The move of Vedanta Aluminum Limited (VAL) to lay off staff at its closed alumina refinery in Lanjigarh might be illegal, as the state labour department claims to not have received any official communication regarding the shutdown of the plant.
“Prima facie, VAL’s decision to lay off staff seems illegal”, said a senior official of the state labour department. “However, the picture will be clearer only after examining the lay-offs notice from the company”, he added.
VAL CEO, Mukesh Kumar, on Wednesday said the company had been forced to take a decision to lay off employees at its Lanjigarh plant, and the details of the plan would soon be worked out.
“When the notice for closure of the plant is not proper, how can we accept the lay-offs proposal of the company”, asked the labour department official.
“There is no formal or informal intimation received from the company in this regard till date”, said State Labour Commissioner Hemant Sharma.
The labour department claimed the closure notice given by the company on September 6 was “not in the proper format”, as stipulated by the provisions of the Industrial Disputes Act 1947.
VAL had closed its plant on December 5. It had issued a three-month advance notice and had attributed the cause of closure to economic unviability of the plant in the absence of assured supply of bauxite.
According to Section 25 (o) of the ID act, an employer has to give a 90 days’ notice in the prescribed format to the appropriate government authority, stipulating the reasons for the closure.
The official added a company, under such circumstances, if found guilty of non-compliance, might be liable for penalty or imprisonment according to the provisions of the Act.
Kumar said, “We have followed the format laid out in the relevant section of the Industrial Dispute Act, without mentioning so in our letter to the labour department. There is no provision for giving advance notice for temporary closure in the Act, which prescribes the procedure for permission for permanent closure of an establishment. As our intention was not to shut down the plant for good, we had not mentioned about Section 25 (o) of the Act, though we have followed the format provided under the law”.
“We will submit the lay-offs plan to the government according to the provisions of ID Act”, he added.
About 2,000-2,500 contractual employees engaged in bauxite loading and unloading and transportation have already lost their jobs, as a fallout of the closure. VAL had 620 executives on its rolls, of which 75 quit two months ago, because of uncertainty surrounding the future of the refinery.
Even in the idle state, the company has to spend about Rs 10 crore to Rs 11 crore a month towards salaries, electricity bills, payments to contractors, establishment cost and maintenance.
"There are 550 executives left with VAL, and they are being paid salaries on time”, said Kumar.
Around 6,500 people, including 550 employed directly, 5,000 engaged indirectly and 1,000 self-employed, in and around the plant depended on the VAL refinery for their livelihood. The company claimed to have spent Rs 150 crore on the development of the local area and community.
VAL's announcement on the lay-off contradicts a recently submitted report of the district labour office (DLO) -Kalahandi, saying there was no retrenchment at the company's refinery.
"The management of VAL-Lanjigarh has stopped production of alumina from December 5, according to the notice to the government, but has not closed the main gate of the establishment and retrenched any workman or employee”, the DLO said in his report to the State Labour Commissioner.
VAL had gone for a temporary shutdown of the refinery and intended to resume operations only after having five to six months of assured supplies of bauxite. To run the one million tonne per annum (mtpa) refinery plant at maximum capacity, VAL needed 300,000 tonnes of bauxite every month.
VAL had designed its refinery in Odisha, keeping in mind the locally available bauxite. The aluminium major had entered into an agreement with the state-controlled miner Odisha Mining Corporation (OMC) for the supply of bauxite. But, attempts to mine bauxite at the ecologically sensitive Niyamgiri hills under OMC’s leasehold were blocked by the environment ministry that scrapped the Stage-II forest clearance on August 24, 2010.
The company’s bid to continue the refinery operation by sourcing bauxite from other states such as Gujarat, Maharashtra, Chhatishgarh, Jharkhand and Andhra Pradesh was also thwarted by logistical, regulatory and procedural issues.