1/31/2017 RetrenchmentunderIndustrialDisputeAct,1947

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RetrenchmentunderIndustrialDisputeAct,1947 (Saveas.pdf)
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BankingandFinance Published :July30,2011|Author:shraddhaojha RandomPick
laws Category :CompanyLaw|TotalViews :78568|Rating: Print| Emailtofriend
Impacton
CaseLaws Societyandon
LawsrelatingtoRetrenchmentunderIndustrialDisputeAct,1947 Victim.Sheis
CivilLaws shraddhaojha
AlreadyaVictim
Shraddhaojha,student
CompanyLaw Retrenchment is something akin to downsizing. When a company or government ofNirmaUniversity, andVictimized
Ahmedabad. DuringProlonge
ConstitutionalLaw
goes through retrenchment, it reduces outgoing money or expenditures or redirects Delays.
focus in an attempt to become more financially solvent. Many companies that are Viewarticles | Contactauthor
Consumerlaws being pressured by stockholders or have had flagging profit reports may resort to
retrenchmenttoshoreuptheiroperationsandmakethemmoreprofitable.Althoughretrenchmentismostoftenused fullstory|sendtofriend
Contractslaws
in countries throughout the world to refer to layoffs, it can also label the more general tactic of cutting back and
Criminallaw
downsizing.
Statistics
Druglaws
Dubailaws Retrenchment:TheLegalAspect TotalArticles
The above is a very informal definition of retrenchment. Retrenchment has more to it than just termination of
Educationallaws employmentbyaemployer.Thereareahostoflegalprovisionswhich TotalAuthors
Employment/Labour govern the practice of retrenchment. Section 2 (oo) of the Industrial
laws DisputesAct,1947definesRetrenchmentas TotalViews
EnvironmentalLaw
theterminationbytheemployeroftheserviceofaworkmanforany Totalcategories
familylaw
reasonwhatsoever,otherwisethanasapunishmentinflictedbywayof
GaylawsandThird disciplinaryaction,butdoesnotinclude
Gender LawForum

HumanRightslaws (a)voluntaryretirementoftheworkman,or FreelegalAdvicelawyersForum

Immigrationlaws (b)retirementoftheworkmanonreachingtheageofsuperannuatingif Re:NRIseekingdivorce
Insurance/Accident thecontract of employment between the employer and the workman 1)canihavemyparentsfilefordiv
Claim concernedcontainsastipulationinthatbehalfor meinIndiawhileaminUS?andi
presentduringallcourthearingso
IntellectualProperty
(b) termination of the service of the workman as a result of the non bephysicall...
InternationalLaw Jan30,20172:30:12PM
removalofthecontractofemploymentbetweentheemployerandthe
JuvenileLaws workmanconcernedonitsexpiryorofsuchcontractbeingterminated
Re:WhatistheRoleofNGOsin
Lawlawyers&legal underastipulationinthatbehalfcontainedthereinor
ProtectionofDomest...
Profession itsonlyrelatestocounsellingand
(c)terminationoftheserviceofaworkmanonthegroundofcontinued
LegalAidandLok counsellingfailedthepersoneithe
illhealth
Adalat acomplaintinthecourtorbeforep
Legaloutsourcing officer.ifcomp...
The definition of retrenchment was not included in the Industrial Disputes Act, 1947 in its original form. It was
Jan30,20172:26:16PM
Medialaws insertedbyAmendmenttotheActin1953.ThustheIndustrialDisputesAct,1947providesforcertainconditionsin
whichtheterminationofemploymentwouldnotbeconsideredasretrenchment.Itisinterstingtonoteherethatthe Re:NeverhadanyPSrecord,Go
Medicolegal
provision(bb)toSection2(oo)wasinsertedlaterthroughtheAmendmentAct49of1984.Section2(oo)(bb)provides trappedinFamilym...
Miscellaneous thatterminationofemploymentonnonrenewalofemploymentagreementuponitsexpiryshalllnotbeconsidered DearSir,IFyoudon'twanttobewi

