Facing Retrenchment: What Are the Legal Steps and Notice Periods Required?

Dear Seniors, my company management is supposed to retrench some workers; however, our company is registered under the Shops & Commercial Establishment Act, 1952. Additionally, our company's employee strength is 96, inclusive of both workmen and non-workmen. The reason for the retrenchment is a financial crisis.

Please clarify my following doubts:

1) Do we need to obtain prior approval from the state government in order to retrench the workers?

2) How many months' notice should be served to the workers who have been in continuous service for more than 1 year, whether it is 1 month or 3 months?

3) Can workers who have not completed 1 year of service in our company be retrenched? If yes, how many months' notice should be served to these workers?

4) When calculating retrenchment compensation, should basic plus DA or gross salary be taken into account?

Thanks in advance.

Regards, Rachna

Though we know this is not a fair practice, we still need to stick to management's decision. According to my understanding, this could be addressed by initiating resignations from those employees to avoid any potential legal conflicts in the future. The resignation policy should be clearly outlined by HR, including the notice period clause and the specific number of days for the notice period, which could be determined after necessary approval from the management. The formalization of the notice period is solely at the discretion of the management, as it can vary from organization to organization. In your case, I would suggest reviewing the notice period clause of your organization and proceeding accordingly. While this is my opinion, it is advisable to consult with some superiors before moving forward.

Please let me know if you need any further assistance or clarification.

Thank you.