Facing Retrenchment: Can I Challenge My Employer on Notice Period and Benefits?

I have been employed by a company since the 12th of March 2012, and as per the offer letter, both parties are liable for a notice period of 30 days, irrespective of probation.

The company, due to poor sales performance, wishes all employees to align with direct revenue generation by changing their roles. I have declined this change, which resulted in my retrenchment with a notice period of 15 days.

As they do not have any policy regarding leave encashment, they deny paying me the same.

Additionally, they do not wish to sign the PF Withdrawal form until I complete my 2-month cooling period. As far as I know, the employer is supposed to sign the document and return it within two working days, irrespective of the cooling period. The sole responsibility lies with the employee, not the employer. Which is correct?

Questions Regarding Employment Terms

• Am I eligible to receive a retrenchment bonus? If yes, for how many days?
• Can I request leave encashment?
• What sections/acts are relevant to this?

Anticipating your prompt response.

Thanks & Regards,

Dikshit T G S.

Notice Pay and Retrenchment Compensation

You will be eligible to receive notice pay for 30 days or to work for 30 days after receiving your termination notice. There is no concept of a retrenchment bonus. If you are covered under the Industrial Dispute Act, you are entitled to retrenchment compensation. However, this does not apply if you have not completed one year of work.

Leave Encashment and Eligibility

Leave encashment is not mandated by law. Additionally, since you have not completed a year of service, you may not be eligible for leave. This eligibility would depend on the company's policy.

Dear Dikshit,

Please let me know if you are covered under the Factories Act or the Shops & Estt Act. Of course, there is some impediment in the law regarding 'Retrenchment' and the doctrine of 'last in, first out'. Nevertheless, there is nothing wrong in claiming a minimum 'separation package', in other words, a 'terminal package', in case you choose to accept the retrenchment with some compensation.

The first thing is your notice pay; legally, you are entitled to 30 days' salary, leave encashment, ex gratia in lieu of bonus, and gratuity (though technically you have not earned or are entitled to these as per the Acts). It appears that a 15-day notice is not valid in the eyes of the law, and such retrenchment is considered "null and void" or illegal. It is always possible to challenge this; you have nothing to lose that wasn't already at stake.

By the way, were you the only person retrenched? Did they issue you a 'retrenchment letter'? This letter is crucial evidence in your case. Please collect these documents and consult a knowledgeable advocate in labor laws.

All the best, pal.

Kumar S.

Quote:

"W.P. (C) 7385/2007 Page 7 of 25

...18. This Court has used different expressions to describe the consequence of terminating a worker's service/employment/engagement through retrenchment without complying with the mandate of Section 25-F of the Act. Sometimes it has been termed as ab initio void, sometimes as illegal per se, sometimes as nullity, and sometimes as non est. Leaving aside the legal semantics, we have no hesitation in holding that the termination of an employee's service through retrenchment without complying with the requirement of giving one month's notice or pay in lieu thereof and compensation as per Sections 25-F(a) and (b) renders the action of the employer null and entitles the employee to continue employment as if the service was not terminated."

Similarly, in "Jagbir Singh vs. Haryana State Agriculture Marketing Board and anr.; (2009) 15 Supreme Court Cases 327," which was a case of termination of the services of a daily wager who had worked from 01.09.1995 to 18.07.1996, the Supreme Court took note of its earlier decisions and held as follows:

..."W.P. (C) 7385/2007 Page 15 of 25 "7. It is true that the earlier view of this Court articulated in many decisions reflected the legal position that if the termination of an employee was found to be illegal, the relief of reinstatement with full back wages would ordinarily follow. However, in recent past, there has been a shift in the legal position, and in a long line of cases, this Court has consistently taken the view that relief in the form of reinstatement with back wages is not automatic and may be wholly inappropriate in a given fact situation even though the termination of an employee is in contravention of the prescribed procedure. Compensation instead of reinstatement has been held to meet the ends of justice."

Regards,
Kumar S.