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Summarizing the Event of Mass Lay-offs around the World with Special Focus on Indian Labour Laws
Gurdeep Singh
A layoff is a temporary or permanent termination of employment for reasons unrelated to the employee's performance. Employees may be laid off when companies seek to reduce costs, as a result of a drop in demand for their products or services, a seasonal closure, or during an economic downturn.
In recent times, particularly tech companies, have reduced staff and slowed hiring in response to rising interest rates, sluggish consumer spending in the United States, and a strong dollar abroad. Mass layoffs, primarily in technology, have flooded headlines in recent weeks, including at Twitter, Meta, Amazon, Salesforce, HP, Lyft and others. According to Layoffs.fyi, more than 50,000 tech workers were laid off in November, up from 12,600 in October.
Recent Layoffs around the world:
Meta: Facebook's parent company is laying off 11,000 employees, the first significant round of layoffs in the social media industry's history. About 13% of the workforce will be laid off, and Meta will keep its hiring freeze in place until the first quarter.
Twitter: Twitter is currently experiencing some of the steepest job cuts among its peers. Elon Musk, who paid $44 billion for Twitter, fired approximately 3,700 employees via email. According to various reports, in India, Twitter has fired the entire marketing and communications team.
Amazon: The world's largest online retailer plans to lay off 10,000 workers. Amazon's devices division, which includes Alexa, as well as its retail sector and human resources, will be the primary targets of the cuts.
Microsoft Corporation: According to news reports, the software behemoth laid off around 1,000 employees across several divisions recently.
HP: Due to a decline in the market for personal computers, HP Inc. is planning to cut 6,000 jobs over the next three years. In addition to a 10% reduction in employees, the firm will reduce its real estate footprint.
Salesforce: In an effort to increase profitability, Salesforce has eliminated hundreds of employees from its sales teams.
Other reputed companies such as Netflix, Walmart, Ford, Unilever, Tesla have also announced layoffs in recent times.
So far in India, at least 44 startups in India have laid off over 15,000 employees in 2022, including unicorns BYJU'S, Chargebee, Cars24, LEAD, Ola, Meesho, MPL, Innovaccer, Udaan, Unacademy, and Vedantu. The Edtech sector has experienced the most layoffs, followed by consumer services and ecommerce.
Most recently, Amazon India has been summoned by the Union Labour Ministry to appear before the Deputy Chief Labour commissioner in Bengaluru in connection with thee alleged forced terminations by the company.
Legal provisions relating to Lay-off:
In India, Layoff and retrenchment are regulated by the Industrial Disputes Act of 1947. Lay-offs have been defined under Section 2 (kkk) of the Industrial Disputes Act, 1947. According to this section, "lay-off" means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.
Layoffs can be both temporary and permanent, though the scope of Industrial Dispute Act in practice in India only allows for temporary layoffs, and the term should not be used interchangeably with retrenchment.
Chapter VA of the Industrial Dispute Act provides that provisions relating to lay-offs are not applicable for establishment with less than 50 workers. While for the establishments that can legally lay off their employees, a right for compensation is provided for all the workmen who have their names on the muster roll. The compensation must be 50% of the total basic wages that the worker must have earned had he not been laid off. Provided that if during any period of twelve months, a workman is so laid-off for more than forty-five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty-five days, if there is an agreement to that effect between the workman and the employer.
According to section 2(oo) of Industrial Disputes Act, 1947 "retrenchments" means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action but does not include-
(a) voluntary retirement of the workman; or
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation on that behalf contained therein; or
(c) termination of the service of a workman on the ground of continued ill-health;
In case of retrenchment, as per Section 25F of the Industrial Disputes Act, 1947, the employer must give the workman one month's written notice that includes the reasons for the retrenchment, or in lieu of such notice the workman must be paid wages for the duration of the notice. At the time of retrenchment, the employer must pay the workman compensation equal to the average pay of 15 days for each year of continuous service provided by such worker. The notice of retrenchment must also be served to the appropriate government.
There are several instances of violation of these provisions by employers. In many cases, employees are pressurized by their employer to give voluntary resignation.
However, in the year 2020, Supreme Court dismissed a public interest litigation seeking protection of IT employees against termination and salary cuts in the wake of the COVID-19 pandemic. The Supreme Court, dismissing the petition filed by National Information Technology Employees Senate (NITES), a Maharashtra-based IT union, observed, “We are not inclined to entertain this petition under Article 32 of the Constitution of India. The writ petition is accordingly dismissed.”
References:
https://www.investopedia.com/terms/l/layoff.asp
https://inc42.com/features/indian-startup-layoffs-tracker/
https://www.legalserviceindia.com/legal/article-9859-legal-aspects-of-lay-off.html
Sophie Asveld
February 14, 2019
Email is a crucial channel in any marketing mix, and never has this been truer than for today’s entrepreneur. Curious what to say.
Sophie Asveld
February 14, 2019
Email is a crucial channel in any marketing mix, and never has this been truer than for today’s entrepreneur. Curious what to say.