Hello Experts, Unlike other industries, in the IT industry many employees' designation would be managers whether they really do managerial/supervisory work or not. Like retrenchment happens among workers, it happens among managerial employees too. We have the retrenchment compensation defined for workers in ID Act. But we are not clear about the retrenchment compensation for IT employees who does only managerial work. We know these employees are not coming under the ID Act workmen category. Kindly advise how to claim the compensation for the managers who work in the IT industry who are affected due to workforce downsizing often in the IT sector.
From India, Coimbatore
Labour Law & Hr Consultant
Management Consultancy


There is no similar formula for managerial employees for retrenchment compensation. It primarily depends on two factors, the capacity to pay as well as willingness for it. If both are there, many industries are known to have paid very liberally, mostly one-month current salary for every completed year of service or the remaining salary whichever is lower. It could go up to even 45days salary per year of service. Some even pay a lumpsum amount as gratitude payment without much calculation.
From India, Mumbai

Dear Ms.Parimala,

Designation cannot be the deciding factor for the determination of the nature of the job position held by an employed person nor the amount of salary paid to him. It is always the nature of duties predominantly discharged by him which goes ultimately to decide whether one is a workman under the IDA,1947 or not. If we analyze the definition of the term " workman " u/s 2(s) of the ID Act,1947, it is manifest for a person employed to do (1) Manual work (2) Unskilled work (3) Skilled work (4) Technical work (5) Operational work (6) Clerical work or (7) Supervisory work as per the terms of the contract of employment would be a workman and if he is mainly employed in a managerial or administrative capacity, he is not a workman. In addition, if employed in a supervisory capacity and draws wages exceeding Rs.10000/= p.m or exercises functions mainly of managerial or administrative nature, he is not a workman. Strictly applying these parameters to each employee facing premature discharge in the IT or ITES establishments for obvious reasons, you can come to a conclusion whether he is a workman or not so as to claim retrenchment compensation u/s 25-F of the Act.

Regarding managers, strictly speaking, only the terms of exit fixed in case of unilateral termination of the contract of employment by the employer have to be adopted to determine the amount of compensation. Of course, higher rate of compensation may be paid out of mutual bargaining as pointed out to be the practice in vogue in certain IT companies by Mr. KK!HR.

From India, Salem

Dear Parimala,

The Manager under ID Act.1947 is something different than of present day of managers. As you are moving for retrenchment, you need to consider the people bearing mere a manager designation but without authority in administrative matter of your company.

From India, Mumbai

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