Amendment status not verified — confirm the current text below against the official source.
Conditions precedent to retrenchment of workmen.—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 The Industrial Disputes Act, 1947 workman has been paid in lieu of such notice, wages for the period of the notice; 1[***] (b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days’ average pay 2 [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 appropriate Government 3[or such authority as may be specified by the appropriate Government by notification in the Official Gazette]. Case Law Application Section 25F has no application to a closed or dead industry; Hariprasad v. A.D, Divdker, AIR 1957 SC 129. Burden of proof The requirement of the statute of 240 days cannot be disputed and it is for the workman concerned to prove that he has in fact completed 240 days in the preceding twelve months period; Essen Deinki v. Rajio Kumar, 2003 LLR 113. Held not to be retrenchment When the appointment is against rules, no valid master and servant relationship exists and hence termination of concerned person’s service was held, not retrenchment; Government Servants’ Co-operative Society Ltd., Wadakkamcheny v. Industrial Tribunal, Alappuzha, (2003) I LLJ Ker 236. The termination order cannot be said to be an order of retrenchment warranting compliance of section 25F of the Act as the workman was not being retrenched as a surplus workman but she was being terminated on the ground of her unsatisfactory work; Mana Thomas Gonsalvies v. Concept Pharmaceuticals (P) Ltd., (2002) IV LLJ (Supp) Bom 906. Termination does not amount to retrenchment and therefore provision of section 25F is not attracted; Life Insurance Corporation of India v. Rajeev Kumar Srivastava, 1994 LLR 573 (AH) (DB) Illegal retrenchment 1 Proviso omitted by Act 49 of 1984, Section 32 (w.e.f. 18.8.1984). 2 Subs. by Act 36 of 1964, Section 14, for “for every completed year of service” (w.e.f. 19.12.1964). 3 Ins. by Act 36 of 1964, Section 14 (w.e.f. 19.12.1964). The Industrial Disputes Act, 1947 If the termination of an employee is based on no inquiry, no charge and not by way of punishment, then it becomes a case of illegal retrenchment. In such case, the Workman will be entitled to reinstatement with full back wages; Sachiv, Krishi Upaj Mandi I Sanawad v. Mahendra Kumar S/o Mangita! Tanwarao, 2004 LLR 405, Notice Pasting of notice of retrenchment on the notice board was held not substitute for individual notice. Hence, pay in lieu of notice was necessary; Alumina Mazdoor Sangh Ratna Construction Co., (2003) I LLJ Ori 793. Termination of services of person before expiry of probationary period without issuance of prior notice according to terms of employment which provides that the employment is provisional and could be put to an end at any time without assigning any reason whatsoever and service will be regularised only after successful completion of probation period, is not illegal and will not amount to retrenchment and hence question of issue of notice required under section 25F does not arise; Kalyani Sharp India Ltd. v. labour Court No. 1, Gwalior, AIR 2002 SC 300. Period of cessation It is well established that the period of cessation of work not due to any fault on the| part of the employee, always gets calculated as a period of continuous service; kukadi Irrigation Project v. Woman, 1994 LLR 381 (Bom). Precedent conditions The conditions enumerated in section 25F are conditions precedent; State of Rajasthan K v. Miss Usha Lokiuani, 1994 LLR 369 (Raj). Provisions are mandatory The provisions of section 25-F are couched in mandatory form, and non-compliance therewith has the result of rendering the order of retrenchment void abinitia or non-est State of Rajasthan v. Miss Usha Lokwani, 1994 LLR 369 (Raj). Purpose The standardisation of retrenchment compensation and doing away with a perplexing variety of factors for granting retrenchment compensation may well have been the purposes of section 25F though the basic consideration must have granting of unemployment relief; Haripnisad v. A.D. Divelker, AIR 1957 SC 129. 1[25FF. Compensation to workmen in case of transfer of undertakings - Where the ownership of management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who has been in continuous service for not less than one year in that undertaking immediately 1 Section 25-FF ins. by Act 41 of 1956, Section 3 (w.e.f. 4.9.1956) and Subs. by Act 18 of 1957 Section 3 (w.e.f. 28.11.1956). The Industrial Disputes Act, 1947 before such transfer shall be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched: Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if— (a) the service of the workman has not been interrupted by such transfer; (b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and (c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.] 1[25FFA. Sixty days’ notice to be given of intention to close down any undertaking.— (1) An employer who intends to close down an undertaking shall serve, at least sixty days before the date on which the intended closure is to become effective, a notice, in the prescribed manner, on the appropriate Government stating clearly the reasons for the intended closure of the undertaking: Provided that nothing in this section shall apply to— (a) an undertaking in which— (i) less than fifty workmen are employed, or (ii) less than fifty workmen were employed on an average per working day in the preceding twelve months, (b) an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work or project. (2) Notwithstanding anything contained in sub-section (1), the appropriate Government, may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that provisions of sub- section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.] 