▶ Industrial Relations Code, 2020 (IR Code)
▷ Fixed-term employment is now expressly regulated under the IR Code, 2020. Fixed-term workers are entitled to the same benefits and conditions as permanent workers on a pro rata basis.
→ Section 2(o) IR Code defines “fixed term employment” as the engagement of a worker on the basis of a written contract of employment for a fixed period: Provided that—
(a) His/her hours of work, wages, allowances and other benefits shall not be less than that of a permanent worker doing the same work or work of similar nature;
(b) He/she shall be eligible for all statutory benefits available to a permanent worker proportionately according to the period of service rendered by him/her, even if his period of employment does not extend to the qualifying period of employment required in the statute; and
(c) He/she shall be eligible for gratuity if he renders service under the contract for a period of one year.
▷ Remarks: The IR Code indicates under paragraph 5 of the "STATEMENT OF OBJECTS AND REASONS" that: The salient features of the Industrial Relations Code, 2020, inter alia, are as follows:
(i) to define “workers” which includes the persons in supervisory capacity getting wages up to eighteen thousand rupees per month or an amount as may be notified by the Central Government from time to time;
(ii) to provide for fixed-term employment with the objective that the employee gets all the benefits like that of a permanent worker (including gratuity), except for notice period after conclusion of a fixed period, and retrenchment compensation. The employer has been provided with the flexibility to employ workers on fixed-term basis on the basis of requirement and without restriction on any sector. (...).

No statutory provisions were found in the examined legislation in this respect.

▷ There were no statutory limits on the maximum number of successive fixed-term contracts.

▷ There were no statutory limits on the duration of fixed-term contracts.

The IR Code (2020) does not require any specific objective or material reasons for using fixed-term contracts.

▷ The IR Code, 2020, does not prescribe any fixed statutory maximum duration for probationary periods.
▻ Remarks: Unlike the previous legal framework (where the Model Standing Orders provided a clear 3-month reference point), the IR Code leaves the duration of probation to contractual agreement or certified Standing Orders, with no statutory ceiling.

▶ Industrial Relations Code, 2020 (IR Code)
▷ Under Section 2(zr) of the IR Code, the definition of “worker” expressly excludes military personnel, officers of the police service, employees of a prison and some persons employed in managerial capacity.
→ Section 2(zr) IR Code indicates that: “worker” means any person (except an apprentice as defined under clause (aa) of section 2 of the Apprentices Act, 1961) (52 of 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and includes working journalists as defined in clause (f) of section 2 of the Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 195 (45 of 1955) 5 and sales promotion employees as defined in clause (d) of section 2 of the Sales Promotion Employees (Conditions of Service) Act, 1976 (11 of 1976), and for the purposes of any proceeding under this Code in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched or otherwise terminated in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person—
(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer or other employee of a prison; or
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who is employed in a supervisory capacity drawing wages exceeding eighteen thousand rupees per month or an amount as may be notified by the Central Government from time to time:
Provided that for the purposes of Chapter III, "worker"—
(a) means all persons employed in trade or industry; and
(b) includes the worker as defined in clause (m) of section 2 of the Unorganised Workers’ Social Security Act, 2008 (33 of 2008).

▷ Union activities
▶ Industrial Relations Code, 2020 (IR Code)
The IR Code prohibits unfair labour practices, including dismissal by way of victimisation or for trade union activities (§ 84 IR Code read with the Second Schedule).
→ Section 84 IR Code indicates that:
No employer or worker or a Trade Union, whether registered under this Code, or not, shall commit any unfair labour practice specified in the Second Schedule.
▷ The Second Schedule: Unfair Labour Practices "On the Part of Employers and Trade Unions of Employers"
→ Clause 1 of the second schedule (IR Code) indicates that: To interfere with, restrain from, or coerce, workers in the exercise of their right to organise, form, join or assist a Trade Union or to engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection, that is to say:
(a) threatening workers with discharge or dismissal, if they join a Trade Union;
(...)
(4) To encourage or discourage membership in any Trade Union by discriminating against any worker, that is to say:
(a) (...);
(b) discharging or dismissing a worker for taking part in any strike (not being a strike which is deemed to be an illegal strike under this Code); (...);
(5) To discharge or dismiss workers:
(a) by way of victimisation; (...).
▷ Maternity
▶ The Maternity Benefit Act (Not repealed)
Protection against dismissal on account of pregnancy or maternity leave remains under Section 12(1) of the Maternity Benefit Act, 1961.
→ Section 12(1) of the Maternity Benefit Act indicates that: When a woman absents herself from work in accordance with the provisions of this Act, it shall be unlawful for her employer to discharge or dismiss her during or on account of such absence or to give notice of discharge or dismissal on such a day that the notice will expire during such absence, or to vary to her disadvantage any of the conditions of her service.
▷ Constitutional rule
▶ Constitution of India
Article 16(2) of the Constitution of India prohibits discrimination in public employment on grounds of religion, race, caste, sex, descent, place of birth, or residence (applies only to public employment).
→ Section 16(2) of the Constitution of India on Equality of opportunity in matters of public employment, states that: "No citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect of, any employment or office under the State.
NOTE: This applies only in relation to public employment.

