Sections 65 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 65 decides which establishments are covered by the lay-off rules in sections 67 to 69, and s.66 defines "continuous service" for Chapter IX. Together they answer two questions every employer must settle before a lay-off or retrenchment: does the Chapter apply to this establishment, and has this worker completed the service that triggers the right?
Sections 67 to 69 (lay-off compensation and related duties) do not apply to establishments under Chapter X, to establishments that employed less than fifty workers on an average per working day in the preceding calendar month, or to seasonal or intermittent establishments (s.65(1)). "Industrial establishment" here means a factory, mine or plantation. A worker has continuous service for a year if he worked 240 days in twelve months (190 days underground in a mine), and for six months if he worked 120 days (95 days underground) (s.66).
Section 65: where sections 67 to 69 apply
The exclusions: s.65(1)
| Excluded establishment | Text |
|---|---|
| Chapter X establishments | Those "to which Chapter X applies" (special provisions for certain establishments) |
| Small establishments | "less than fifty workers on an average per working day have been employed in the preceding calendar month" |
| Seasonal or intermittent | "of a seasonal character or in which work is performed intermittently" |
If a question arises whether an establishment "is of a seasonal character or whether work is performed therein only intermittently, the decision of the appropriate Government thereon shall be final" (s.65(2)).
Which establishments count
The Explanation provides that in s.65 and in ss.67, 68 and 69, "industrial establishment" shall mean a:
- factory, as defined in clause (m) of section 2 of the Factories Act, 1948;
- mine, as defined in clause (j) of sub-section (1) of section 2 of the Mines Act, 1952; or
- plantation, as defined in clause (f) of section 2 of the Plantations Labour Act, 1951.
What this means
Three points are easy to miss.
- The exclusion covers only sections 67 to 69. It does not say sections 70 to 73 (retrenchment conditions, procedure, re-employment and transfer) are excluded. Section 70 speaks of a worker "employed in any industry", not of an industrial establishment. Check the wording of each section separately, and note that the definition of "industrial establishment" in the Explanation is limited to s.65 and ss.67 to 69.
- The fifty-worker test uses the preceding calendar month and an average per working day. The employer needs day-wise headcount records for that month.
- Chapter X establishments have their own regime. For the lay-off compensation in s.67, see section 67.
Example (invented). A factory employed an average of forty-six workers per working day in the preceding calendar month. Sections 67 to 69 do not apply to it under s.65(1)(a). A factory that averaged fifty-two workers is inside them, unless Chapter X applies, or the Government decides it is seasonal or intermittent.
Employers often rely on a headcount they have not documented. Our labour law compliance team can help you build a day-wise register so that a claim of exclusion under s.65 is supportable.
Section 66: continuous service
Section 66 defines continuous service "in relation to a worker" as "the uninterrupted service of such worker, including his service which may be interrupted on account of":
- sickness;
- authorised leave;
- an accident;
- a strike which is not illegal;
- a lock-out; or
- "a cessation of work which is not due to any fault on the part of the worker".
The definition applies "in this Chapter", that is Chapter IX. Note that a lock-out is included without the qualifier "not illegal", while a strike is included only if it is not illegal. Illegality of a strike is governed by sections 63 and 64.
Deemed continuous service: Explanation 1
Where a worker is not in continuous service for one year or six months, he is deemed to be in continuous service:
| Period | Condition (actual work in the preceding period) | Underground mine worker | Any other worker |
|---|---|---|---|
| One year | In the twelve months before the date of calculation | not less than 190 days | not less than 240 days |
| Six months | In the six months before the date of calculation | not less than 95 days | not less than 120 days |
Days counted as worked: Explanation 2
For these tests, days actually worked include days on which the worker:
- was laid off under an agreement or as permitted by or under the Code or any other law applicable to the establishment;
- was on leave on full wages earned in the previous years;
- was absent due to temporary disablement caused by an accident arising out of and in the course of employment; or
- in the case of a female, was on maternity leave, so long as the total period does not exceed the period specified in the Maternity Benefit Act, 1961.
Why the number matters
- Lay-off compensation under s.67 requires "not less than one year of continuous service".
- Retrenchment under s.70 requires continuous service "for not less than one year" before the notice, compensation and government-notice conditions apply.
- Transfer of ownership under s.73 gives notice and compensation to a worker with "not less than one year" of continuous service.
- The six-month deemed period matters in s.70(b), where compensation is paid for each completed year "or any part thereof in excess of six months".
The Central Rules, 2026 (G.S.R. 342(E), 8 May 2026), in the text reviewed, do not change these tests. They apply to Central-sphere establishments; where the State Government is the appropriate Government, State rules apply.
Need help testing service or headcount?
Continuous service and the fifty-worker test are fact questions that depend on attendance and payroll records. Our labour law compliance team can help you test them before a lay-off or retrenchment decision.
Key takeaways
- Sections 67 to 69 do not apply to Chapter X establishments, those with under fifty workers on average per working day in the preceding calendar month, or seasonal or intermittent establishments (s.65(1)).
- The Government's decision on seasonal or intermittent character is final (s.65(2)).
- "Industrial establishment" in ss.65 and 67 to 69 means a factory, mine or plantation.
- Continuous service includes breaks for sickness, authorised leave, accident, a lawful strike, a lock-out and no-fault cessation (s.66).
- Deemed one year: 240 days (190 underground); deemed six months: 120 days (95 underground).
Read next
- Section 63-64: illegal strikes and lock-outs and financial aid
- Section 67: rights of laid-off workers to compensation
- Section 68-69-70: laid-off workers and conditions precedent to retrenchment
- Layoff: Section 2(kkk) and compensation under Section 25C
Disclaimer: Based on the Industrial Relations Code, 2020 (as enacted) and, where noted, the Industrial Relations (Central) Rules, 2026 (G.S.R. 342(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.