Dear Ms.Shweta
1. The need to pay retrenchment compensation to an employee is provided for in the Industrial Disputes Act 1947. Section 2(oo) of the Industrial Disputes Act defines the term "retrenchment" and also specifies what are not covered by the definition of the term "retrenchment". Please go through this section of the Industrial Disputes Act.
2.For the Industrial Disputes Act to be applicable firstly, the employee should be a "workman" as defined under section 2(s) of this Act. Secondly, the organisation which employs the "workman" should be an industry as defined under section 2(j) of the Act.Thirdly, the issue involved should be an industrial dispute as defined under section 2(k) of the Industrial Disputes Act. If any one of the above mentioned three conditions are not satisfied, then the Industrial Disputes Act is not applicable.
3.In the case of BPO the activity carried on in the BPOs are "industry" as defined in the Industrial Disputes Act. I cannot elaborate on the basis on which I am making this statement because of paucity of space and time and I want to be brief also.
4. If the individual who is retrenched, is a "workman" as defined under the Industrial Disputes Act, then the retrenched "workman" is entitled to the protection of the Industrial Disputes Act, in other words the BPO has to follow the provisions of the Industrial Disputes Act while retrenching the workman.
5.As "retrenchment" is an industrial dispute, the Industrial Disputes Act is applicable to the case referred to by you in your post.
6. In the case of the employee referred to in your post, if during the period of the last six months of his service he had worked for 120 days then he is deemed to have had put in a continuous service for six months and the total continuous service will be one and half years. He will be entitled to retrenchment compensation at the rate of 15 days average pay for every completed year of service and the period in excess of six months of continuous service has to be treated as one year of continuous service. In this case as the employee has put in only one and half years of continuous service he will be eligible for retrenchment compensation for one year of continuous service only. In addition he is entitled to one month's notice or one month's wages lieu of notice
With regards