🔍 Brief Note: Retrenchment under the Industrial Disputes Act, 1947
By Rajesh Kantubhukta
Retrenchment refers to the termination of a workman by the employer for reasons other than disciplinary action. It usually occurs due to business downsizing, cost-cutting, or restructuring.
⚖️ Legal Definition (Sec 2(oo)):
Retrenchment is the termination by the employer for any reason whatsoever, excluding:
Voluntary retirement
Superannuation (retirement due to age)
Termination due to ill-health
Expiry of contract
Closure of business (covered separately)
✅ Conditions for Lawful Retrenchment (Sec 25F):
One-month notice or wages in lieu
15 days' average pay per completed year of service as compensation
Government intimation where required
📌 Additional Provisions:
Sec 25G – “Last Come, First Go” principle
Sec 25H – Preference to retrenched workers in future hiring
Sec 25N – Prior government permission (for 100+ workers)
⚠️ Non-Compliance Effects:
Retrenchment can be declared illegal
May lead to reinstatement with back wages and legal action
🔑 Conclusion:
Retrenchment must follow due legal process to ensure fairness, compliance, and industrial harmony.
By Rajesh Kantubhukta
Retrenchment refers to the termination of a workman by the employer for reasons other than disciplinary action. It usually occurs due to business downsizing, cost-cutting, or restructuring.
⚖️ Legal Definition (Sec 2(oo)):
Retrenchment is the termination by the employer for any reason whatsoever, excluding:
Voluntary retirement
Superannuation (retirement due to age)
Termination due to ill-health
Expiry of contract
Closure of business (covered separately)
✅ Conditions for Lawful Retrenchment (Sec 25F):
One-month notice or wages in lieu
15 days' average pay per completed year of service as compensation
Government intimation where required
📌 Additional Provisions:
Sec 25G – “Last Come, First Go” principle
Sec 25H – Preference to retrenched workers in future hiring
Sec 25N – Prior government permission (for 100+ workers)
⚠️ Non-Compliance Effects:
Retrenchment can be declared illegal
May lead to reinstatement with back wages and legal action
🔑 Conclusion:
Retrenchment must follow due legal process to ensure fairness, compliance, and industrial harmony.