LAY-OFF AND

RETRENCHMENT
LECTURE 7
RELEVANT PROVISIONS OF LAY-OFF

 S. 2 (kkk)
 Chapter VA (25 C to 25 E)

Amendment in 1953
 Provision for compensation for lay-off or retrenchment, setting a common standard for all
employers was added
 Chapter VA
 This chapter contains ss. 25 A to 25J
DEFINITION-SEC 2(KKK)
 " Lay- off" (with its grammatical variations and cognate expressions) means the failure, refusal
or inability of an employer on account of shortage of coal, power or raw materials or the
accumulation of stocks or the breakdown of machinery or natural calamity or for any
other connected reason to give employment to a workman whose name is borne on the muster
rolls of his industrial establishment and who has not been retrenched.
 Explanation.-- Every workman whose name is borne on the muster rolls of the industrial
establishment and who presents himself for work at the establishment at the time appointed for
the purpose during normal working hours on any day and is not given employment by the
employer within two hours of his so presenting himself shall be deemed to have been laid- off
for that day within the meaning of this clause:
 Provided that if the workman, instead of being given employment at the commencement of any
shift for any day is asked to present himself for the purpose during the second half of the shift
for the day and is given employment then, he shall be deemed to have been laid- off only for
one- half of that day:
 Provided further that if he is not given any such employment even after so presenting himself,
he shall not be deemed to have been laid- off for the second half of the shift for the day and shall
be entitled to full basic wages and dearness allowance for that part of the day;]
 IRC 2020 PROVISION
• (t) "lay-off" (with its grammatical variations and cognate expressions) means the failure, refusal or
inability of an employer on account of shortage of coal, power or raw materials or the accumulation of
stocks or the break-down of machinery or natural calamity or for any other connected reason, to give
employment to a worker whose name is borne on the muster rolls of his industrial establishment and who
has not been retrenched. 

• explanation.—Every worker whose name is borne on the muster rolls of the industrial establishment and
who presents himself for work at the establishment at the time appointed for the purpose during
normal working hours on any day and is not given employment by the employer within two hours of his
so presenting himself shall be deemed to have been laid-off for that day within the meaning of this
clause: 

• Provided that if the worker, instead of being given employment at the commencement of any shift for any
day is asked to present himself for the purpose during the second half of the shift for the day and is given
employment then, he shall be deemed to have been laid-off only for one-half of that day: 
• Provided further that if he is not given any such employment even after so presenting himself, he shall not
be deemed to have been laid-off for the second half of the shift for the day and shall be entitled to full
basic wages and dearness allowance for that part of the day; 
EXPLANATION

 Explanation introduces a fiction in the definition

A worker who presents themself for work at the establishment is not given 
employment by the employer within two hours of his presenting himself, shall be 
deemed to have been ‘laid-off’ for the day.
 Explanation along with the two provisos, contains three deeming provisions

1. If a worker who has presented themself for work, is not given employment within two 
hours of his presenting , laid off for the entire day
2. Worker, instead of being given employment at the commencement of the shift, is  asked to
present himself for work during the second half- laid off only for the first half  of the day.
3. If the worker is not given work even after presenting themself at the commencement  of the
second half of the shift, he shall not be deemed to have been laid off- Entitled  to full basic
wages and dearness and allowances for that second half
WHO CAN BE LAID OFF

 Name is borne on the muster rolls of his industrial establishment

 Workmen who has not been retrenched
 Section 25 D- Duty to maintain the muster rolls of the workmen
 If there is no name on the muster rolls- the question of his lay off would not
arise.
EMPLOYER’S RIGHT TO LAY-OFF

 Whether s. 25 C recognize a common law right of an industrial employer to layoff his

workmen?

