No need for permission to close biz, but avoid litigation
Have a small restaurant which I run with a manager, accountant, two cooks and three helpers. I have to shut down my business but don’t have any money to even pay them a severance package. What is the minimum compensation I have to pay legally? My business is on the verge of bankruptcy.
There is no prohibition or requirement of prior permission from the Labour Department for closing down your restaurant business. The law demands that you serve one month’s notice or notice pay together with 15 days of salary for each completed year of service to your employees. Even if you close the business without pay and compensation, it only enables the employees to approach the labour court to claim those amounts. It is better that you avail a loan and pay the statutory compensation and obtain an appropriate receipt for the same than allowing them to go for litigation, since the court may order interest and cost if there was a deliberate refusal to pay the due amount.
DISCLAIMER: The views expressed here are of Justice K Chandru, who is providing guidance and direction based on his rich experience and knowledge of the law. This is not a substitute for legal recourse which must be taken as a follow-up if so recommended in these columns
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