Section 67
Lay-off Compensation Calculator: 50% of Basic Wages and DA Under the IR Code: This free lay-off compensation calculator works out what a laid-off worker must be paid under Section 67 of the Industrial Relations Code, 2020. It does three things:
- checks whether the establishment and the worker are covered (Sections 65, 69, 77 and 78);
- counts lay-off days, leaving out weekly holidays;
- applies 50% of basic wages plus dearness allowance for each day, with the 45-day rule where there is an agreement.
Lay-off is temporary: the worker stays employed but is not given work. If the job ends permanently, use the retrenchment compensation calculator instead.
Lay-off Compensation Formula
The Code says 50% of the total basic wages and dearness allowance that would have been payable had the worker not been laid off. For a monthly-rated worker, the day's wages are commonly worked out as monthly basic + DA ÷ 26 (or ÷ 30, as per your wage rate or practice).
Lay-off Compensation Example (Calculator Default)
A factory with 120 workers lays off a worker with 3 years' service from 2 to 21 November 2026 because of a machinery breakdown. Basic wages ₹18,000 and DA ₹4,500 a month; Sunday is the weekly holiday.
| Step | Working | Result |
|---|---|---|
| Lay-off days | 20 calendar days − 2 Sundays | 18 days |
| Per-day wages | (₹18,000 + ₹4,500) ÷ 26 | ₹865.38 |
| Compensation a day | 50% × ₹865.38 | ₹432.69 |
| Lay-off compensation | ₹432.69 × 18 days | ₹7,788 |
Who Gets Lay-off Compensation
| Condition | Rule |
|---|---|
| Establishment | A factory, mine or plantation (Section 65 Explanation) that is not seasonal and does not work only intermittently |
| Size | 50 or more workers on average per working day in the preceding calendar month |
| Worker | Name on the muster roll; not a badli or casual worker; a "worker" under Section 2(zr), so not managerial staff or a supervisor earning above ₹18,000 a month |
| Service | At least 1 year of continuous service |
| Days paid | Every day of lay-off, continuous or broken, except weekly holidays |
A badli worker is one employed in place of another worker on the muster roll. A badli worker who completes 1 year of continuous service in the establishment is no longer treated as badli.
The 45-Day Rule and Retrenchment
If a worker is laid off for more than 45 days in any 12 months, no compensation is payable after the first 45 days, but only if the worker and employer have an agreement to that effect. Without such an agreement, compensation continues for every lay-off day.
Example: with an agreement, a worker already laid off for 40 days in the past 12 months is laid off for 18 more days. Only 5 days are paid: ₹432.69 × 5 = ₹2,163.
After the first 45 days, the employer may retrench the worker under Section 70. In establishments with fewer than 300 workers, lay-off compensation paid in the preceding 12 months can be set off against retrenchment compensation. This set-off does not apply to establishments with 300 or more workers (Section 78(10)).
Lay-off in Establishments With 300 or More Workers
- Prior permission: under Section 78, a factory, mine or plantation with 300 or more workers on average per working day in the preceding 12 months needs the government's prior permission to lay off workers. The application states the reasons, and a copy goes to the workers.
- Exemptions: no permission is needed for lay-off due to power shortage or natural calamity, and, in a mine, fire, flood, excess inflammable gas or explosion. For these mine events, the employer must apply within 30 days to continue the lay-off.
- Deemed permission: if the government does not communicate its order within 60 days of the application, permission is deemed granted.
- Illegal lay-off: if no application is made or permission is refused, the lay-off is illegal from its start, and workers are entitled to all benefits as if they had not been laid off, which means full wages, not 50%.
- Compensation: when lay-off is permitted, Section 67 applies, so the same 50% of basic wages and DA is payable.
When No Compensation Is Payable (Section 69)
- The worker refuses alternative work in the same establishment, in another establishment of the same employer in the same town or village, or within 8 km, if the work needs no special skill or experience and the normal wages are offered.
- The worker does not present himself for work at the establishment at the appointed time during normal working hours at least once a day.
- The lay-off is due to a strike or slowing down of production by workers in another part of the establishment.
The employer must keep a muster roll and let workers who report for work make entries in it, even while they are laid off (Section 68).
Lay-off vs Retrenchment
| Lay-off | Retrenchment | |
|---|---|---|
| Job | Continues; work is not given for a time | Ends permanently |
| Reasons | Shortage of coal, power or raw material, stock piling up, machinery breakdown, natural calamity or a connected reason | Surplus staff, for any reason other than punishment |
| Payment | 50% of basic wages + DA for each lay-off day | 15 days' average pay for every completed year of service (and any part over 6 months), plus notice pay |
| Section | 67 (IR Code) | 70 (IR Code) |
How to Use This Lay-off Compensation Calculator
- Open Establishment: say whether it is a factory, mine or plantation, enter the average number of workers, and whether work is seasonal. At 300 or more workers, choose the permission status.
- Open Worker and wages: choose the employee category and continuous service, then enter monthly basic wages and DA and the per-day basis.
- Open Lay-off period: enter the first and last day of lay-off and the weekly holiday. If there is a 45-day agreement, enter earlier lay-off days in the past 12 months. Choose any Section 69 situation.
- Read lay-off days, compensation a day and the total, or the reason none is payable. Use Copy for your records.
Frequently Asked Questions
How is lay-off compensation calculated?
50% of the basic wages and dearness allowance for each day of lay-off, excluding weekly holidays. At ₹22,500 basic + DA a month, ÷ 26, it is ₹432.69 a day, or ₹7,788 for 18 days.
Which section of the IR Code covers lay-off compensation?
Section 67 of the Industrial Relations Code, 2020. Sections 65, 68 and 69 set coverage, the muster roll and when compensation is not payable; Sections 77 and 78 cover establishments with 300 or more workers.
Who is eligible for lay-off compensation?
A worker on the muster roll of a factory, mine or plantation with 50 or more workers, who is not badli or casual and has completed 1 year of continuous service.
Are weekly holidays paid during lay-off?
No. Section 67 excludes intervening weekly holidays from the days for which lay-off compensation is paid.
Is lay-off compensation paid after 45 days?
Yes, unless the worker and employer have agreed otherwise. With such an agreement, compensation stops after the first 45 days of lay-off in 12 months, and the employer may retrench the worker.
Do IT companies and shops have to pay lay-off compensation?
The lay-off compensation sections apply to factories, mines and plantations. Other establishments should follow their standing orders, appointment terms or any settlement.
What if lay-off is done without permission in a 300+ worker factory?
It is illegal from the date of lay-off, and workers are entitled to all benefits as if they had not been laid off, which means full wages, not 50%.
Can a worker refuse alternative work and still get compensation?
No, if the work is in the same establishment, another establishment of the employer in the same town or village or within 8 km, needs no special skill and pays the normal wages.
Is lay-off compensation adjusted against retrenchment compensation?
Yes, in establishments with fewer than 300 workers: compensation paid for lay-off in the preceding 12 months can be set off when the worker is retrenched after 45 days of lay-off.
Does a supervisor get lay-off compensation?
Only if they are a "worker" under Section 2(zr). Supervisors earning above ₹18,000 a month and managerial staff are not workers, so the lay-off compensation sections do not cover them.