The term Retrenchment as defined in the ID Act means termination of service of a workman for any reason whatsoever, otherwise than as a 'punishment inflicted by way of disciplinary action'. It specifically excludes termination of employment by resignation by workman himself, retirement on reaching the age of superannuation, termination as a result of non- renewal of contract of employment or termination on the ground of continued ill- health. The Act does not specifically deals with non performance as a reason for termination.
The Supreme Court has observed that misconduct on the basis of which a disciplinary action of termination from service is taken against a worker shall include any act on the part of the worker which is against the code of conduct of the establishment. Obviously, an employee is expected to perform and give results. If he does not give result or act differently, it should come under negligence or dereliction of duty. The courts will not direct the employer to keep a non performing worker. As such if you have evidences to show that the worker was given enough opportunities to improve, there is nothing wrong in terminating without paying retrenchment compensation.
However, in some other judgement,like Karnataka State Road Transport Corporation v. M. Boraiah and another, Punjab Land Development and Reclamation Corporation v. The Presiding Officer, Labour Court, Chandigarh etc the observation by the Court was different. The Court expanded the meaning of "for any reason whatsoever"in the definition of retrenchment as interpreted it as any reason other than those specifically mentioned,ie, termination on the ground of continued ill health, non renewal of contract or dismissal on the ground of misconduct.
Now we have to decide what all will come under misconduct. In my opinion all acts of an employee which deviate from the code of conduct are misconduct. An employee is expected to do a given work and if he does not do that it is dereliction of duty. As such non performance is also a misconduct. Now you have given opportunities and there are evidences to show the deviation from work. What else is required?