Retrenchment is the termination of an employee by an employer for reasons other than a punishment meted out by disciplinary action. Employees terminated in such a manner are financially compensated by the employer. This kind of compensation is known as retrenchment compensation.
There must be a termination of the service of a workman. The termination must be by the employer, for any reason whatsoever, and. Except for punishment inflicted by way of disciplinary action
The employee must be compensated with an amount equal to 15 days annual wage for every completed year of continuous employment in the industry or any portion of it exceeding six months.
However, the following are not covered within the meaning of retrenchment: Voluntary retirement of a workman. Retirement of workmen on reaching the age of
Also the Payment of Gratuity Act, 1972, states that an employee is eligible to get gratuity only after he or she has worked with an organization for a minimum period of five years. The employee stands to receive the gratuity amount on his or her superannuation, or at the time of retirement or resignation.