If you are laid off, your employer must pay you compensation equal to 50% of your basic wages plus dearness allowance for every lay-off day. This right comes from Section 67 of the Industrial Relations Code, 2020, which took effect across India on 21 November 2025. You qualify if your name is on the muster roll and you have completed at least one year of continuous service.
Short on time? Jump to the calculation example below to see exactly what your daily lay-off pay should be.
A “lay-off” is not a sacking. It is temporary: the employer cannot give you work, usually due to a shortage of coal, power or raw materials, a machinery breakdown, stock accumulation, or a natural calamity. Your name stays on the muster roll and you have not been retrenched. The law treats you as still employed but idle through no fault of your own, so it makes the employer pay half your wages. This page covers lay-off only. If your service has actually ended, that is retrenchment, with a different payout. See our guide on retrenchment compensation under the IR Code and the table below.
| Concept | What it means | Compensation rate | Notice / permission |
|---|---|---|---|
| Lay-off | Employer temporarily cannot give work; you stay on the rolls | 50% of basic wages + dearness allowance per lay-off day | No notice; 300+ worker units need prior government permission |
| Retrenchment | Employer ends your service for any reason except discipline | 15 days average pay for each completed year of service | 1 month notice or pay in lieu, plus notice to government |
| Lock-out | Employer temporarily shuts the workplace, often in a dispute | No statutory lay-off rate; wage liability turns on whether the lock-out is legal or illegal | Notice and conciliation rules apply to the dispute |
The key difference: in a lay-off you are still employed, so you get half pay. In a retrenchment your job is gone, so you get a severance based on years served. A lock-out is an industrial-dispute action by the employer, not a lay-off, and the 50% rule does not apply to it.
Section 67 sets three conditions. You must meet all three.
There is also a size threshold for the establishment. Under Section 65, the basic lay-off compensation in Sections 67 to 69 does not apply to an establishment that employed fewer than 50 workers on average in the preceding calendar month, or to seasonal or intermittent-work establishments.
For larger units, the right still stands. An establishment with 300 or more workers falls under Chapter X. There the employer cannot lay you off at all without prior permission from the appropriate Government (Section 78). And Section 78(10) directly applies Section 67 to those lay-offs, so the 50% compensation still flows to you. In short: 50 or more workers is the floor for the 50% right; 300 or more adds a prior-permission layer on top.
The statute is precise. Section 67 says compensation must be “equal to fifty per cent. of the total of the basic wages and dearness allowance that would have been payable to him, had he not been so laid-off.” Weekly holidays that fall in the period are excluded.
Note one thing carefully. The base is basic wages plus dearness allowance only. House rent allowance, conveyance, bonus and other allowances are not part of this calculation.
Worked example. Suppose your monthly basic wage is ₹18,000 and your dearness allowance is ₹6,000.
If you are laid off for 20 working days in a month, you receive roughly ₹9,231 for that period, that is 50% of 20 days of basic plus dearness allowance. Your employer should pay this for all lay-off days, skipping only weekly holidays.
Many summaries state flatly that pay stops after 45 days. That is not the full rule. Section 67 stops compensation after 45 days in any 12-month period only if there is an agreement to that effect between you and the employer. Without such an agreement, the 50% continues.
The second proviso gives the employer the other exit. After the first 45 days of lay-off, the employer may instead retrench you under Section 70. If the employer does this, any lay-off compensation already paid in the preceding 12 months can be set off against your retrenchment compensation.
There are also two situations where no lay-off compensation is due at all, under Section 69. You lose the right if you refuse suitable alternative work offered at the same wages within 8 kilometres, or if you do not present yourself for work at the establishment at least once a day at the appointed time.
Follow these steps if your employer is not paying the 50%.
If you are unsure how to frame the claim, our The RTI Playbook explains how to use a Right to Information application to get official records, such as inspection reports or lay-off notices filed with the labour department, that strengthen your case.
No. A lay-off is temporary. Your name stays on the muster roll and you remain an employee. Being fired in the sense of having your service ended is retrenchment, which is a separate process under Section 70 with its own 15-days-per-year compensation.
You get 50% of the total of your basic wages and dearness allowance for each day you are laid off, excluding weekly holidays. Other allowances like HRA are not counted. Use the worked example above to estimate your daily figure.
Yes. Section 67 requires not less than one year of continuous service under the employer. A worker who has served less than a year is not entitled to the statutory 50% lay-off compensation.
Only if you and your employer have an agreement to that effect. Without that agreement, the 50% continues beyond 45 days. After 45 days the employer may instead retrench you under Section 70 and set off what was already paid.
The Section 67 to 69 lay-off compensation does not apply where fewer than 50 workers were employed on average in the previous month, or to seasonal or intermittent establishments. Above that size the right applies, and establishments with 300 or more workers also need prior government permission to lay anyone off.
The Central Government notified 21 November 2025 (S.O. 5320(E)) as the date all provisions of the Industrial Relations Code, 2020 took effect. It replaced the Industrial Disputes Act, 1947 and two other older labour laws.
Non-payment of lay-off compensation is an industrial dispute over money. Start with the Labour Commissioner or conciliation officer for your area. If conciliation fails, the matter can go to the Industrial Tribunal constituted under Section 44 of the Code.
This guide is maintained by the RTI Wiki editorial team under the guidance of Dr. Shrawan Kumar Pathak and Kashvi Pathak. It explains the law in plain terms and is not a substitute for advice from a labour lawyer on your specific case.