Realestatelaws
asretrenchment.BeforethisprovisionwasaddedtotheAct,theCourtswereoftheopinionthatnonrenewalof
suchcontractsofemploymentwouldconstituteretrenchmentforthepurposeofthisAct.Thisopinionwasexpressed
RightToInformation bytheSupremeCourtinHindustanAluminumCorporationv.StateofOrissa.Itwaslaterrealizedthatthejudgment
TaxLaws wasabadjudgmentandtheprovision(bb)wassubsequentlyaddedtothesection.
TortsLaw
Somelandmarkcaselaws
WomanIssues The Supreme Court in Byram Pestonji Gariwala v. Union Bank of India and othershad restricted the defintion of
WorkplaceEquality& RetrenchmentunderS.2(oo)(bb)tooccuronlywhenthereisadischargeofexcesslaborbytheemployer.Later
NonDiscrimination the Supreme Court in State Bank of India v. N. Sundara Money, Punjab Land Development and Reclamation
CorporationLtd.,Chandigarhv.PresidingOfficer,LabourCourt,Chandigarhandsubsequentdecisionsrejectedthe
YetAnotherCategory
narrow interpretation adopted by the Court in the earlier decision and held that any retrenchment, as defined in
Section2(oo),meansterminationbytheemployeroftheserviceofaworkmanforanyreasonwhatsoeverotherwise
More Options thanasapunishmentinflictedbywayofdisciplinaryactionandthoseexpresslyexcludedbyClauses(a),(b)and(c)
ofthedefinition.Inviewofthesedecisions,itcannotbesaidthatretrenchmentmeansterminationbytheemployerof
Mostreadarticles
theserviceofaworkmanassurpluslabor.
Mostratedarticles
The Supreme Court excluded closure from the scope of retrenchment in Hariprasad Shivshankar Shukla vs. A.D.
Divelkar.Further,intheStateBankofIndiavs.SundaraMoney,theSupremeCourtadoptedtheliteralmeaningof
Subscription
retrenchment, which is exhaustive and comprehensive and held that the expression "for any reason whatsoever"
Subscribenowandreceivefree was very wide and admitted almost no exceptions. So, retrenchment means termination of a worker's services for
articlesandupdatesinstantly.
anyreasonwhatsoever,otherthanthosespecifiedinSection2(oo).

Name
TheBombayHighCourt,inStateBankofIndiav.Sundaramonyheldthatwhereinthecourtheldthatananalysisof
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thedefinitionrevealsfouressentialingredients,namely

Remove Subscribe 1)Theremustbeaterminationoftheserviceofaworkman.

2)Theterminationmustbebytheemployer,
3)Foranyreasonwhatsoever,and
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4)Otherwisethanasbywayofpunishmentinflictedbywayofdisciplinaryaction.
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1/31/2017 RetrenchmentunderIndustrialDisputeAct,1947
Procedureforcalculationofretrenchmentcompensation

ToCopyrightYourBooks, While effecting retrenchment of the workmen, it is obligatory on the part of the employer to pay retrenchment
Videos,Songs,Scriptsetc compensationattherateof15dayswages(foreverycompletedyaer)tobecalculatedatthelastdrawnsalaryofan
Callusat:9891244487/oremail employee.Thecalculationofcompenstationistobebasedfromthedateofappointmentandincaseanemployee
at:admin@legalserviceindia.com
has completed 240 days, he will be entitled to 15 days retrenchment compensation besides one months noice or
TopLawColleges
salaryinlieuthereofasifhehasworkedforoneyear.240daysincludesSundaysoroffdaysaswellasfestivalor
LawUpdates: nationalholidays.
#IncomeTax
#Familylaw Incaseanemployeehasworkedformorethanoneyear,theprocedureisthatincasethesubsequentperiodofone
#CompanyLaw year is less than six months then it will be counted as one year for calculation of compenstation. While making
#ConstitutionalLaw
#Partnershipfirms
calculationstheperiodofnoticeisalsotobetakenintoconsideration.
#ImmigrationLaw
#CyberLaw Provisionsrelatedtoretrenchment
#LokAdalat,legalAid&PIL
#Forms
Now that the law is settled on what retrenchment is, let us proceed to the provisions contained in the Industrial
#Trademarks DisputesAct,1947,regardingtheproceduretobefollowedincasesofretrenchment.
#Womanissues
#MedicoLegal
Conditionprecedenttoretrenchment
#Consumerlaws
#Criminallaws Section25Fprovidestheconditionsprecedenttoretrenchment.Accordingtothissectiontheemployermustsatisfy
#SupremeCourtJudgments thefollowingconditionsbeforeretrenchinganemployeeemployedforaperiodofcontinuousperiodofnotlessthan
oneyear

