Understanding Retrenchment and Notice Pay: When Are Employees Eligible and How Is It Calculated?

Good morning, everybody. My name is Sujit Nayak, and I work in an operation and maintenance company. I would like to request information on retrenchment and notice pay. Specifically, I am interested in understanding when an employee becomes eligible for retrenchment and notice pay, as well as how the calculation is done. I would appreciate it if you could provide me with detailed information on this matter. Thank you for your assistance.

Hi Buddy,

According to the Industrial Disputes Act of 1947, an employee who has completed one year of continuous service must serve a notice period of 30 days if the industrial establishment employs more than 50 workers but fewer than 100 workers. For establishments employing more than 100 workers, the notice period is three months. The compensation for both types of retrenchment is 15 days' pay for each completed year of service.

With Regards,

Mr. Thumbs Up