1 Ins. by Act 32 of 1972, Section 2 (w.e.f. 14.6.1972). The Industrial Disputes Act, 1947 1 [25FFF. Compensation to workmen in case of closing down of undertakings.— (1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in cordance with the provisions of section 25F, as if the workman had been retrenched: Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under clause (b) of section 25F, shall not exceed his average pay for three months. 2[ Explanation.—An undertaking which is closed down by reason merely of— (i) financial difficulties (including financial losses); or (ii) accumulation of undisposed stocks; or (iii) the expiry of the period of the lease or licence granted to it; or (iv) in case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on, shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section.] 3 [(1A) Notwithstanding anything contained in sub-section (1), where an undertaking engaged in mining operations is closed down by reason merely of exhaustion of the minerals in the area in which such operations are carried on, no workman referred to in that sub-section shall be entitled to any notice or compensation in accordance with the provisions of section 25F, if— (a) the employer provides the workman with alternative employment with effect from the date of closure at the same remuneration as he was entitled to receive, and on the same terms and conditions of service as were applicable to him, immediately before the closure; 1 Ins. by Act 18 of 1956, Section 3 (w.e.f. 28.11.1956). 2 Subs. by Act 45 of 1971, Section 4, for Explanation (w.e.f. 15.12.1971). 3 Ins. by Act 45 of 1971, Section 4 (w.e.f. 15.12.1971). The Industrial Disputes Act, 1947 (b) the service of the workman has not been interrupted by such alternative employment; and (c) the employer is, under the terms of such alternative employment or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by such alternative employment. (1-B)For the purposes of sub-sections (1) and (1A), the expressions “minerals” and “mining operations” shall have the meanings respectively assigned to them in clauses (a) and (b) of section 3 of the Mines and Minerals (Regulation and Development) Act, 1957 (67 of 1957).] (2) Where any undertaking set-up for the construction of buildings, bridges, roads, canals, dams or other construction work is closed down on account of the completion of the work within two years from the date on which the undertaking had been set-up, no workman employed therein shall be entitled to any compensation under clause (b) of section 25F, but if the construction work is not so completed within two years, he shall be entitled to notice and compensation under that section for every 1[completed year of continuous service] or any part thereof in excess of six months.] Case Law Bonafide motive The Industrial Tribunal has no power to enquire into the motive of closure in order lo find out whether the closure is justified or not when indiscipline is established. It can only consider the question of bona fides and nothing more; Savani Transport (Pvt.) Ltd. v. Savani Transport Employees’ Association, 1994 LLR 578 (Ker). Liability of employer Payment of compensation and payment of wages for the notice period have not been made conditions precedent to retrenchment on closure under section 25FFF. However, the liability of the employer to make payments remains, which may be enforced; Pramod Kumar Tiwari v. Hindustan Fertilizer Corporation Ltd., 1994 LLR 465 (MP) (DB). Meaning of Undertaking Section 25FFF deals with closing down of undertakings. The term “undertaking” is not defined in the Act. The relevant provisions use the term “industry”. Undertaking is a 1 Subs. by Act 36 of 1964, Section 15, for “completed year of service” (w.e.f. 19.12.1964). The Industrial Disputes Act, 1947 concept narrower than industry. An undertaking may be a part of the whole, that is, the industry. It carries a restricted meaning; S.M. Nilajkar v. Telecom District Manager, (2003) 4 SCC 27. The expression “undertaking” is not intended to cover the entire industry or business of the employer. It should be a recognised sub-section or unit eligible for being styled as an undertaking. In other words, “undertaking” is a separate and distinct business or commercial or trading or industrial activity; Pramod Kumar Tiwari v. Hindustan Fertilizer Corporation Ltd., 1994 LLR 465 (MP) (DB). Misconduct Indiscipline is not always a misconduct; Savani Transport (Pvt.) Ltd. v. Savani Transport Employees’ Association, 1994 LLR 578 (Ker). Partial closure Partial closure of an establishment or undertaking is allowed; Suvuni Transport (Pvt.) Ltd. v. Savtmi Transport Employees’ Association, 1994 LLR 578 (Ker). Reasonable restrictions Closure by itself involves no dispute; it is the volition of the employer. Even then, the employer cannot claim it as his absolute right. The State can impose reasonable restrictions in the interest of general public; Savant Transport (Pvt.) Ltd. v. Savani Transport Employees’ Association, 1994 LLR 578 (Ker). 25G.Procedure for 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.