▷ Workers’ representatives and trade union members
▶ Industrial Relations Code, 2020 (IR Code)
Workers’ representatives and trade union members are protected against victimisation and unfair labour practices (§ 84 IR Code and Second Schedule).
→ Section 84 IR Code indicates that:
No employer or worker or a Trade Union, whether registered under this Code, or not, shall commit any unfair labour practice specified in the Second Schedule.
▷ The Second Schedule: Unfair Labour Practices "On the Part of Employers and Trade Unions of Employers"
→ Clause 1 of the second schedule (IR Code) indicates that: To interfere with, restrain from, or coerce, workers in the exercise of their right to organise, form, join or assist a Trade Union or to engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection, that is to say:
(a) threatening workers with discharge or dismissal, if they join a Trade Union;
(...)
(4) To encourage or discourage membership in any Trade Union by discriminating against any worker, that is to say:
(a) (...);
(b) discharging or dismissing a worker for taking part in any strike (not being a strike which is deemed to be an illegal strike under this Code); (...);
(5) To discharge or dismiss workers:
(a) by way of victimisation; (...).
▷ Maternity
Pregnant women and women on maternity leave are protected under § 12 of the Maternity Benefit Act, 1961.
▶ The Maternity Benefit Act (Not repealed)
→ Section 12(1) of the Maternity Benefit Act indicates that: When a woman absents herself from work in accordance with the provisions of this Act, it shall be unlawful for her employer to discharge or dismiss her during or on account of such absence or to give notice of discharge or dismissal on such a day that the notice will expire during such absence, or to vary to her disadvantage any of the conditions of her service.

▷ Retrenchment (economic reasons)
▶ Industrial Relations Code, 2020 (IR Code)
▷ In establishments covered by Chapter IX (50 or more workers): one month’s notice in writing, indicating the reasons for retrenchment (or pay in lieu) (§ 70 IR Code).
→ Section 70 IR Code on "Conditions precedent to retrenchment of workers" indicates that: No worker employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until:
(a) The worker has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the worker has been paid in lieu of such notice, wages for the period of the notice; (...).
(c) notice in such manner as may be prescribed is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification.
▷ In establishments covered by Chapter X (300 or more workers): three months’ notice in writing, indicating the reasons for retrenchment (or pay in lieu) (§ 79(1)(a) IR Code).
→ Section 79(1) IR Code states that: Conditions precedent to retrenchment of workers to which Chapter X applies.
(1) No worker employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer, shall be retrenched by that employer until,
(a) The worker has been given three months’ notice in writing, indicating the reasons for retrenchment, and the period of notice has expired, or the worker has been paid in lieu of such notice, wages for the period of the notice; (...).
▷ Note: Retrenchment covers both individual and collective terminations for economic or operational reasons.

▷ Retrenchment (economic reasons)
▶ Industrial Relations Code, 2020 (IR Code)
Chapter IX (50–299 workers): one month’s notice or pay in lieu (§ 70 IR Code)
→ Section 70 IR Code on "Conditions precedent to retrenchment of workers" indicates that: No worker employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until:
(a) The worker has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the worker has been paid in lieu of such notice, wages for the period of the notice; (...).
→ Section 75(1) IR Code states that: Where an establishment is closed down for any reason whatsoever, every worker who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of section 70, as if the worker had been retrenched: (...).
▷ Exception:
→ under section 75(4) IR Code, where any undertaking set up for the construction of buildings, bridges, roads, canals, dams or other construction work is closed down on account of the completion of the work within two years from the date on which the undertaking had been set up, no worker employed therein shall be entitled to any compensation under clause (b) of section 70, but if the construction work is not so completed within two years, he shall be entitled to notice and compensation under that section for every completed year of continuous service or any part thereof in excess of six months.
▷ Chapter X (300 or more workers): three months’ notice or pay in lieu (§ 79(1)(a) IR Code).
→ Section 79(1) IR Code states that: Conditions precedent to retrenchment of workers to which Chapter X applies.
(1) No worker employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer, shall be retrenched by that employer until,
(a) The worker has been given three months’ notice in writing, indicating the reasons for retrenchment, and the period of notice has expired, or the worker has been paid in lieu of such notice, wages for the period of the notice; (...).
▷ Note: For other types of termination (misconduct, capacity, etc.), notice is governed by the employment contract or certified Standing Orders.