(a)theworkmanhasbeengivenonemonthsnoticeinwritingindicatingthereasonsforretrenchmentandtheperiod
ofnoticehasexpired,ortheworkmanhasbeenpaidinlieuofsuchnotice,wagesfortheperiodofthenotice:

(b)theworkmanhasbeenpaid,atthetimeofretrenchment,compensationwhichshallbeequivalenttofifteendays
averagepay[foreverycompletedyearofcontinuousservice]oranypartthereofinexcessofsixmonthsand

(c)noticeintheprescribedmannerisservedontheappropriateGovernment[orsuchauthorityasmaybespecified
bytheappropriateGovernmentbynotificationintheOfficialGazette].

Calculationofaveragepayisdonebydividingthelastdrawnmonthlysalaryby25andthenmultiplyingthedividend
by15foreverycompletedyearofcontinuouswork.

Section25Nalsolaysdowntheconditionsprecedenttoretrenchment

1)NoworkmanemployedinanyindustrialestablishmenttowhichthisChapterapplies,whohasbeenincontinuous
servicefornotlessthanoneyearunderanemployershallberetrenchedbythatemployeruntil,

(a) the workman has been given three months notice in writing indicating the reasons for retrenchment and the
periodofnoticehasexpired,ortheworkmanhasbeenpaidinlieuofsuchnotice,wagesfortheperiodofthenotice
and

(b)thepriorpermissionoftheappropriateGovernmentorsuchauthorityasmaybespecifiedbythatGovernmentby
notificationintheOfficialGazette(hereafterinthissectionreferredtoasthespecifiedauthority)hasbeenobtained
onanapplicationmadeinthisbehalf.

(2) An application for permission under subsection (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
simultaneouslyontheworkmenconcernedintheprescribedmanner.

(3)Whereanapplicationforpermissionundersubsection(1)hasbeenmade,theappropriateGovernmentorthe
specifiedauthority,aftermakingsuchinquiryasitthinksfitandaftergivingareasonableopportunityofbeingheard
totheemployer,theworkmenconcernedandthepersonsinterestedinsuchretrenchment,may,havingregardtothe
genuineness and adequacy of the reasons stated by the employer, the interests of the workmen and all other
relevantfactors,byorderandforreasonstoberecordedinwriting,grantorrefusetograntsuchpermissionanda
copyofsuchordershallbecommunicatedtotheemployerandtheworkmen.

(4)Whereanapplicationforpermissionhasbeenmadeundersubsection(1)andtheappropriateGovernmentor
the specified authority does not communicate the order granting or refusing to grant permission to the employer
withinaperiodof sixty days from the date on which such application is made, the permission applied for shall be
deemedtohavebeengrantedontheexpirationofthesaidperiodofsixtydays.

Procedureofretrenchment
Section25Glaysdowntheprocedureofretrenchment.Whereanyworkmaninanindustrialestablishment,whoisa
citizenofIndia,istoberetrenchedandhebelongstoaparticularcategoryofworkmeninthatestablishment,inthe
absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily
retrenchtheworkmanwhowasthelastpersontobeemployedinthatcategory,unlessforreasonstoberecorded
the employer retrenches any other workman. The employer is also required to maintain a seniority list of the
workmen.Thesystemoflastinfirstoutistobefollowedinretrenchingworkmen.

