Retrenchment

Monday, 21 March 2022 2:44 PM

Section 2 OO of the Industrial disputes-act gives reference to the term

retrenchment. More or less the provision is similar to that of the ID
Act. Under Industrial relations code we find a number of workers more
than 300 but under the ID Act the number is minimum 50-100. Above
this number, employer will have to take permission of competent
authority.

1) Focus under retrenchment is on WORKERS ONLY and only they

will be terminated under retrenchment.

Exclusions-

- If there are disciplinary procedures against a person, it will not

amount to retrenchment.
- Where there is superannuation there is no retrenchment.
- No retrenchment where there is a case of VRS.
- No retrenchment when there is closure of contact.
- Termination due to prolonged ill health.

A worker is identified if his name is in the muster roll and if he is

working under the ID acT as a worker. He should be unskilled and if he
performs any supervisory roles he cannot be removed under the
proviso of retrenchment. He has to be performing CONTINUOUS
SERVICE. This means 240 days in one calendar year. If he has taken
sanctioned leave, it will mean he has taken a leave not amounting to
break of service.

The employer will take into account seniority of a worker to decide

who will become eligible for retrenchment. The last person who has
joined will be the first one be to be retrenched. The person with the
least seniority will be retrenched. In order to apply this provision many
factors like number of employees, etc. are there. A list of workers to be
retrenched has to be made and sent to the relevant authorities. ONLY
if the company has a requisite amount of workers, will the question of
asking permission for retrenchment even arise.

In retrenchment a compensation will have to be given. This includes

15% of average pay, he will also get benefits like provident fund
contribution, more than 5 years he will be able to get gratuity. No
pension. All other termination benefits will also be available to him.

In case a vacancy is to open, the retrenched person will be the first

person to be informed of this or apply for the job.

Q) Under IR Code there is a specific mention of fixed contract.

Evaluate whether fixed contract workers be retrenched?

Retrenchment and VRS

VRS- Voluntary retirement scheme.

Can fixed term contract employees termination will be termed as

retrenchment or not?

Negations

- Their names are not entered into the muster role, so it may be
that their termination will not amount to retrenchment. They are
not permanent employees.
- Under the existing guidelines, under any individual contracts, a
person is given a higher amount os security and cannot be
retrenched. We can negate and say that any such form of
terminations will not amount to Retrenchment.

Who will be eligible for retrenchment-

Under the ID Act, if a worker is just performing some managerial

function on the side , but is primarily doing normal worker job, he will
still be considered a workman under the ID Act.

Merely designating a person will not make him one, and we will also
have to see whether what his actual role is. If he is performing
substantial managerial work, he will not be deemed as a worker.

Even when the worker is performing an important task like trade union
leader, he will not be considered for retrenchment.

Work can be said to be managerial in nature if-

1) He has subordinates
2) He has to give orders
3) He has to schedule work

If a person in a term based contract- even if a person had continuous

service, had equal pay, had seniority, HE WILL NOT BE CONSIDERED
FOR RETRENCHMENT. This is because he was never in a permanent
employee ship, and was to be removed when his term was over.