▷ Note: The IR Code distinguishes two regimes:
▻ Chapter IX applies to establishments employing 50 or more workers (§ 65 IR Code).
▻ Chapter X (prior permission regime) applies to establishments employing 300 or more workers (§ 77 IR Code).

No statutory requirement for prior consultation with trade unions or workers’ representatives before retrenchment.

▷ Retrenchment (economic reasons)
▶ Industrial Relations Code, 2020 (IR Code)
Prior permission of the appropriate Government is mandatory for retrenchment and closure in establishments with 300 or more workers (§ 79 and § 80 IR Code, Chapter X).
The Government must pass a reasoned order within 60 days; if no order is communicated, permission is deemed granted (§ 79(4) IR Code).
→ See below under the section on "Approval by public administration or judicial bodies"
▷ Note: Retrenchment covers both individual and collective terminations for economic or operational reasons.

▷ Retrenchment (economic reasons)
▶ Industrial Relations Code, 2020 (IR Code)
A copy of the application for prior permission to close down an undertaking must be served on the representatives of the workmen (§ 80(1) IR Code).
→ Section 80(1) IR Code states that: An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, electronically or otherwise, apply in such manner as may be prescribed, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workers in such manner as may be prescribed:
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work.

▷ Prior permission of the appropriate Government is mandatory for retrenchment and closure in establishments with 300 or more workers (§ 79 and § 80 IR Code, Chapter X).
The Government must pass a reasoned order within 60 days; if no order is communicated, permission is deemed granted (§ 79(4) IR Code).
▶ Industrial Relations Code, 2020 (IR Code)
→ Section 79 IR Code provides that:
applies.—(1) No worker employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until,—
(a) the worker has been given three month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the worker has been paid in lieu of such notice, wages for the period of the notice; and
(b) the prior permission of the appropriate Government has been obtained on an application made in this behalf.
(2) An application for permission under sub-section (1) shall be made by the employer electronically or otherwise in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workers concerned in such manner as may be prescribed.
(3) Where an application for permission under sub-section (1) has been made, the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workers concerned and the persons interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workers and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workers.
(4) Where an application for permission has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days and the application shall be deemed to have been disposed of accordingly by the appropriate Government.
(5) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (6), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order.
(6) The appropriate Government may, either on its own motion or on the application made by the employer or any worker, review its order granting or refusing to grant permission under sub-section (3) within the prescribed time from the date on which such order is made or refer the matter or, as the case may be, cause it to be referred to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
(7) Where no application for permission under sub-section (1) is made, or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the worker and the worker shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him. (...).
→ Section 80 IR Code indicates that:
(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, electronically or otherwise, apply in such manner as may be prescribed, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workers in such manner as may be prescribed:
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work.
(2) Where an application for permission has been made under sub-section (1), the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workers and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workers.
(3) Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted as applied for on the expiration of the said period of sixty days and the application shall be deemed to have been disposed of accordingly by the appropriate Government.
(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order.
(5) The appropriate Government may, either on its own motion or on the application made by the employer or any worker, review its order granting or refusing to grant permission under sub-section (2) within the prescribed time from the date on which such order is made or refer the matter to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
(6) Where no application for permission under sub-section (1) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workers shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.
(7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.
(8) Where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is deemed to be granted under sub-section (3), every worker who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to fifteen days average pay, or average pay of such days as may be notified by the appropriate Government, for every completed year of continuous service or any part thereof in excess of six months.

No statutory provisions were found in the examined legislation in this respect.

▷ Retrenchment (economic reasons)
▶ Industrial Relations Code, 2020 (IR Code)
“Last in, first out” (LIFO) rule applies: the employer shall ordinarily retrench the worker who was the last person to be employed in that category, unless reasons are recorded for retrenching another worker (§ 71 IR Code).
→ Section 71 IR Code indicates that: Where any worker in an industrial establishment who is a citizen of India, is to be retrenched and he belongs to a particular category of workers in that establishment, then, in the absence of any agreement between the employer and the worker in this behalf, the employer shall ordinarily retrench the worker who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other worker.

▷ Retrenched workers have a preference for re-employment for one year (§ 72 IR Code)
▶ Industrial Relations Code, 2020 (IR Code)
→ Section 72 IR Code indicates that: Where any worker is retrenched and the employer proposes to take into his employment any person within one year of such retrenchment, he shall, in such manner as may be prescribed, give an opportunity to the retrenched workers who are citizens of India to offer themselves for re-employment and such retrenched workers who offer themselves for re-employment shall have preference over other persons.

No statutory provisions were found in the examined legislation in this respect.