Workmen of Dewan Tea Estate v. Management, 1964

“If any case is not covered by the Standing Orders, it will necessarily be covered
by the provisions of the Act, and ‘lay-off’ would be permissible only where one or the
other of the factors mentioned in section 2 (kkk) is present and for such ‘lay-off’
compensation will be awarded under section 25 C”
Workmen of Firestone Tyre and Rubber Co. v The Firestone Tyre and Rubber Co. (1976) I LLJ 493
(SC
• Company manufactured tyres at its Bombay factory. Due to strike in the office, there was a shortage
in supply of tyres due to which 17 out of 30 workmen were laid off by the management. Lay-off
was called off after two months but no wages or compensation was given during lay-off period.
• Industrial tribunal held that lay-off was justified and workmen were not entitled to any lay-off
compensation.
• Issues 1- Whether the management had the right to lay-off?
Issue 2- Whether workmen are entitled to claim wages or compensation?
JUDGEMENT:
 IDA(AMENDMENT), 1984-SPECIAL PROVISIONS FOR LAY-
OFF--CHAPTER V B

Section 25M:
1) No workman (other than a badli workman or a casual workman) whose name is borne
on the muster rolls of an industrial establishment to which this Chapter applies shall be
laid-off by his employer except [with the prior permission of the appropriate Government
or such authority as may be specified by that Government by notification in the Official
Gazette or obtained on an application made in this behalf, unless such lay-off is due to
shortage of power or to natural calamity, and in the case of a mine, such lay-off is due
also to fire, flood, excess of inflammable gas or explosion.

2) An application for permission under sub-section (1) shall be made by the employer in

the prescribed manner stating clearly the reasons for the intended lay-off and a copy of
such application shall also be served simultaneously on the workmen concerned in the
prescribed manner.
(3) Where the workman of an industrial establishment, being a mine, have been laid-off under sub-
section (1) for reasons of fire, flood or excess of inflammable gas or explosion, the employer, in relation to such
establishment, shall, within a period of thirty days from the date of commencement of such lay-off, apply, in the
prescribed manner, to the appropriate Government or the specified authority for permission to continue the lay-
off.

(4) Where an application for permission under sub-section (1) or sub-section (3) has been made, the appropriate
Government or the specified authority, after making such enquiry as it thinks fit and after giving a reasonable
opportunity of being heard to the employer, the workmen concerned and the persons interested in such lay-off,
may, having regard to the genuineness and adequacy of the reasons for such lay-off, the interests of the
workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to
grant such permission and a copy of such order shall be communicated to the employer and the workmen.

(5) Where an application for permission under sub-section (1) or sub-section (3) has been made and the
appropriate Government or the specified authority does not communicate the order granting or refusing to grant
permission to the employer within a period of sixty days from the date on which such application is made, the
permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
(6) An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the
provisions of sub-section (7), be final and binding on all the parties concerned and shall remain in force for one year from the date
of such order.

(7) The appropriate Government or the specified authority may, either on its own motion or on the application made by the
employer or any workman, review its order granting or refusing to grant permission under sub-section (4) or refer the matter or, as
the case may be, cause it to be referred, to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty
days from the date of such reference.

(8) Where no application for permission under sub-section (1) is made, or where no application for permission under sub-
section (3) is made within the period specified therein, or where the permission for any lay-off has been refused, such lay-off shall
be deemed to be illegal from the date on which the workmen had been laid-off and the workmen shall be entitled to all the benefits
under any law for the time being in force as if they had not been laid-off.

(9) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is
satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is
necessary so to do, by order, direct that the provisions of sub-section (1), or, as the case may be, sub-section (3) shall not apply in
relation to such establishment for such period as may be specified in the order.]

(10) The provisions of section 25C (other than the second proviso thereto) shall apply to cases of lay-off referred to in this section.
SECTION 25A:

