Greeting to all seniors, could somebody tell me how to calculate the retrenchment and lay off compensation. Regards Rana
From India, Lucknow
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11From India, Lucknow
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Dear Mr. Rana,
Retrenchment Compensation: 15 days for every completed year of service (i.e., completed means a minimum of 240 days in a year).
Layoff Compensation: Payment of wages except for intervening weekly holidays, compensation of 50% of the total or basic wages and DA for a period of layoff up to a maximum of 45 days in a year.
From India, Lucknow
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Retrenchment Compensation: 15 days for every completed year of service (i.e., completed means a minimum of 240 days in a year).
Layoff Compensation: Payment of wages except for intervening weekly holidays, compensation of 50% of the total or basic wages and DA for a period of layoff up to a maximum of 45 days in a year.
From India, Lucknow
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Sub-retrenchment compensation & lay-off wages -computation
In my opinion, retrenchment compensation can be calculated as under
1)As per Sec. 25-F of the Industrial disputes Act 1947, retrenchment compensation shall be computed at the rate of fifteen days average wages for each completed year of service or any part thereof in excess of six months.
2) Therefore, the next step is to compute fifteen days average wages. To arrive at fifteen days average wages, one has to calculate one month’s average wage.
3) Sec. 2(aaa) of I.D. Act defines average wage payable to a workman for a month means the average wages payable to him in the three complete calendar months preceding the date on which such average pay becomes payable or where it is not possible to calculate average pay as above, the average pay will be the average of wages payable to the workman during the period he actually worked.
One month average wage = (Three months’ wages preceding the date of retrenchment) / 3
4) After determining the monthly average wage, the next step is to find out 15 (fifteen) days average wage. This can be obtained by dividing monthly wage by the figure ‘2’(two) since a ‘month’ for the purpose of retrenchment compensation is now decided to consist of 30 (thirty) days only as held by the Apex Court in the case of Guru Jambeshwar University, Hissar v. Dharampal 2007 I LLJ 1006.
15 days’ average wage = (Average monthly wage) / 2
5) After arriving at the 15 days’ average wage, the retrenchment compensation can be arrived at by multiplying 15 days’ average wages by the number of years of service put in by the workman.
Retrenchment compensation = (15 days average wages) x (No. of years of service)
Note :- i) If the period of service is in excess of six months, it shall be taken as one year.
Computation of lay-off compensation
As regards lay off, Sec. 25-C of the Industrial Disputes Act 1947 stipulates a formula for computation of lay off-compensation. It states that lay –off compensation shall be equal to fifty percent of the total of the Basic wages and Dearness Allowance that would have been payable to him, had he been not laid off. The compensation so calculated is to be payable to the workman concerned for all the days on which he is laid–off excepting weekly holidays. The same formula be applied for lay-off effected under Sec. 25-M of the I.D. Act also.
However some states may stipulate a different formula by amending Sec.25-C. Please ascertain this before proceeding to compute clay-off compensation.
B.Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt.Ltd
Mumbai
Tel-022-28324234
From India, Mumbai
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In my opinion, retrenchment compensation can be calculated as under
1)As per Sec. 25-F of the Industrial disputes Act 1947, retrenchment compensation shall be computed at the rate of fifteen days average wages for each completed year of service or any part thereof in excess of six months.
2) Therefore, the next step is to compute fifteen days average wages. To arrive at fifteen days average wages, one has to calculate one month’s average wage.
3) Sec. 2(aaa) of I.D. Act defines average wage payable to a workman for a month means the average wages payable to him in the three complete calendar months preceding the date on which such average pay becomes payable or where it is not possible to calculate average pay as above, the average pay will be the average of wages payable to the workman during the period he actually worked.
One month average wage = (Three months’ wages preceding the date of retrenchment) / 3
4) After determining the monthly average wage, the next step is to find out 15 (fifteen) days average wage. This can be obtained by dividing monthly wage by the figure ‘2’(two) since a ‘month’ for the purpose of retrenchment compensation is now decided to consist of 30 (thirty) days only as held by the Apex Court in the case of Guru Jambeshwar University, Hissar v. Dharampal 2007 I LLJ 1006.
15 days’ average wage = (Average monthly wage) / 2
5) After arriving at the 15 days’ average wage, the retrenchment compensation can be arrived at by multiplying 15 days’ average wages by the number of years of service put in by the workman.
Retrenchment compensation = (15 days average wages) x (No. of years of service)
Note :- i) If the period of service is in excess of six months, it shall be taken as one year.
Computation of lay-off compensation
As regards lay off, Sec. 25-C of the Industrial Disputes Act 1947 stipulates a formula for computation of lay off-compensation. It states that lay –off compensation shall be equal to fifty percent of the total of the Basic wages and Dearness Allowance that would have been payable to him, had he been not laid off. The compensation so calculated is to be payable to the workman concerned for all the days on which he is laid–off excepting weekly holidays. The same formula be applied for lay-off effected under Sec. 25-M of the I.D. Act also.
However some states may stipulate a different formula by amending Sec.25-C. Please ascertain this before proceeding to compute clay-off compensation.
B.Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt.Ltd
Mumbai
Tel-022-28324234
From India, Mumbai
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Suppose an employee worked for 10 years and has been retrenched. How do I calculate retrenchment compensation? Do I calculate every year at 15 days of average pay?
My salary was $10,000 in 2001, $11,000 in 2002, and increased each year until it reached $20,000 in 2010. How will you calculate the retrenchment compensation?
From India, Mumbai
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My salary was $10,000 in 2001, $11,000 in 2002, and increased each year until it reached $20,000 in 2010. How will you calculate the retrenchment compensation?
From India, Mumbai
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respected sir, mam please give me calculation of retrenchment my working 15/05/2012 to till date. and my gross salary 15050/- so please help me.
From India, Nagpur
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From India, Nagpur
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