N.J. Nair

Labour Department cannot even take preventive action against retrenchments

Law does not allow voluntary action

THIRUVANANTHAPURAM: Amid fears of staff downsizing in the wake of an economic recession in some countries, the Labour Department is having a tough time detecting cases of retrenchment in the absence of specific complaints, not to speak of preventive action.

Sources in the department told The Hindu that other than media reports and fears over presumed mass retrenchment in information technology (IT) companies, the department is yet to receive any specific complaints from any affected personnel.

Under the Industrial Disputes Act, 1947, action can be taken against an employer for retrenchment only on complaints from affected employees. The department reserves the powers to look into individuals complaints. The Act does not give it the authority to take voluntary action.

Labour Department personnel who inspected the Technopark here following reports of downsizing could not detect such cases. On verifying documents, they saw that 27 employees of a firm had handed in resignation letters. The department officials talked to company officials at random, but could not verify any such case. Action based on periodic performance appraisal cannot be deemed retrenchment, sources said.


The department has an established procedure to take action on such complaints. It will first try to iron out a negotiated settlement and if the attempt fails, the case will be referred to the industrial tribunal.

In special economic zones (SEZs), given the protracted nature of the process, the responsibility for proper enforcement and administration of labour laws has been vested with the development commissioners. The commissioner is answerable to the State government and holds the powers of the Labour Commissioner.

This system is aimed at expediting action and decision in these cases. Sources clarified that all such laws were in force in the SEZs and labour unions were active even in functional zones such as the one in Kochi.

Considering the gravity of the situation, the Industries, Labour and IT departments should adopt a proactive role and bail IT companies out of the crisis, instead of initiating punitive measures against them, sources said.