Three types of industrial establishments have been exempted from this provisions of sections. 25C
to 25E
1. Those to which Chapter V-B applies
2. Those in which less than 50 workmen on an average per working day have been employed
in the preceding calendar month;
3. Those which are of seasonal character or in which work is performed intermittently
4. If a question arises whether an industrial establishment is of a seasonal character or whether work
is performed therein only intermittently, the decision of the appropriate Government thereon shall
be final.
SECTION 25B: CONTINIOUS SERVICE
 The words ‘continuous service’ occur in ss. 25B, 25C, 25F, 25FF, 25FFF in CHAPTER VA
 It gives certain rights and advantages to the workmen who have been in continuous service for a
specified period of time
 The section lays down that the service shall be deemed to be continuous in spite of its
interruption on account of any of the reasons stated therein and should remain uninterrupted
 Workman should have been in ‘continuous service’ under an employer
 The employer must be one and the same
 It is not necessary that the workman should work in the same capacity during the required period
 If a person is a workman as defined in the Act and the employer is the same,
he earns ‘continuous service’ by working for 240 days within a period of 12
calendar months preceding the date of retrenchment.
 Subsection (1) defines ‘continuous service’ for ‘a period’ as uninterrupted
service for that period and by fiction includes also the service interrupted for
the enumerated reasons
 Subsection (2) introduces further fiction in calculating the continuous service
for ‘one year’ or ‘six months’.
SUBSECTION (1) OF SECTION 25B:
It comprises of two periods:
1.Uninterrupted Service
2.Interrupted Service
 SICKNESS
 AUTHORISED LEAVE
 AN ACCIDENT
 A STRIKE WHICH IS NOT ILLEGAL
 A LOCKOUT
 ACCESSATION OF WORK THAT IS NOT DUE TO ANY DEFAULT
ON THE PART OF THE WORKMAN SHALL BE INCLUDED IN THE
‘CONTINUOUS SERVICE’
 Even if a workman’s service during the period is interrupted by any of the
reasons set out in the second part of this section, he shall be still in continuous
service for that period
 However, if the service of a workman is interrupted for any reasons other than
the enumerated reasons, it will ipso facto disrupt the contract of service or
sever the vinculam juris of the relationship of employment
 OTHER PURPOSES: Taking part in illegal strike
SUBSECTION (2)-CONTINIOUS
SERVICE FOR A PERIOD OF ONE YEAR
 Deeming provisions
 Even if a person has not been in ‘continuous service within the meaning of
sub clause 1 for a period of one year, he shall be deemed to be in ‘continuous
service’ under an employer for that period if he has ‘actually worked’ under
that employer for 190 days in case he is employed underground in a mine’
or 240 days in any other case
EXPRESSION “ACTUALLY WORKED”

The explanation specifically includes the days on which the workman has been
laid off under an agreement, or he has been on leave with full wages or he has
been absent due to temporary disablement caused
RIGHT OF THE WORKMEN LAID OFF
FOR COMPENSATION- SEC 25 C
Section 25 C recognizes the right of the workmen for compensation in the case of lay off
 Four conditions:

1. His name should be in the muster rolls

2. He has completed one year of ‘continuous service’
3. He should not be a badli workman or a casual workman
4. He should not be employed in an industrial establishment to which Ch VB applies.

The right of the workmen for compensation is recognized to relieve the hardship caused by
unemployment due to no fault of the employee.

Secondly, involuntary unemployment also causes dislocation of trade and may result in general
economic insecurity.

Right is based on humane public policy grounds

COMPENSATION

 As per S. 25C, the workmen is entitled to 50 percent of the total of the basic
wages and dearness allowance which would have been paid to him had he not
been so laid off.
 If a workman is so laid off for more than 45 days, no compensation will be
payable in respect of any period of lay-off after the expiry of the first 45 days if
there is an agreement to that effect between the workman and the employer
 An employer shall have the right in such case to retrench the workmen as per
section 25 F of the Act, at any time after the expiry of 45days of the lay off, and
when he does so, any compensation paid to the workman for having been laid
off during the preceding twelve months, may be set off against the compensation
payable for retrenchment
ADJUDICATION

 Unless mala fides are alleged and proved, it is not open to the tribunal to
inquire/investigate into the appropriateness of Management’s reasons which
led to the lay-off.
 The ulterior purpose which led to a lay-off will be determined from the facts
of the case. Such findings of fact are not amenable to judicial review.
 If lay-off is mala fide, then it would not be a lay-off in the eyes of law. Also the
relief provided to laid off workmen under S. 25 C would not be the only
relief to which they would be entitled.
SECTION 25 D-DUTY OF THE EMPLOYER
TO MAINTAIN MUSTER ROLLS
SECTION 25 E- WORKMEN NOT ENTITLED
TO COMPENSATION IN CERTAIN CASES
 Workmen not entitled to compensation in certain cases.- No compensation
shall be paid to a workman who has been laid- off--
1. If he refuses to accept any alternative employment in the same
establishment from which he has been laid- off, or in any other establishment
belonging to the same employer situate in the same town or village or situate
within a radius of five miles from the establishment to which he belongs, if, in
the opinion of the employer, such alternative employment does not call for any
special skill or previous experience and can be done by the workman,
provided that the wages which would normally have been paid to the
workman are offered for the alternative employment also;
2. ANOTHER PART OF THE ESTABLISHMENT:

