Navigating Blue-Collar Termination: How to Handle Refusal and Legal Risks?

Due to a recent reorganization in the company, some employees have been made redundant. Although we have settled the cases for all others (all white-collar), there is one blue-collar employee who is refusing to leave on mutual consent. I would like to know if:

1. Can we terminate him by paying 3 months' notice pay (as per the appointment letter) plus the gratuity amount due?
2. Is there any additional payment required, such as severance pay that we paid to others (2 months' salary per year of service), if he is terminated?
3. Is there any risk of him going to the Labour Court and the court asking us to "re-hire" him mandatorily?
4. What is the best way to terminate him with the least risk to the company?

I would be highly obliged if you can help me with this case.

Thanks,
R

Retrenchment Under the Industrial Disputes Act

The effect of the exit described in the post, consequent on the refusal of the employee, is "retrenchment" under Section 2(oo). If he is a "workman" under Section 2(s) of the Industrial Disputes Act, 1947, specific procedures must be followed.

Before retrenching an employee who has continuous service of not less than one year in the establishment, and if the establishment has 100 or more workmen on its rolls, prior permission should be obtained from the Appropriate Government, as per Section 25-N(b) of the ID Act, 1947. Mr. R can refer to the Act for other procedural formalities.

Whether the "retrenchment" is resorted to with or without prior permission, one month's notice or one month's salary in lieu of notice must be paid. Additionally, compensation should be paid to the workman at the time of retrenchment at 15 days' average pay for every year of completed service as per Section 25-F of the Act.

Complying with all the above conditions before the exit of the particular employee is the only risk-free option available to the management. Otherwise, it would be an illegal action, entitling the employee to reinstatement and back wages if he raises an industrial dispute in this regard.

Regards,
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