Salary Compensation On Retrenchment - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Expertans
Consultant

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Hi,
Need your expert advice on the following - My company has been on a retrenchment spree and downsizing itself. The issue is in the appointment letter it states 3 months notice or 3 months salary on either sides during separation. But currently it has been offering only 2 month's salary as settlement. How should one proceed and settle this amicably?
Thanks.
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Dear friend,
You've not given the total no. of people employed in your establishment in the cadre of workmen. If it is less than 100 on an average per working day in the preceding 12 months period, Sections 25F and if 100 and more, then 25N of the Industrial Disputes Act,1947 will be applicable respectively before retrenching any workman who has been in continuous service not less than one year. The conditions, inter alia include notice or notice pay in lieu of notice and retrenchment compensation @ 15 days average pay for every completed year of continuous service or any part thereof in excess of 6 months. In the case of establishments having 100 and more workmen, the notice period is 3 months or 3 months notice pay in lieu thereof.
Your Company's appointment letter can not have any stipulations running counter to the provisions of the Law applicable in this regard.
Thanks Sir.
That was very useful information.
Would the above rule apply to confirmed employees (6 months confirmation period) but have less than one year of service when the retrenchment is initiated?
Secondly if the discussions with the company for a 3 month settlement against 2 months they are giving currently doesn't yield positive results then what is the course of action one can take? Is there a 'consumer court' equivalent body that the employee can approach for help?
The compensation part of my answer has not reached you fully is revealed by your response. The two months salary now proposed by your management as settlement amount is only notice pay on your resignation and as such you would not be eligible for any terminal benefit other than gratuity if eligible. In the case of the total strength of the establishment is 100 or more, your management will have to obtain prior permission from the Govt. which is synonimous with impossibility and retrenchment without permission is punishable and illegal as well. On the contrary, if the exit of the surplus employees is on account of a mutually agreed voluntary separation scheme, the compensation package could be at least equal to the retrenchment compensation fixed under the Act.

Consumer Court has no jurisdiction in the matter of industrial disputes. You'll have to raise a dispute u/s 2k of the ID Act,1947 initially before the conciliation officer and subsequent to a reference by the Govt. you have to fight it before the Industrial Tribunal.

An employee with less than one year service is not eligible for retrenchment compensation and as such he can not be retrenched.
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