Q: I am seeking advice on behalf of the workmen employed in a cotton mill owned and run by a public limited company which also runs two other cotton mills. We have come to learn that the management is thinking of closing down the mill where we are employed on the ground that the unit has been suffering loss for the past few years. If the mill is closed down, about 1,000 workmen will lose their jobs and their families will face starvation.

Can the management close down our mill at its sweet will? If our unit is closed down, can we insist that the management absorb us in the two other units of the company? We eagerly await your advice as it is a question of our survival.

Name withheld

A:Your mill is an industrial undertaking within the meaning of the Industrial Disputes Act, 1947, and the rights and interests of the workmen (as defined by Section 2(s) of the Act) of the undertaking are protected by the said Act. Section 25(o) of the Act provides that an employer who intends to close down an industrial undertaking shall apply to the appropriate government (state or central as the case may be) for prior permission at least 90 days before the date of intended closure, stating the reasons for the intended closure and a copy of such application will be served on the representatives of the workmen.

The government will then make such enquiry as it deems fit and after giving a reasonable opportunity of hearing to the employer, the workmen and all persons interested in such closure and having regard to the genuineness and adequacy of the reasons stated by the employer as also the interests of the general public and all other relevant factors, will pass a reasoned order in writing, granting or refusing to grant such permission. A copy of such order shall be communicated to the employer and the workmen.

The government may either on its own motion or on an application made by the employer or any workman review its order or may refer the matter to an industrial tribunal for adjudication.

Where an undertaking is permitted to close down, every workman employed therein immediately before the date of the employer’s application for permission, shall be entitled to receive compensation equivalent to 15 days’ average pay for every completed year of continuous service or any part thereof in excess of six months.

Thus, the answer to your first query is that your employer cannot close down the mill where you are employed according to his or her sweet will. Closure can be effected only with the government’s prior permission.

You may oppose the employer’s application for permission and demonstrate, if possible, that the reasons given for the intended closure are not genuine or adequate or that the employer by its own mismanagement and defaults have brought the unit to a state where it cannot function profitably and that with proper management and / or restructuring the unit can certainly be made viable.

As regards your second query, if the unit is in fact permitted to be closed down, you will be only entitled to the compensation as mentioned above and you will not have any legal right to insist that you be absorbed in the other two units of the company.