I have 2 Units under the common name "X". They are engineering industry manufacturing automotive components. One is situated in Bangalore and the second one in Tumkur. My bangalore unit has 80 emloyees out of which 50 are workmen and my Tumkur unit has 96 employees with 88 are workmen. I have transferred 12 workmen from Tumkur to Blore in Nov 2012. Can I retrench workmen from Tumkur plant on the basis of Lastcome first go without seeking Govt permisiion. For the purpose of applicability of chapter Vb of ID act, do we consider each factory seperately or both are clubbed. If I club both then the workmen strength becomes 138, in whcih case govt permission becomes necessary ?? Coan anyone please clarify. Thanks.
From India, Bangalore
From India, Bangalore
Dear friend,
You have not mentioned any thing about the constitution of the units. By inference, if it is one company having two units engaged in the same manufactory in two different places Chapter V-B will be applicable because of functional integrality; on the contrary, if the two units engaged in the same manufactory owned by the same individual or the same set of individuals are distinctly two different entities by virtue of their registration or incorporation, then the Chapter V-B will not be applicable.
From India, Salem
6018You have not mentioned any thing about the constitution of the units. By inference, if it is one company having two units engaged in the same manufactory in two different places Chapter V-B will be applicable because of functional integrality; on the contrary, if the two units engaged in the same manufactory owned by the same individual or the same set of individuals are distinctly two different entities by virtue of their registration or incorporation, then the Chapter V-B will not be applicable.
From India, Salem
Both the units are with the same name and therefore the incorporation is the same. It is called UNIT 1 and UNIT 2. The factory licenses are different. Both units manufacture automotive components and supply to one customer , but the products are different. Tumkur Unit has a seperate customer code and Blore unit has a seperate customer code. The manufacturing machines are similar. Note :- They have different factory licenses and seperated from each other by 75 Kms.But only once we have transferred 12 employees from Tumkur to Blore at the specific request of the workmen.
Many thanks for your early reply.
Could you pl reclarify with the above inputs please.
From India, Bangalore
Many thanks for your early reply.
Could you pl reclarify with the above inputs please.
From India, Bangalore
Unit 1 was started in 1985 while Unit 2 in 2006 The Board of Directors are the same .
From India, Bangalore
From India, Bangalore
Dear friend,
'Functional integrality' mentioned in my earlier reply means functional interdependence between the units.It is one among the various factors such as unity of ownership, unity of finance and accounting, identical service conditions of employees, proximity of location, exchange of materials of production, the type of products manufactured, sale of finished products etc to determine whether a particular unit among the several units owned by the same employer is a separate entity.Lots of judgments of the Supreme Court and various High Courts are available in this regard.So, my personal view is that your Tumkur unit is a separate unit and Chapter V-B is not attracted in the proposed retrenchment.However, you can do it with consultation of the trade union, if existing or with the consent of the concerned workmen to avoid litigation or other problems. Better consult a senior counsel well-versed in labour matters.
From India, Salem
'Functional integrality' mentioned in my earlier reply means functional interdependence between the units.It is one among the various factors such as unity of ownership, unity of finance and accounting, identical service conditions of employees, proximity of location, exchange of materials of production, the type of products manufactured, sale of finished products etc to determine whether a particular unit among the several units owned by the same employer is a separate entity.Lots of judgments of the Supreme Court and various High Courts are available in this regard.So, my personal view is that your Tumkur unit is a separate unit and Chapter V-B is not attracted in the proposed retrenchment.However, you can do it with consultation of the trade union, if existing or with the consent of the concerned workmen to avoid litigation or other problems. Better consult a senior counsel well-versed in labour matters.
From India, Salem
Dear friend,
I have seen your query and subsequent mail clarifying the doubts. As far I understand as both the units have different factory licenses and seperated from each other by 75 Kms, I am of the opinion that both the units have to be treated as seprate identity and cases of both has to be dealt separately.As in both the units, the number of workmen are less than 100, the application of chapter VB will not into effect. Before retrenchment, you need to comply with the provisions contained Chapter VA. You are within your right to retrench the workmen in Tumkur plant on the basis of last come first go principle without seeking Govt permission. Since you have mentioned that you have transferred 12 workmen from Tumkur to Blore in Nov 2012. You may have to justify your action in the said tranferring 12 workmen as the question may be raised about your bonafide presuming that you have taken action to save these workmen from being retrenched.I agree with my colleague Sh Umakanthan that you should involve the trade union, if existing or with the consent of the concerned workmen to avoid litigation or other problems at a later stage.
