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Industrial Disputes Act

Section:25-N, 25-G :Retrenchment Of Workmen

Obligation : To obtain prior approval before retrenching workmen, and to provide them with notice and compensation

Type:Trigger Frequency: Quarterly

Action to be taken:
Where an industrial establishment has employed more than 100 workmen per day on an average in the preceding 12 months,
no employee who has been in continuous service (Sec 25-B) for at least one year can be retrenched unless:
(a) the workman has been given three months notice in writing indicating the reason for retrenchment, and pay in lieu of notice period
(b) the prior permission of the appropriate government has been obtained for retrenchment.
(c) The workman has been paid compensation at the rate of 15 days average pay for every completed year of continuous service (or any part of a year in excess of six months)

The employer has to make an application in the prescribed manner stating clearly, the reasons for the intended retrenchment, and simultaneously serve a copy of the application on the workmen concerned. The appropriate government will grant or refuse permission in writing, and if no communication is received within 60 days, permission is deemed to have been granted

Audit Requirement:
Has prior permission been obtained from the appropriate government before retrenching any workmen ? Have all retrenched workmen been given notice and compensation ?

Supporting Documents:
Written Confirmation of Compliance

Related Triggers:
Closure Of An Undertaking/Establishment
Closure Of Any Part of A Factory
Employee Leaving The Company
Employment of Workmen After Retrenchment
Number of Workers In The Establishment
Retrenchment Of Workmen

Related Keywords:
Dispute, Industrial Dispute
Remuneration/Wages/Compensation
Retrenchment


Related Sections:
Industrial Disputes Act, 1947
Chapter:Lay-off and Retrenchment| 25-G:Procedure for retrenchment:
Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman.
Industrial Disputes Act, 1947
Chapter:Special Provisions Relating to lay-off,retrenchment and closure in certain establishments| 25-N:Conditions precedent to retrenchment of workmen:
(1) No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that until, -

(a) the workman has been given three months notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; and
(b) the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (herein after in this section referred to as the specified authority) has been obtained on an application made in this behalf.
(2) An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner.
(3) Where an application for permission under sub-section (1) has been made, the appropriate Government or the specified authority, after making such inquiry as it thinks fit and after giving a reasonable opportunity, of being heard to the employer, the workmen concerned and the persons interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workman and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workman.
(4) Where an application for permission has been made under sub-section (1)and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
(5) An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub-section (6), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order.
(6) The appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (3) or refer the matter or, as the case may be, cause it to be referred, to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
(7) Where no application for permission under sub-section (1) is made, or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workman and the workman shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him.
(8) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such establishment for such period as may be specified in the order.
(9) Where permission for retrenchment has been granted under sub-section (3) or where permission for retrenchment is deemed to be granted under sub-section (4),every workman who is employed in that establishment immediately before the date of application for permission under this section shall be entitled to receive, at the time of retrenchment, compensation which shall be equivalent to fifteen days average pay for every completed year of continuous service or any part thereof in excess of six months.)