 Intention of the Legislature: To release the employer from the obligation to pay
compensation where the lay-off is occasioned by a strike or slowing down of
production in another part of that establishment
 Case law: Associated Cement Companies v. Workmen (1960)
 What does the word ‘part’ means?
 The word ‘part’ means workers other than those who were on strike or have slowed
down the production.
 Strike can be because of all workmen or some workmen in the establishment. There is no
provision in the Act for laying off workmen who are themselves on strike or for payment of
lay-off compensation to such striking workmen.
ASSOCIATED CEMENT COMPANIES
CASE
TEST
•What test should be applied for determining what constitutes ‘one
establishment’?
1. Geographical Proximity
2. Unity of Ownership
3. Management and Control
4. Contract And Supervision By Same Employer
5. Unity of Employment and Conditions of Service
6. Functional Integrity
7. General Unity of Purpose
CONTD…

SK Das J
- “The real purpose of these tests is to find out the true relation between the parts, branches,
units, etc. if in their true relation they constitute one integrated whole, we say that the
establishment is one…..”
- “If the statute does not, say….what constitutes one establishment, then the usual tests have to
be applied to determine the true relation”
There is no strait-jacket formula. One need to take into consideration the overall pictures of
their activities and the interest, which they have in common.
3. ABSENCE FROM THE ESTABLSIHMENT
AT THE APPOINTED TIME
 The clause imposes a duty on the workman to present himself for work at the
establishment from which he has been laid off at the appointed time during
normal working hours at least once a day during the period of lay off, before
he can be entitled to lay-off compensation.
 It absolves the employer from his liability to pay lay-off compensation in
case the laid-off workman commits default in so presenting himself.
 The requirement is related to the question of compensation only
 NUTAN MILLS LTD. V. ESIC 1956

 “During the period of lay off the employee would be entitled to go and serve another master.

The only result of his doing so would be that he would be disentitled to receive compensation.
But it is entirely a matter of his option whether he should present himself at the office of his
employer and thus claim compensation or earn wages under a different employer and even
though he may serve a different employer he would still have the right to be reinstated when the
proper occasion arises.”
 In other words, during lay-of, the relationship of master and servant is temporarily suspended
and it would be revived as soon as the lay off is over
4. BADLI AND CASUAL WORKERS
5. IF LAYING OFF IS DUE TO A STRIKE OR GO-SLOW ON THE
PART OF THE WORKMEN
PAPANASAM LABOUR UNION VS MADURA
COATS 1995
• In Papanasam Labour Union vs Madura Coats Ltd, the question before the division bench of
the apex Court was regarding the constitutional validity of section 25-M. The Court while
upholding the constitutional validity of the said provision held that the object of the provision
is to avoid hardship to workmen and encourage industrial amity. Further, there is no need to
take prior permission in extreme cases as mentioned under sub-section (3). For the reason of
greater interest in avoiding unemployment and industrial peace such provision was held not to
be arbitrary and unconstitutional.
RETRENCHMENT

Provisions relating to Retrenchment:

 Sections 2 (oo), 25F, 25G, 25H, 25N and 25B

(Chapter VA and Chapter VB)

 Section 25 L has special reference and need to be referred to understand the

meaning of ‘industrial establishment’.
 RETRENCHMENT: SECTION 2(OO)
" Retrenchment means the termination by the employer of the service of a workman for any
reason whatsoever, otherwise than as a punishment inflicted by 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 superannuation if the contract of
employment between the employer and the workman concerned contains a stipulation in that
behalf; or
(bb) termination of the service of the workman as a result of the non- renewal of the contract of
employment between 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;]
 DEFINITION OF RETRENCHMENT

