Section 67 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 67 entitles a laid-off worker on the muster rolls, with one year of continuous service, to compensation equal to fifty per cent of basic wages and dearness allowance for each lay-off day, except weekly holidays. The worker must not be a badli or casual worker, and the section has two provisos on long lay-offs and set-off against retrenchment compensation.
A worker whose name is on the muster rolls, who has completed not less than one year of continuous service, and who is not a badli worker or casual worker, must be paid, for all days of lay-off except intervening weekly holidays, compensation equal to fifty per cent of the total of basic wages and dearness allowance that would have been payable. If laid off for more than forty-five days in twelve months, an agreement may end compensation after the first forty-five days, and the employer may then retrench under s.70, setting off lay-off compensation against retrenchment compensation.
What the section requires
| Element | Text of s.67 |
|---|---|
| Who | A worker "whose name is borne on the muster rolls" and who "has completed not less than one year of continuous service under an employer" |
| Who is excluded | A badli worker or a casual worker |
| When | "Whenever" he "is laid-off, whether continuously or intermittently" |
| How much | Compensation "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" |
| For which days | "all days during which he is so laid-off, except for such weekly holidays as may intervene" |
| Who pays | The employer |
Who is covered
Only workers with a real attachment to the establishment: on the muster rolls, with at least one year of continuous service. "Continuous service" is defined in s.66, including the 240-day rule for deemed service (see sections 65 and 66). The section applies only where Chapter IX applies to the establishment; s.65 excludes establishments that are under Chapter X, have under fifty workers on average in the preceding calendar month, or are seasonal or intermittent.
A badli worker is, under the Explanation, one employed in place of another worker whose name is on the muster rolls, but he "shall cease to be regarded as such, if he has completed one year of continuous service in the establishment". So a long-serving substitute eventually becomes a covered worker. The Code does not define a casual worker in this section.
What is paid
Fifty per cent of basic wages plus dearness allowance, for each lay-off day, excluding weekly holidays that fall in between. Other elements of pay, such as allowances not forming part of basic wages and dearness allowance, are not part of the base in the text of s.67. For the definition of wages more generally see our article on wages and average pay.
Worked example (illustrative figures). A worker's basic wages and dearness allowance total 30,000 a month. For illustration, say one lay-off day corresponds to 1,000 (30,000 divided by 30). Compensation for one lay-off day is 500. If the worker is laid off for ten days and one weekly holiday falls within them, compensation is for nine days, 4,500. The divisor used by the establishment for a daily rate is a matter for the employer's own wage system; the Code's text states only the fifty per cent of the wages that would have been payable for the day.
Payroll teams should confirm that lay-off pay is calculated on the right base and that weekly holidays are excluded. Our payroll compliance audit team can help you review the computation.
The two provisos
First proviso: more than forty-five days
"If during any period of twelve months, a worker is so laid-off for more than forty-five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty-five days, if there is an agreement to that effect between the worker and the employer."
Three features: the threshold is forty-five days in any twelve months, it needs an agreement between worker and employer, and it stops compensation only for lay-off after the first forty-five days. Without such an agreement, compensation continues.
Second proviso: retrenchment and set-off
"It shall be lawful for the employer in any case falling within the foregoing proviso to retrench the worker in accordance with the provisions contained in section 70 at any time after the expiry of the first forty-five days of the lay-off and when he does so, any compensation paid to the worker for having been laid-off during the preceding twelve months may be set off against the compensation payable for retrenchment." So lay-off compensation paid in the preceding twelve months reduces the retrenchment compensation under s.70(b); see sections 68 to 70.
| Situation | Result |
|---|---|
| Laid off for forty-five days or fewer in twelve months | Compensation for each day except weekly holidays |
| More than forty-five days, no agreement | Compensation continues |
| More than forty-five days, agreement | No compensation after the first forty-five days |
| After forty-five days, employer retrenches under s.70 | Lay-off compensation paid in the preceding twelve months may be set off against retrenchment compensation |
Related duties and recovery
Section 68 requires a muster roll to be kept and s.69 lists cases of no compensation (see sections 68 to 70). If lay-off compensation is unpaid, recovery of money due under Chapter IX is available under s.59 (see section 59). What counts as a lay-off is in the s.2 definitions (see lay-off, closure, retrenchment, strike and lock-out). The Central Rules, 2026 (G.S.R. 342(E), 8 May 2026) set an application for intended lay-off in rule 30 for certain Central-sphere cases; this article does not cover that. State rules apply where the State is the appropriate Government. For the old-law comparison, see Layoff: Section 2(kkk) and compensation under Section 25C.
Need help with lay-off pay?
Lay-off pay turns on the base, the day count and the agreement on forty-five days. Our payroll compliance audit team can help you check the computation and the records behind it.
Key takeaways
- Fifty per cent of basic wages plus dearness allowance for each lay-off day, except intervening weekly holidays (s.67).
- Only muster-roll workers with one year of continuous service; badli and casual workers are excluded.
- A badli worker who completes one year of continuous service stops being a badli worker.
- An agreement can end compensation after the first forty-five days of lay-off in twelve months.
- After forty-five days the employer may retrench under s.70 and set off lay-off compensation paid in the preceding twelve months.
Read next
- Section 65-66: application of chapter and continuous service
- Section 68-69-70: laid-off workers and conditions precedent to retrenchment
- Section 59: recovery of money due from an employer
- 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.