Is the Retrenchment Act Relevant for Managers in Manufacturing? How Is Service Calculated?

Sir, is the retrenchment act, as per law, applicable to the managerial cadre who are working in the production area in a manufacturing company? If applicable, how is the service calculated from the date of joining?

There is no Act called the Retrenchment Act. The provisions relating to retrenchment are available in the Industrial Disputes Act of 1947. According to the Industrial Disputes Act, managers (whether working in a manufacturing establishment, mine, plantation, or any other establishment) are not covered by any of the provisions of this Act. Therefore, the process of termination of a manager will be carried out as per the contract of employment/appointment order given and accepted by him. If there is a notice period mentioned in it, you can follow that.

A person designated as a manager need not be a manager so that the provisions of the Industrial Disputes Act shall not be made applicable to him. In order to be excluded from the scope of the Act, he should have managerial powers and responsibilities, like the power to appoint, authority to dismiss, authority to initiate disciplinary action, authority to appraise performance, or at least a power to approve leave.

The managers are not covered under the ID Act. Employees in supervisory and managerial capacities can be retrenched as per the terms of appointment by paying the notice period amount.

Determining 'Workman' Status Under the ID Act

Here, it's pertinent to determine whether the 'manager' is a 'workman' under the ID Act or not. Then comes the question of 'retrenchment' of him and any protection available under the ID Act.

Notice Requirement for Retrenchment

Notice needs to be given to the employee: An employee who has worked for a continuous period of at least one year can only be retrenched by the employer for his service. Before retrenching the employee, the employer must send a notice of retrenchment at least three months before the date of his retrenchment.

I hope the first part should answer the second part to some extent if not fully. Please go through the contention in these links:

- https://www.livelaw.in/labour-servic...tes-act-255960
- https://hrvista.in/a-workman-under-t...utes-act-1947/
- https://www.labourfile.com/section-detail.php?aid=236