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Dear Seniors,
I would be interested to know difference between Retrenchment & Layoff. Also the various clauses that can be added for any callbacks. I am a mid-level HR Professional.
Regards,
Archana G. Katakdhond
From India, Mumbai
# Anonymous
Retrenchment is nothing but downsizing. Company reduces outgoing money or expenditures or redirects focus in an attempt to become more financially solvent. it is more general tactic of cutting back and downsizing.
Lay off means termination faliure, refusal or inability of employer due to shortage of raw material, coal, power, breakdown of machinery etc.
In both methods employers used Retrenchment and layoff to reduce their workforce due to heavy expenses, company defaulter etc. In these two employees are terminated but the difference between these two is that retrenched employees are promised legally (condition) that they will be recalled on job (when the conditions of business gets better )but in layoff employees are terminated without any such promise after paying all their legal dues
From India, Hyderabad
Dear Archana,
Retrenchment is nothing but downsizing. Company reduces outgoing money or expenditures or redirects focus in an attempt to become more financially solvent. it is more general tactic of cutting back and downsizing.
Lay off means termination faliure, refusal or inability of employer due to shortage of raw material, coal, power, breakdown of machinery etc.
In both methods employers used Retrenchment and layoff to reduce their workforce due to heavy expenses, company defaulter etc. In these two employees are terminated but the difference between these two is that retrenched employees are promised legally (condition) that they will be recalled on job (when the conditions of business gets better )but in layoff employees are terminated without any such promise after paying all their legal dues
Ramya
HR Executive
From India, Hyderabad
Why a middle level HR professional have not read ID Act so far?.It contain the answer to the above query.Read sec 2 and 25H, of the Act Varghese Mathew
From India, Thiruvananthapuram
Further to the advice of Mr Varghese Mathew, I may add a few more points for the benefit of those HR Managers, who are not having in depth knowledge about the provisions in the Industrial Disputes Act 1947.

Lay Off is defined in Section 2 (KKK) of ID Act 1947

Lay off means the failure, refusal, or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.

Retrenchment is defined in Section 2 (oo) of the ID Act 1947

Retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include –

(a) Voluntary retirement of the workman; or

(b) Retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or

(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or

(c ) Termination of the service of a workman on the ground of continued ill-health.

The Provisions of Lay Off and Retrenchment are given in Chapter VA and Chapter VB of the ID Act 1947. The applicability of Chapter V-A or V-B is depending upon the number of workmen employed in the preceding calendar month / preceding twelve months.

For further details, please read Section 25C, 25D, 25E, 25F, 25G, 25H, (Chapter V-A) and 25M, 25N, and 25Q (Chapter V-B) of Industrial Disputes Act 1947
From India, Madras
Dear All
Apart from the provisions of the Industrial Disputes Act 1947 enumerated by Mr.K.C.S.Kutty, there is a basic difference between lay off and retrenchment. In the case of lay off the relationship of employer and employee continues even during lay off and does not come to an end. But in the case of retrenchment, the relationship of employer and employee comes to an end. So it is not correct to say as has been said in some of the posts in this thread that lay off is also termination.
From India, Madras
Agree with the views of Shri Harikrishnanji. During Lay off, the workmen are entitled to Lay off Compensation equal to 50% of basic wages and dearness allowance. [Section 25C and 25 M(10)] unless otherwise ineligible under Section 25E
From India, Madras
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