Retrenchment Dilemma: Do We Owe Notice Pay, Retrenchment Benefits, or Both?

If the company retrenches the staff, do we need to pay notice pay, retrenchment benefits, or both as part of the full and final settlement? Your answer would be highly appreciated.

Understanding Retrenchment Under Sec. 25-F of the ID Act, 1947

The poster should go through Sec. 25-F of the ID Act, 1947. One month's notice is the first step in the process of retrenchment. When the employer is unable to do so due to whatever reasons, he has to pay notice pay in lieu of notice and the retrenchment compensation simultaneously at the time of retrenchment itself. It is entirely a concurrent process, and any failure would render the retrenchment illegal.

Hi Uma, what is the process to calculate retrenchment compensation? Please explain the formula. Secondly, how many minimum days are required to be a "CONFIRMED Employee"?

Thanks

Retrenchment Compensation

Retrenchment compensation should be paid at the time of retrenchment. It should be calculated on the basis of the last drawn average wages, i.e., at 15 days' average gross wages for every completed year of service.

Confirmation of a Newly Appointed Employee

Confirmation of a newly appointed employee is always based on their successful completion of the probation period as fixed in their appointment orders. In case of non-satisfactory performance or inevitable leave taken due to unforeseen circumstances like an accident or sudden serious illness during the probation period, the period of probation for such an employee can be extended by another equal spell. The length of the probation period normally varies depending on the nature of the post as well as the organization. Therefore, how much time would be taken for confirmation cannot be precisely stated.