Section 25FFF of IDA : Section 25Fff: Compensation To Workmen In Case Of Closing Down Of Undertakings

Explanation using Example

Imagine a scenario where XYZ Textiles Ltd., a garment manufacturing company, has been facing financial difficulties due to a severe market downturn. The company has accumulated a large stock of unsold inventory and is unable to recover its costs. After considering various options, the management decides to close down the undertaking.

According to Section 25FFF of The Industrial Disputes Act, 1947, the workers employed at XYZ Textiles Ltd. who have been in continuous service for at least one year are entitled to notice and compensation as if they had been retrenched. However, since the closure is due to financial difficulties, which do not qualify as unavoidable circumstances beyond the control of the employer, the compensation to be paid will not be limited to the average pay for three months.

Therefore, the workers will receive their due compensation in accordance with section 25F, which includes one month's notice or salary in lieu thereof, 15 days' average pay for every completed year of continuous service, and a notice to the appropriate government authority.