Retrenchment in Kerala Construction: Do We Need to Follow Section 25K and 25N Notice Rules?

Construction company in Kerala having more than 100 workmen; whether to give benefits of Section 25K and 25N of the ID Act, i.e., 3 months' notice prior to retrenchment of workmen.

I am not a legal expert, but I can provide some general information that may help guide you. However, for specific advice related to your situation, it is advisable to consult with a legal professional who specializes in labor laws in India.

Industrial Disputes Act of 1947: Sections 25K and 25N

Under the Industrial Disputes Act of 1947, Sections 25K and 25N relate to the provisions for notice and compensation in case of retrenchment. In general, the requirement for providing notice and compensation depends on the number of workmen being retrenched.

Section 25K: Notice Requirement

Section 25K deals with the requirement of notice to the appropriate government or the authority specified before retrenching workmen. The notice period is typically three months.

Section 25N: Compensation Requirement

Section 25N deals with the requirement of payment of compensation to workmen in case of retrenchment. The compensation is equivalent to 15 days' average pay for every completed year of continuous service.

The applicability of these provisions can depend on factors such as the number of workmen being retrenched, the reasons for retrenchment, and whether the company falls under the Act's purview.

For companies with more than 100 workmen, it's important to comply with the legal provisions related to retrenchment. However, it's recommended to seek legal advice to ensure accurate and up-to-date information based on your specific circumstances. Labor laws are subject to change, and a legal professional will be able to provide guidance based on the latest regulations.

Difference between Section 25F and 25N

The difference between Section 25F and 25N is that the former applies to companies with fewer than 100 employees, while the latter applies to establishments with more than 100 employees. As per Section 25F, when the notice required to retrench the workmen is one month, an establishment that employs more than 100 employees should give three months' notice to retrench the workmen. Another important difference between these two sections is that an establishment employing 100 or more employees cannot retrench employees without permission from the appropriate government. However, an establishment not covered by Chapter VB (i.e., an establishment with fewer than 100 employees) need not wait for permission; just an intimation to the appropriate government is sufficient.

An establishment in construction activity comes under "factory" for the purpose of Chapter VB, and therefore, three months' notice to retrench the workmen is required anyway.

Section 25O and Construction Companies

However, Section 25O, which provides procedures for closing down an establishment, does not apply to companies engaged in the construction of buildings, bridges, roads, canals, dams, etc.

In practice, a construction company should employ workers on a fixed-term contract basis so that employment naturally terminates automatically when the construction work is completed. In such a situation, no compensation, notice, or notice pay is required to be given to any employee.

Your post does not mention the reason for the retrenchment. Is your establishment closing down, is the project work coming to an end, or is there another reason for which partial retrenchment is required?