• What is Retrenchment?

As per Section 2(oo) of the Industrial Disputes Act, 1947, Retrenchment has been defined as the termination of the services of a workman for any reason whatsoever, other than as a punishment inflicted by way of disciplinary action. However, retrenchment does not include –

(a) Voluntary retirement of the workman; or

(b) Retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that regard; or

(bb)Termination of the workman because of the non-renewal of the contract of employment on its expiry or of the contract being terminated under a stipulation in that regard contained in the contract; or

(c) Termination of the service of a workman on the ground of continued ill health

  • What is the Procedure of Retrenchment?
    Section 25G of the Industrial Disputes Act, 1947 lays down the procedure of 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. The employer is also required to maintain a seniority list of the workmen. The system of last in first out is to be followed in retrenching workmen.


  • Penalty for lay-off and retrenchment without previous permission –

Any employer who contravenes the provisions pertaining to conditions precedent to retrenchment of workmen shall be punishable with imprisonment for a term which may extend to 1 month, or with fine which may extend to Rs 1000, or with both.