Retrenchment

 Section 2(oo) lays down the provision in The Industrial Disputes Act, 1947, for Retrenchment-

Section 2(oo) provides: 'Retrenchment' means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by the way of disciplinary action, but does not include-

(a) voluntary retirement of the workman; or

(b) retirement of the workman on reaching the age of super- annuation if the contract of employment between the employer and the workman concerned contains a stipula- tion in that behalf; or

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(bb) termination of the service of the workman as a result of the non-removal of the contract of employment between sh the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or

(c) termination of the service of a workman on the ground of continued ill-health.

Causes of Retrenchment:

Like lay-off the causes of Retrenchment are similar; just as when an industry has been running continuously at loss, on account of some natural calamity, breakage of machine, shortage of raw-material, shortage of coal or electric supply etc. Condition beyond the control of the employer such as natural calamity, God's act or enemy activity for instance. Mahacharyaji Rubber Works Private Ltd. Vs. Mahacharyaji Rubber Works Union, 1960 L.L.J. 198 (Cal.). In addition to these the following causes can be appropriate for retrenchment-

(1) Excess of Workers-If at some place more than necessary workers have been employed then according to necessity pro- portionally workers can be reduced. Under such circumstances for the employer it is possibily convenient and he retrenches workers which are unnecessary in excess.

(2) End of a department-If a department of an establish- ment is finished for ever then the workers employed in that department can be retrenched.

(3) Installation of new machinery-When in order to P increase production new machinery is installed then sometimes workmen become idle or unemployed and in consequence the unwanted workers can be retrenched.

(4) When the establishment continuously suffers a loss-If for many years the employer continues to suffer a loss then the industry has to be closed and methods have to be devised to t reduce its expenses and among these retrenchment is the primary method resorted to.

(5) Shortage of raw material-When in an industry there is a continuous shortage of raw material and the production of the industry is adversely effected. On that account it becomes essential tial to restrict the industry to some extent and it is possible that some employed workers may have to be retrenched.

Procedure of retrenchment and conditions precedent :

Section 25(F) of The Industrial Disputes Act, 1947 provides : No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until-

(a) the workman has been given one month's 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; or

(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days average (for every completed year of continuous service) or any part thereof in excess of six months; and

(c) notice in the prescribed manner is served on the appro- priate Government (or such authority as may be specified by the appropriate Government by notification in the official Gazette).

Section 25G of The Industrial Disputes Act, 1947 lays down: 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 the 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 a employed in that category unless for reasons to be recorded the employer retrenches any other workman.