Retrenchment
/rɪˈtrɛntʃmənt/
Labour Law Term
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Definition
The termination of employment of a workman by the employer for any reason other than as a disciplinary measure. Defined under Section 2(oo) of the Industrial Disputes Act, 1947. Requires: one month's notice (or wages in lieu), retrenchment compensation at 15 days' wages per year of service, and government intimation. The 'last come, first go' (LIFO) principle must be followed unless there is a valid reason to deviate.
Examples
Case Study
In State Bank of India v. N. Sundara Money (1976), the Supreme Court held that every retrenchment must comply with Section 25F of the Industrial Disputes Act — failure renders the retrenchment void ab initio, entitling the workman to reinstatement with back wages.
Key Cases
State Bank of India v. N. Sundara Money
1976AIR 1976 SC 1111
Retrenchment without compliance with Section 25F (notice, compensation, government intimation) is illegal and void. Workman entitled to reinstatement with full back wages.
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