▶ Code on Social Security, 2020 (SS Code)
▻ Under the SS Code, gratuity is payable upon termination of employment after five years of continuous service. The five-year requirement is waived in cases of death or disability. However, the employer may forfeit the gratuity, in whole or in part, in cases of serious misconduct.
▻ Relevant provisions are contained in Chapter V of the SS Code (corresponding to the previous Section 4 of the Payment of Gratuity Act, 1972 which has been repealed and replaces by the SS Code).of the Gratuity Act).
→ Section 53 of the SS Code indicates that:
(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years;
(a) on his superannuation; or
(b) on his retirement or resignation; or
(c) on his death or disablement due to accident or disease; or
(d) on termination of his contract period under fixed-term employment; or
(e) on happening of any such event as may be notified by the Central Government:
▻ Provided that in case of working journalist as defined in clause (f) of section 2 of the Working Journalists and Other Newspaper Employees (Condition of Service) and Miscellaneous Provisions Act, 1955, the expression "five years" occurring in this sub-section shall be deemed to be three years:
▻ Provided further that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement or expiration of fixed-term employment or happening of any such event as may be notified by the Central Government:
(...).
(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages or such number of days as may be notified by the Central Government, based on the rate of wages last drawn by the employee concerned:
▻ Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:
▻ Provided further that in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of seven days' wages for each season:
▻ Provided also that in the case of an employee employed on fixed term employment or a deceased employee, the employer shall pay gratuity on pro rata basis.
(3) The amount of gratuity payable to an employee shall not exceed such amount as may be notified by the Central Government.
(...).
(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
(6) Notwithstanding anything contained in sub-section (1),
(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused;
(b) the gratuity payable to an employee may be wholly or partially forfeited:
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided such offence is committed by him in the course of his employment.
▹ Explanation 1.— For the purposes of this Chapter, employee does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
(...).
▹ Explanation 3.— For the purposes of this section, it is clarified that in the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.
▶ Industrial Relations Code, 2020 (IR Code)
▷ Closer of undertakings
→ Section 75 IR Code on "compensation to workers in case of closing down of undertakings" stipulates that:
(1) Where an establishment is closed down for any reason whatsoever, every worker who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of section 70, as if the worker had been retrenched:
Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the worker under clause (b) of section 70, shall not exceed his average pay for three months.
Explanation: An industrial establishment which is closed down by reason merely of :
(i) financial difficulties (including financial losses); or
(ii) accumulation of undispersed stocks; or
(iii) the expiry of the period of the lease or license granted to it; or
(iv) in case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on, shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section. (...).
▷ Exception:
→ Under section 75(4) IR Code, where any undertaking set up for the construction of buildings, bridges, roads, canals, dams or other construction work is closed down on account of the completion of the work within two years from the date on which the undertaking had been set up, no worker employed therein shall be entitled to any compensation under clause (b) of section 70, but if the construction work is not so completed within two years, he shall be entitled to notice and compensation under that section for every completed year of continuous service or any part thereof in excess of six months.

▷ Under the IR Code, a worker who has been in continuous service for not less than one year is entitled to retrenchment compensation at the time of retrenchment equivalent to 15 days’ average pay for every completed year of continuous service (or any part thereof in excess of six months).
▶ Industrial Relations Code, 2020 (IR Code)
▷ Retrenchment of workers
→ Section 70 IR Code indicates that: No worker employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until:
(a) (...);
(b) the worker has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay, or average pay of such days as may be notified by the appropriate Government, for every completed year of continuous service or any part thereof in excess of six months ; (...).
→ Section 79(9) IR Code on "Conditions precedent to retrenchment of workers to which Chapter X applies" provides that: Where permission for retrenchment has been granted under sub-section (3) or where permission for retrenchment is deemed to be granted under sub-section (4), every worker who is employed in that establishment immediately before the date of application for permission under this section shall be entitled to receive, at the time of retrenchment, compensation which shall be equivalent to fifteen days average pay, or average pay of such days as may be notified by the appropriate Government, for every completed year of continuous service or any part thereof, in excess of six months.
▷ Closer of undertakings
→ Section 75 IR Code on "compensation to workers in case of closing down of undertakings" stipulates that:
(1) Where an establishment is closed down for any reason whatsoever, every worker who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of section 70, as if the worker had been retrenched:
Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the worker under clause (b) of section 70, shall not exceed his average pay for three months.
Explanation: An industrial establishment which is closed down by reason merely of :
(i) financial difficulties (including financial losses); or
(ii) accumulation of undispersed stocks; or
(iii) the expiry of the period of the lease or license granted to it; or
(iv) in case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on, shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section. (...).

Note: Gratuity is not generally referred to as “severance pay” in India. It is a specific statutory benefit payable only upon termination after 5 years of employment.