Facing Retrenchment: How Do I Fairly Choose Employees and Handle Legalities?

Retrenchment

In my organization, currently, 48 people are working under our role. Now, due to low business, we want to retrench 20 employees. Can anyone suggest how I can select the employees for retrenchment? Can anyone send me the notice for retrenchment information to an employee?

My Questions

1. Do I need to get permission from government officials, i.e., the Additional Labour Commissioner?
2. What reason should I mention in the retrenchment letter?
3. In our organization, there is a union. Can I retrench union office bearers?
4. How many days' salary should I provide for retrenched employees?
5. Is it mandatory to take back an employee into our organization after the retrenchment?

Regards,

If the number of employees is only 48 on average during the 12 months preceding the proposed date of retrenchment, there is no necessity for obtaining prior permission for retrenchment. Retrenchment has to be done only on the basis of seniority - i.e., only juniors in service have to be retrenched. So, there is no question of pick and choose. For all other details, please go through Sections 25F and 25N of the Industrial Disputes Act, 1947.

In addition to Mr. Umakanthan, you can retrench based on skill level as well. If a newly joined person's skill level is superior to that of the incumbent, the incumbent can be retrenched, provided that you have evidence to support this decision.

Hi,

It is better to go by the ID Act and follow the procedure. Check with your management as well. In today's context, how successful you will be in obtaining government permission is a significant question.

Permission from Government Officials
1. Do I need to get permission from government officials, i.e., the Additional Labour Commissioner?
Ans: No requirement because your strength is less than 100, but you have to send the information of retrenched employees to the ALC.

Reason for Retrenchment in the Letter
2. What reason should I mention in the retrenchment letter?
Termination of Employment - either one month before retrenchment or one month notice pay.

Retrenchment of Union Office Bearers
3. Can I retrench union office bearers in our organization?
Yes.

Salary for Retrenched Employees
4. How many days' salary should I provide for retrenched employees?
Ans: 15 days' retrenchment compensation for every year. Less than six months will be ignored, and more than six months will be treated as a full year.
Suppose an employee worked for 3 years and 6 months, you will have to pay 15 days' pay * 4 = 2 months' average pay. If they worked for 3 years and 5 months, you will have to pay 15 days' pay * 3 = 1.5 months' average pay.

Rehiring After Retrenchment
5. Is it mandatory to take back an employee into our organization after retrenchment?
Ans: No.