Dear Seniors,
We are closing our establishment due to accumulation of stock and we are providing the following terminal benefits to the employees,
1) Retrenchment compensation- 15 days salary (Basic + DA) for every completed year of service.
2) Gratuity -15 days salary (Basic + DA) for every completed year of service.
3) Bonus up to date.
4) leave with wages arrears.
kindly suggest me is this procedure correct.
Thanks in advance

From India, Bangalore
Accounts Manager
Legal Adviser
+2 Others


Is your establishment a manufacturing unit and if so how many workers are employed? B.Saikumar HR & Labour Law Advsior Mumbai
From India, Mumbai

Mr.Kiran , termination of employment due to closure of an establishment is not retrenchment and hence you need to pay closer compenation under Sec.25FFF of the Industrial Disputes Act. however, since the mode of calculation of closer compensation is same as retrenchment compensation under Sec.25-F, you can treat the retrenchment compensation as closer compensation.
HR & Labour Law advsior

From India, Mumbai

Thanks for your replies, kindly let me know exactly whether we need to give both closure compensation (retrenchment Compensation) and gratuity and on what basis we need to give that means on Basic+Da or gross salary
From India, Bangalore

In addition you need to give one month’s notice or one month’s pay in lieu of notice T Sivasankaran
From India, Chennai

Dear Kiran,
Since your establishment is a manufacturing industry employing less than 50 employees, there is no need of prior permission of the closer as required under sec. 25FFA of ID Act. However, please see and confirm the state provisions applicable in the state where the industry is situated.
For a safer side, please draft a mutual agreement describing the reasons of closer and the terms and conditions settled between the employee and employer and get is signed from each employee and the manager/occupier/director (Any one) on behalf of the employer.
Clear the dues as mentioned in your post. Instead of retrenchment compensation you can show it as Closer Compensation(as advised by Mr. Sai Kumar) and if you are not giving one month prior notice to the workmen as required under section 25F of the ID Act you have to pay one month wages in lieu of notice( as advised by Mr. Sivasankaran).
Rest is OK

From India, Delhi
Dear Sir/Madam,

Our company also a manufacturing unit. Closing operations. we would like to know that, are admin employees also will eligible for retrechment benefit as factory on roll workers getting.

From India, Hyderabad
Dear Sir/Mdam, in pretext to earlier query Kindly advise on retrechment benefits to admin employees when factory shutting operations. Regards, V.L.Murthy
From India, Hyderabad
Shailesh Parikh_HR Pro

Dear Kian

There are two aspects of your query/concern.

1) Legal closure and 2) Final settlement of your employees

It is the duty of the occupier of the FACTORY to give prior intimation regarding closure of factory to the Directorate of Factory. Till such time, the factory will be presumed running without licence (if you don't maintain valid factory license for the period) . May please refer state factories rules for the procedure of closure.

To avoid Industrial dispute it is necessary that you settle all dues of your employees and also give them prior notice of min one month or salary of one month. The F&F heads you have mentioned includes all statutory dues, unless you have any other head of payment under any scheme or settlement.

Shailesh Parikh
99 98 97 10 65
Vadodara, Gujarat

From India, Mumbai

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