Gratuity Eligibility During Retrenchment
As per the Factory Act, during retrenchment, employees are eligible for gratuity. If yes, then how much? Also, please let me know in case the employee has not completed one year. What should be the actual process of exit in the case of retrenchment for plant employees?
From India, Bangalore
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1As per the Factory Act, during retrenchment, employees are eligible for gratuity. If yes, then how much? Also, please let me know in case the employee has not completed one year. What should be the actual process of exit in the case of retrenchment for plant employees?
From India, Bangalore
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Retrenchment and Procedures Under the Industrial Disputes Act
Retrenchment and procedures to be adopted for retrenchment are provided in the Industrial Disputes Act. According to the said Act, if any person who has been in service for at least one year is retrenched, they should be paid retrenchment wages at the rate of 15 days' wages for every completed year of service. If an employee has worked for 240 days in a period of 12 months, it is considered to have worked for one year for this purpose.
In addition to the retrenchment compensation mentioned above, every employee who has completed one year of service is required to be given one month's advance notice before retrenching or pay one month's salary in lieu of notice. If the establishment has been employing more than 100 employees, then Chapter VB of the ID Act will be applicable, and in such cases, instead of one month's notice, you have to give three months' notice or three months' pay in lieu of notice.
In the case of retrenchment in companies employing less than 100 employees, intimation/notice of retrenchment should be sent to the appropriate labor authorities, whereas permission from the authorities shall be obtained for retrenchment in case the company falls under Chapter VB of the Act.
Retrenchment should not be made according to the company's preference, but it should be the last employee who has joined in a particular category of job who should be retrenched first.
In addition to the above, all employees who have been in service for at least five years should also be paid gratuity as per the Payment of Gratuity Act.
Regards,
Madhu.T.K
From India, Kannur
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Retrenchment and procedures to be adopted for retrenchment are provided in the Industrial Disputes Act. According to the said Act, if any person who has been in service for at least one year is retrenched, they should be paid retrenchment wages at the rate of 15 days' wages for every completed year of service. If an employee has worked for 240 days in a period of 12 months, it is considered to have worked for one year for this purpose.
In addition to the retrenchment compensation mentioned above, every employee who has completed one year of service is required to be given one month's advance notice before retrenching or pay one month's salary in lieu of notice. If the establishment has been employing more than 100 employees, then Chapter VB of the ID Act will be applicable, and in such cases, instead of one month's notice, you have to give three months' notice or three months' pay in lieu of notice.
In the case of retrenchment in companies employing less than 100 employees, intimation/notice of retrenchment should be sent to the appropriate labor authorities, whereas permission from the authorities shall be obtained for retrenchment in case the company falls under Chapter VB of the Act.
Retrenchment should not be made according to the company's preference, but it should be the last employee who has joined in a particular category of job who should be retrenched first.
In addition to the above, all employees who have been in service for at least five years should also be paid gratuity as per the Payment of Gratuity Act.
Regards,
Madhu.T.K
From India, Kannur
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Industrial Disputes Amendment Act 2010.doc
INDUSTRIAL DISPUTES ACT.pdf