BS Kalsi
Member since Aug 2011
From India, Mumbai
I have seen your query and subsequent mail clarifying the doubts. As far I understand as both the units have different factory licenses and seperated from each other by 75 Kms, I am of the opinion that both the units have to be treated as seprate identity and cases of both has to be dealt separately.As in both the units, the number of workmen are less than 100, the application of chapter VB will not into effect. Before retrenchment, you need to comply with the provisions contained Chapter VA. You are within your right to retrench the workmen in Tumkur plant on the basis of last come first go principle without seeking Govt permission. Since you have mentioned that you have transferred 12 workmen from Tumkur to Blore in Nov 2012. You may have to justify your action in the said tranferring 12 workmen as the question may be raised about your bonafide presuming that you have taken action to save these workmen from being retrenched.I agree with my colleague Sh Umakanthan that you should involve the trade union, if existing or with the consent of the concerned workmen to avoid litigation or other problems at a later stage.
BS Kalsi
Member since Aug 2011
From India, Mumbai
Dear Queriest,
I support the views by BS Kalsi ji.
You are requested to read the definition on Industrial Establishment as defined u/r. Section 2 (ka) which is given verbatim.
Industrial establishment or undertaking" means an establishment or undertaking in which any industry is carried on:
Provided that where several activities are carried on in an establishment or undertaking and only one or some of such activities is or are an industry or industries, then,--
(a) if any unit of such establishment or undertaking carrying on any activity, being an industry, is severable from the other unit or units of such establishment or undertaking, such unit shall be deemed to be a separate industrial establishment or undertaking;
(b) if the predominant activity or each of the predominant activities carried on in such establishment or undertaking or any unit thereof is an industry and the other activity or each of the other activities carried on in such establishment or undertaking or unit thereof is not severable from and is, for the purpose of carrying on, or aiding the carrying on of, such predominant activity or activities, the entire establishment or undertaking or, as the case may be, unit thereof shall be deemed to be an industrial establishment or undertaking;
Your both the units are severable from each other. There is no need to take permission. However, I support the advise given by Umakanthan ji and take the decision in consultation with the trade union, if any or with the consent of the concerned workmen to avoid hassles.
From India, Mumbai
I support the views by BS Kalsi ji.
You are requested to read the definition on Industrial Establishment as defined u/r. Section 2 (ka) which is given verbatim.
Industrial establishment or undertaking" means an establishment or undertaking in which any industry is carried on:
Provided that where several activities are carried on in an establishment or undertaking and only one or some of such activities is or are an industry or industries, then,--
(a) if any unit of such establishment or undertaking carrying on any activity, being an industry, is severable from the other unit or units of such establishment or undertaking, such unit shall be deemed to be a separate industrial establishment or undertaking;
(b) if the predominant activity or each of the predominant activities carried on in such establishment or undertaking or any unit thereof is an industry and the other activity or each of the other activities carried on in such establishment or undertaking or unit thereof is not severable from and is, for the purpose of carrying on, or aiding the carrying on of, such predominant activity or activities, the entire establishment or undertaking or, as the case may be, unit thereof shall be deemed to be an industrial establishment or undertaking;
Your both the units are severable from each other. There is no need to take permission. However, I support the advise given by Umakanthan ji and take the decision in consultation with the trade union, if any or with the consent of the concerned workmen to avoid hassles.
From India, Mumbai
Respected Keshav Sir,
It is really big appreciation and encouagement for me from a very senior members like you.I am grateful for your gesture.
I hope you will continue to guide us as well as correct us where we are wrong.
Please accept my warm regards.
Thanks once again.
BS Kalsi
Member since Aug 2011
From India, Mumbai
It is really big appreciation and encouagement for me from a very senior members like you.I am grateful for your gesture.
I hope you will continue to guide us as well as correct us where we are wrong.
Please accept my warm regards.
Thanks once again.
BS Kalsi
Member since Aug 2011
From India, Mumbai
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