The management is free to retrench employees but only after following the provisions of the Industrial Disputes Act. Accordingly, an employer desirous of retrenching employees should give sixty days notice to the employees who are to be retrenched. A notice should also be given to the Government showing the details of employees retrenched. If the company has been employing more than 100 employees then prior approval to retrench the employees should have been obtained by the employer from the government before proceeding to retrench workmen.
In addition to notice or payment in lieu of notice every employee who has been in continuous service for at least one year should be paid retrenchment compensation at the rate of fifteen days salary for every year of service. This is in addition to Gratuity payable to the employees who have completed five years of service with the employer.
Regards,
Madhu.T.K