legal. For instance, a worker is entitled to compensation equivalent to 50 percent of the total basic wages and dearness allowance for the layoff period, provided they have been in service for over a year. - The ID Act also has provisions for the reemployment need of professionals. If a company aims to rehire people in the future, it must prioritize the rehiring of retrenched **employees** first. ## **What Companies Must Keep in Mind** Companies need to keep in mind the various laws that govern incidents such as retrenchment and mass **layoffs**. Besides having an in-depth understanding from a legal standpoint, they must also plan such pivotal events strategically. The aim is to reduce the negative impact on **employees** while also keeping the business’ sustainability and profitability in mind. Completely circumventing the law can result in a loss of reputation, reduce employee branding, and lead to financial losses in the event of employee lawsuits. ## **What Employees Must Keep in Mind** It is important for **employees** to understand the terms and conditions of their employment contract. They must go through it in great detail. If they feel they are being treated unfairly without adequate financial compensation, they can seek legal support or appeal to the consumer court to seek a fair outcome. ## **In Conclusion** In 2022, tech-enabled businesses have seen the most number of **layoffs**. Of these, EdTech leads with over 8000 **layoffs** across content, HR, sales, and tech teams. Around five EdTech companies have shut shop altogether. The social media industry has also seen a large number of **layoffs**, with Twitter and Meta leading the way. As tech-enabled businesses continue to face new challenges, **layoffs** will continue to be a part of the cycle. *Companies should seek timely interventions to navigate the* ***legal*** *and financial hurdles of these times. By partnering with* ***legal finance*** *specialists such as* ***Treelife*** *early on, companies can build resilience and emerge stronger.* ### References: [https://labour.gov.in/sites/default/files/THEINDUSTRIALDISPUTES\_ACT1947\_0.pdf](https://labour.gov.in/sites/default/files/THEINDUSTRIALDISPUTES_ACT1947_0.pdf) [https://www.business-standard.com/article/economy-policy/layoffs-deemed-illegal-if-not-carried-as-per-industrial-disputes-act-yadav-122120800970\_1.html](https://www.business-standard.com/article/economy-policy/layoffs-deemed-illegal-if-not-carried-as-per-industrial-disputes-act-yadav-122120800970_1.html) ### Related posts: 1. [Diversity & Inclusion Policy in India](https://treelife.in/legal/diversity-inclusion-policy-in-india/ "Diversity & Inclusion Policy in India") 2. [Impact of PMLA Amendments on Virtual Digital Asset Transactions](https://treelife.in/legal/impact-of-pmla-amendments-on-virtual-digital-asset-transactions/ "Impact of PMLA Amendments on Virtual Digital Asset Transactions") 3. [Tax and Returns for a Restaurant – The Complete Guide for 2026](https://treelife.in/legal/tax-and-returns-for-a-restaurant/ "Tax and Returns for a Restaurant – The Complete Guide for 2026") 4. [Convertible Debentures in India – Meaning, Types, Benefits](https://treelife.in/legal/convertible-debentures-in-india/ "Convertible Debentures in India – Meaning, Types, Benefits") ###### About the Author ###### Share - Link copied to clipboard! https://treelife.in/legal/why-companies-must-pay-heed-to-the-id-act-during-layoffs/ [ ![share-icon](https://treelife.in/wp-content/themes/treelife/assets/images/vector-black.svg) ](javascript:void(0)) - [ ![mdi_linkedin](https://treelife.in/wp-content/themes/treelife/assets/images/linkedin-black.svg) ](https://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Ftreelife.in%2Flegal%2Fwhy-companies-must-pay-heed-to-the-id-act-during-layoffs%2F&title=Why+Companies+Must+Pay+Heed+to+the+ID+Act+During+Layoffs%3F "Share on LinkedIn") - [ ![whatsap-share](https://treelife.in/wp-content/themes/treelife/assets/images/whatsap-black.svg) ](https://api.whatsapp.com/send?text=Why+Companies+Must+Pay+Heed+to+the+ID+Act+During+Layoffs%3F+https%3A%2F%2Ftreelife.in%2Flegal%2Fwhy-companies-must-pay-heed-to-the-id-act-during-layoffs%2F) - [ ![twitter-share](https://treelife.in/wp-content/themes/treelife/assets/images/twitter-black.svg) ](https://twitter.com/intent/tweet?url=https%3A%2F%2Ftreelife.in%2Flegal%2Fwhy-companies-must-pay-heed-to-the-id-act-during-layoffs%2F&text=Why+Companies+Must+Pay+Heed+to+the+ID+Act+During+Layoffs%3F) - [ ![facebook-share](https://treelife.in/wp-content/themes/treelife/assets/images/facebook-black.svg) ](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Ftreelife.in%2Flegal%2Fwhy-companies-must-pay-heed-to-the-id-act-during-layoffs%2F) ![Pooja Savla](https://cdn.treelife.in/2024/11/Pooja-Savla.webp) ##### Pooja Savla [ ![social-linkedin](https://treelife.in/wp-content/themes/treelife/assets/images/linkedin.svg) ](https://www.linkedin.com/in/pooja-savla-60142b7b/) ###### Principal Associate | Transactions | pooja.s@treelife.in Specializes in transaction advisory, including mergers and acquisitions, investment structuring, and corporate legal matters. 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