Conclusion
GlobalizationinduceslabourmarketflexibilitywhichIndiaisyettoattainduetoitsunyieldinglabourlawsystem.It
has started making attempts to achieve full employment of all resources and optimal social welfare but several
issuesareleftunanswered,includingretrenchment.

Ordinarily,retrenchmentisdischargeofsurpluslabourbytheemployer.AccordingtoSection2(oo)oftheIndustrial
Disputes Act, 1947 (IDA), retrenchment is the termination of service of a worker "for any reason whatsoever",but
excludesterminationbywayofpunishmentinflictedpursuanttodisciplinaryaction,voluntaryretirement,retirement
onreachingtheageofsuperannuationifthecontractofemploymentcontainedsuchstipulation,nonrenewalofthe
contractofemployment,andcontinuedillhealth.

Retrenchment may be due to inevitable reasons including rationalization or installation of new laboursaving
machinery. An employer has a right to organize his business in any lawful manner he considers best and courts
cannotquestionitspropriety.Ifreorganizationresultsinsurplusemployees,noemployerisexpectedtocarrytheir
burden. There is consensus of judicial opinion in deciding retrenchment on the facts and circumstances of each
case.

Courts have decided that termination of services due to loss of confidence in an employee, inefficiency or
misconduct does not amount to retrenchment. Termination for unauthorized absence from duty, discontinuance of
service of casual, daily employees, invalid initial appointment, compulsory retirement, and closure or transfer of
businesshavebeenheldtoberetrenchment.

Indianemployershaverespondedtotherestrictiveretrenchmentlawsinseveralwaysincludingthegreateruseof
contract,temporaryand/orcasuallabour,theuseofgoldenhandshakes,andsettingupproductioninstateswhere
labourisnotorganized.Thegovernmentispursuingprivatizationanddisinvestment.Anyanomalyinretrenchment
laws,whichaddressthebasicfunctioningofcompanies,needstheimmediateattentionoflawmakers.
***********************************
Bibliography

http://www.legalservicesindia.com/article/article/retrenchmentunderindustrialdisputeact19477731.html 2/3
1/31/2017 RetrenchmentunderIndustrialDisputeAct,1947
KumarH.L.LabourLaws.(Delhi:UniversalLawPublishingCo.)2006.
KumarH.L.DimissalDischargeandRetrenchment.(Delhi:UniversalLawPublishingCo.)2000.
Websitereferred
Available at http://www.citehr.com/16363legalprovisionsunderindustrialdisputesact.html#axzz1CPDWtKY2,
visitedon30thJanuary2011.
Availableathttp://jurisonline.in/2009/05/retrenchmentthelegalaspect/,visitedon30thJanuary2011.
#H.L.Kumar,Dismissal,DischargeandRetrenchment(Delhi:UniversalLawPublishingCo.Pvt.Ltd.)2000p.221
#AIR1991SC2234
#AIR1976SC1111
#1991(61)FLR73
#H.L.Kumar,Dismissal,DischargeandRetrenchment(Delhi:UniversalLawPublishingCo.Pvt.Ltd.)2000p.223.
#AIR1957SC121
#AIR1976SC1111
#1976(1)LLJ478(SC)
#H.L.Kumar,labourLaw(Delhi:UniversalLawPublishingCo.)2006p.120.
#H.L.Kumar,Dismissal,DischargeandRetrenchment(Delhi:UniversalLawPublishingCo.Pvt.Ltd.)2000p.257.
#Availableat,http://jurisonline.in/2009/05/retrenchmentthelegalaspect/,visitedon30thJanuary2011.
#H.L.Kumar,labourLaw(Delhi:UniversalLawPublishingCo.)2006p.125.

Theauthorcanbereachedat:shraddhaojha@legalserviceindia.com

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