As per Section 25F of the Industrial Disputes Act, you have to provide retrenchment compensation for 15 days for every completed year of continuous service. You must serve one month's notice before retrenchment or pay the salary thereof to the workmen. Furthermore, you have to issue a notice in FORM P/Form PA, depending on the applicability of Chapter VA or Chapter VB of the Act. If the Central rules are applicable to you, in other cases, please refer to state rules.
If your firm is a Government undertaking or engaging more than 100 workmen in the preceding 12 months, Chapter VB will be applicable. In these circumstances, you have to seek approval from the appropriate government for retrenchment. If the retrenched person is already involved in any court case against your corporation, in such circumstances, it is better to seek legal opinion.
Regards,
Ravi