Can Employers Skip Section 25 of IDA if a Long-term Worker Misses 240 Days Before Retrenchment?

Dear Seniors, if a workman worked for more than 5 years in a company and failed to complete 240 days prior to being retrenched by the employer, then in this case, as the workman failed to complete 240 days in the preceding year, can the employer avoid the procedure under Section 25 of the IDA despite the fact that during all the remaining periods of 5 years the workman completed 240 days each year?

Thanks in anticipation...!!!

Section 25F in The Industrial Disputes Act, 1947

I hope the following section will address your query:

25F. Conditions precedent to retrenchment of workmen - No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until:

- (a) The workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice.

- (b) The workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months.

- (c) Notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette.

Thanks,
V K Gupta

Clarification on 240 Days Requirement for Retrenchment

The 240 days are not counted only for the year just prior to retrenchment. If the employee has completed 240 days in any one year, he cannot be retrenched without complying with Section 25F/25N of the ID Act.

Regards,
Varghese Mathew

Dear Prashant, I would like to further clarify that if you retrench an employee, no other person can be appointed to that post. If you have to refill that post, the person who was retrenched must be given the opportunity to be appointed. If he refuses in writing, only then will you be able to appoint another person to that post. Therefore, if you retrench any person, careful consideration, action, and implementation are required. "Retrenched" means that you have abolished the post.

Thanks,

Regards, V K Gupta

One point to consider further before retrenching an employee is the seniority of the employee in the category. The principle of 'LAST COME FIRST GO' should be followed. In other words, you cannot pick and choose. Please refer to Section 25G of the Act.

You might be thinking that I am writing in pieces. In fact, Section 25 of the ID Act is long and crucial and cannot be understood in one go. So please don't mind.

Thanks,

V K Gupta

As per the ID Act, retrenchment benefits of 15 days' average pay for every completed year or any part exceeding six months are to be provided to the retrenched workmen. Please consider those years in which the workmen fulfill the condition of a completed year, i.e., 240 days.

If a workman has completed 240 days in all of the past 4 years and has not completed 240 days in the last year, then the benefits for the 4 years should be paid to the workmen.

Thanks

Regards

Let me point out that the retrenchment issue doesn't relate to Section 25 of The Industrial Disputes Act, 1947, as mentioned by you. Section 25 of The Industrial Disputes Act, 1947 deals with the 'Prohibition of financial aid to illegal strikes and Lockouts'.

Retrenchment Provisions

Chapter VA and Chapter VB contain Section 25A to Section 25S, which deal with retrenchment and other related issues. Chapter VA is applicable to industrial establishments in which fewer than fifty workmen have been employed or to industrial establishments that are of a seasonal character or in which work is performed only intermittently, whereas Chapter VB deals with an industrial establishment employing not less than one hundred workmen in the preceding twelve months.

As regards your query relating to retrenchment, Sh. V. K. Gupta has nicely explained the provisions. Section 25F(b) clearly mentions that if a workman completes continuous service of more than one year, any part in excess of six months shall be counted as one year for the purpose of granting retrenchment compensation.

I hope I have been able to answer your query.

Regards,
BS Kalsi
Member since Aug 2011

Definition of Retrenchment Under the ID Act

The definition of retrenchment as given in the ID Act is provided below:

"Retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, other than as a punishment inflicted by way of disciplinary action. However, it does not include:
- (a) voluntary retirement of the workman; or
- (b) retirement of the workman upon reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation to that effect; or
- (bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned upon its expiry or if such contract is terminated under a stipulation contained therein; or
- (c) termination of the service of a workman on the grounds of continued ill-health."

Regards

I think instead of asking basic questions, you should have the patience to go through the relevant Act & rules, which will give you a fair idea of what the Acts deal with. Then you will have many queries coming to your mind to which our seniors are there to assist you. This is simple advice, which will be helpful in the future if you are building an HR career.

Retrenchment

Retrenchment means the termination of the contract of service of the employees in a redundancy situation, which arises from several factors such as closure of business, restructuring, reduction in production, mergers, technological changes, take-over, economic downturn, and others. Section 2 (oo) of the Industrial Disputes Act, 1947 defines Retrenchment as "the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include voluntary retirement of the workman, superannuation on reaching the age of retirement, on completion of the contract period or on the ground of continued ill-health of a workman." Retrenchment carries with it a host of benefits, such as a notice period or pay in lieu thereof, retrenchment compensation, and re-employment opportunities. The employer has to comply with the statutory provisions contained in the I.D. Act & Rules.

Regards,
BS Kalsi

Dear Gentlemen,

If a workman has worked for 3 years in a company, and in the first year, he worked for 190 days, in the second year, he worked for 210 days, and in the third year, he worked for 245 days. Will he be able to get retrenchment benefits for all these three years on a proportionate basis, or will he only receive the retrenchment benefit for the third year in which he worked for 245 days?

Kindly provide your suggestions.

Regards,
Gati