Section 80 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 80 requires an employer in a Chapter X establishment to apply for the appropriate Government's permission at least ninety days before a closure takes effect, stating the reasons and serving a copy on the workers' representatives. Silence for sixty days means deemed permission; a closure without permission, or after refusal, is illegal and the workers keep all benefits.
An employer who intends to close an undertaking of an industrial establishment to which Chapter X applies must apply for prior permission at least ninety days before the intended closure date, stating the reasons, with a copy served simultaneously on the workers' representatives. Construction undertakings are excluded. If no order is communicated in sixty days, permission is deemed granted. A closure without an application, or after refusal, is illegal from the date of closure and the workers are entitled to all benefits as if the undertaking had not closed. If closure is permitted, each worker receives fifteen days' average pay per completed year or part above six months.
Where section 80 sits
Section 80 is the third of the three Chapter X permission sections. Section 78 covers lay-off and section 79 retrenchment. It applies only to establishments that meet section 77: factories, mines and plantations with an average of 300 or more workers (or a higher notified number) in the preceding twelve months. Smaller units follow only the notice rule in section 74. If you run a large unit and are considering closure, our labour law compliance team can prepare the application and timeline.
Sub-section by sub-section
| Sub-section | Rule |
|---|---|
| 80(1) | The employer applies, electronically or otherwise, in the prescribed manner for prior permission at least ninety days before the intended closure date, stating clearly the reasons; a copy is served simultaneously on the representatives of the workers in the prescribed manner. Proviso: not applicable to an undertaking set up for construction of buildings, bridges, roads, canals, dams or other construction work. |
| 80(2) | After such enquiry as it thinks fit and a reasonable opportunity of being heard to the employer, the workers and interested persons, the Government may grant or refuse by an order with written reasons, having regard to the genuineness and adequacy of the reasons, the interests of the general public and other relevant factors. The order is communicated to the employer and the workers. |
| 80(3) | No order communicated in sixty days: permission is deemed granted as applied for. |
| 80(4) | The order is final and binding (subject to (5)) and remains in force for one year. |
| 80(5) | Review on the Government's own motion or on application by the employer or any worker within the prescribed time, or reference to a Tribunal, which passes an award within thirty days of the reference. |
| 80(6) | If no application is made within the period in (1), or permission is refused, the closure is illegal from the date of closure and the workers are entitled to all benefits under any law as if the undertaking had not been closed down. |
| 80(7) | For exceptional circumstances such as an accident in the undertaking or the employer's death, the Government may direct that s.80(1) shall not apply for a stated period. |
| 80(8) | Where closure is permitted (or deemed permitted), every worker employed immediately before the date of the application receives compensation of fifteen days' average pay (or average pay of such days as the appropriate Government notifies) for every completed year of continuous service or any part above six months. |
Three differences from the retrenchment section
- The public interest is a factor. Section 79(3) looks at the interests of the workers; s.80(2) speaks of "the interests of the general public".
- The lead time is ninety days. The application goes in at least ninety days before the closure date. The clock in s.80(3) for the Government's reply is sixty days, so a prudent employer files early and does not plan the closure date around the last day.
- Illegality runs from closure. Under s.80(6) the closure is illegal from the date of closure, and workers get all benefits as if the undertaking had never closed.
How s.80 sits with s.75 and s.74
Section 80(8) gives its own compensation rule for Chapter X closures: fifteen days' average pay per completed year or part above six months. Section 75 separately gives closure notice and compensation under s.70 for workers with a year's service, including the three-month cap for unavoidable circumstances. The text does not say how the two overlap, so a Chapter X employer should work out both and read the provisions together; see section 75. Do not assume either replaces the other without checking the text.
Central Rules, 2026: rules 35 and 36
These rules apply to Central-sphere establishments. Where the State Government is the appropriate Government, the State's own rules apply.
| Rule | Requirement (G.S.R. 342(E), 8 May 2026) |
|---|---|
| 35 | The employer applies in Form XIV to the Central Government electronically for prior permission at least ninety days before the closure takes effect, stating the reasons; a copy goes simultaneously to the representatives of the workers electronically and in person, or by speed post. |
| 36(2) | Review application by the employer or any worker within thirty days of the order; disposed of within two months after a hearing. |
| 36(3) | Own-motion review: steps within one month of the order; disposal within two months of the decision to review. |
See rules 35 and 36 and Form XIV. Unlike the lay-off and retrenchment rules (30 and 33), rule 35 does not mention a notice-board display.
Penalty
Contravening s.80 is punishable under s.86(1) with a fine of one lakh to ten lakh rupees; a second or subsequent offence after conviction under s.86(2) carries five lakh to twenty lakh rupees, or imprisonment up to six months, or both. See section 86(1) to (6).
Example. A plantation company with 600 workers decides to close one estate. It files Form XIV electronically at least ninety days before the intended date and sends copies to the workers' representatives. The Government hears all sides and grants permission with written reasons; the order stays in force one year. On closure, each worker who was employed immediately before the application date gets fifteen days' average pay for each completed year and any part above six months. Had the company closed without applying, the closure would be illegal and the workers would be treated as still employed for benefit purposes.
For the old-law comparison, see closure of an undertaking under the old Act.
Need help with a closure permission?
A Chapter X closure needs a credible statement of reasons, a worker-representative service plan and a payroll estimate before anything is filed. Our labour law compliance team can prepare the application, check the timeline against your planned date and track the order. Keep your twelve-month headcount data and financial reasons ready.
Key takeaways
- Chapter X employers must apply for permission at least ninety days before closure, with reasons and a copy to workers' representatives.
- Construction undertakings are excluded; the Government may suspend the requirement in exceptional circumstances.
- No order in sixty days means deemed permission; an order lasts one year and can be reviewed or referred to a Tribunal.
- Closure without permission or after refusal is illegal from the date of closure.
- Compensation on permitted closure is fifteen days' average pay per completed year or part above six months.
Read next
- Section 74: sixty days' notice of closure
- Section 75: compensation to workers on closure
- Section 79: prior permission for retrenchment
- Rules 35 and 36: application for closure and review
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.