My company is planning to retrench 50 workers due to financial losses. What compensation and procedure must they follow?

Detailed Legal Analysis

Under Chapter VB of the Industrial Disputes Act 1947, if your establishment employs 100 or more workmen, the employer must give three months' notice or pay in lieu of notice and seek prior permission from the appropriate government before retrenchment. For establishments with fewer than 100 workmen, Section 25F requires one month's notice or pay in lieu and retrenchment compensation of 15 days' wages for every completed year of continuous service.

The employer must also pay all dues including wages, gratuity under the Payment of Gratuity Act 1972, and PF contributions before retrenchment. Under Section 25G, the employer must follow the principle of last come first go, meaning the most recently employed workmen in the category are retrenched first.

The retrenched workmen must be given preference in reemployment under Section 25H for one year from the date of retrenchment. If the employer fails to follow the procedure, the retrenchment is void and the workman can challenge it before the Labour Court under Section 10 of the Industrial Disputes Act.