If company unable to pay NPA - one month notice to employees for retrenchment due to poor financial condition? - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Kritya Nand Jha
Dy. Mgr.(hrd)

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Kindly guide me: If a company who is under NPA bound to pay one month notice to employees for retrenchment due to poor financial condition of the company and unable to pay salary and benefits.
Dear K.N.Jha,
In Banking parlance "NPA" i.e Non Performing Asset, is simply a classification of loans or advances that are in default or are in arrears on scheduled payment of principal or interest. Though it is an indicator of the poor financial condition of the Company, it can not be a reason to absolve its liabilities under labour laws. If the Company does not pay the notice pay in lieu of notice simultaneously with the retrenchment compensation, the retrenchment would be illegal.

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