Retrenchment
In this period of economic recession lakhs of employees face the threat of lay off and retrenchment. People often mistake retrenchment for lay off. Even though in common parlor people use the latter term more often, what actually happens in the case of most of the employees is retrenchment or termination from service.
The Industrial Disputes Act, 1947 defines retrenchment as “termination by the employer of the service of a workman, for any reason whatsoever”. The following are not instances of retrenchment.
a.Termination as a form of punishment by way of disciplinary action.
b.Voluntary retirement of the workman.
c.Retirement of the workman on reaching the age of superannuation.
d.Termination of the service as a result of the non renewal of the contract of the employment.
e.Termination on the ground of continuous ill health.
For the retrenchment of a workman who has been employed for a minimum period of one year continuous service, the following conditions shall be met with by the employer:
a.The workman shall be given one month’s notice in writing, indicating the reason for retrenchment, or wage equivalent to the period of notice.
b.The workman shall be paid compensation equivalent to 15 days average pay, for every completed year of continuous service.
c.Notice in the prescribed manner shall be served on the appropriated authority.