Evolution of Concept Parts of Definition

 No definition provided in the  Two Parts to definition

Trade Disputes Act, 1929  First Part-Exhaustive
 The definition was inserted by the  Second Part-Exclusive
Industrial Disputes (Amendment)  First Part-Lays down ‘retrenchment’ means the
Act, 1953 termination of the service of a workman by the
employer, ‘for
 Section 2 (oo) should be read any reason whatsoever’, otherwise than a
along with Chapters VA and punishment inflicted by way of a disciplinary
VB action
 Second Part- Four Exclusions
 LIVE INDUSTRY
 Retrenchment only applicable to ‘live industry’
 Employed in an Industry
 Industry means ‘live industry’ and not a closed one

 “The entire scheme of the Act assumes that there is in existence, an industry and then
proceeds to provide for various steps to be taken when a dispute arises in the industry”
 Thus the provisions of Act relating to ‘Lock out’, strike, lay off, and retrenchment is applicable
to an industry which is running and not the one which is closed.
 The underlying assumption is that in case of transfer of an undertaking or a closure of
undertaking, there can be no question of retrenchment.
“ANY REASON WHATSOEVER”
 Legislature does not provide any ground for retrenchment
 The definition provides grounds which are excluded from the ambit of the definition

 Again the term “any reason whatsoever” is broader and can include any reason.
 Barsi Light Railway Co. Ltd v. K.N Joglekar, 1957- Discharge of surplus labour or staff by the
employer for any reason whatsoever
 Santosh Gupta v. State Bank of India, 1980- Whether non-passing of an exam amounts  to
retrenchment? (Discharge not due to surplus labour but failure of the worker in  exam)
 Termination of service for any reason whatsoever provided include every kind of 
termination of service except those expressly excluded from the purview of the 
definition.
 Management of Karnataka State Road Transport Corporation, Bangalore v. M.
Boraiah,  1983 – (Embodies every case of termination of services except those
embodied in  the definition).

 “Striking off name from the worker from the rolls by the management
in  termination of his service”
(Delhi Cloth and General Mills Co. Ltd v. Shambhu Nath Mukherji )

•Unauthorized absence from Work

If the service of the workman is terminated by the employer due
to unauthorized absence, it can be characterized as
retrenchment
HARIPRASAD SHIV SHANKAR SHUKLA V. A.D. DIVELKAR,
AIR 1957

The Supreme Court explained further the meaning of the word retrenchment as defined under Section 2(oo) of the
Industrial Disputes Act. The Supreme Court observed that the expression for any reason whatsoever though wide
must necessary draw within its ambit, not any act of commission and omission on the part of the employers, but the
concept of termination of the surplus workers services due to reason such as economy rationalisation in industry,
installation of new labour saving machinery or devices, standardisation or improvement of plant or technique or
the like.
The Supreme Court held that the words for any reason whatsoever must be read and construed as such. The
Supreme Court after considering the definition of retrenchment concluded that the entire scheme was to give the
definition clause relating to retrenchment such a meaning as would include within the definition termination of
services of all workman by the employers when the business itself ceases to exist, meaning thereby that
retrenchment means discharge of surplus workmen in an existing or continuing business and does not include
retrenchment of workers on a bona fide closure of business..”
 WHAT CONSTITUTES RETRENCHMENT?
a. “Termination of the services of the worker  as surplus labour for any
reason
whatsoever” or
b. “Termination by the employer of the service of the workman, for any reason
whatsoever”
(Punjab Land Development and Reclamation Corporation Ltd. v. Presiding Officer,
Labour Court, 1990)
Court: Held that the second view is right and reasoned that if the Parliament  intended
the ground for retrenchment as “surplus of worker”, then the phrase, “for  any reason
whatsoever ” would not have been inserted as part the definition.
It means that Parliament intended many reasons for retrenchment.
JUDICIAL TRENDS

1. All retrenchment is termination but all termination is not retrenchment.

2. The question whether retrenchment includes termination of all kinds is a matter of
fact depending on the nature of termination.
3. Termination of service due to retrenchment will happen only in an active
industry.
4. It is not only confined to permanent worker
5. Active participation of employer is necessary
6. If termination is due to any of the five excluded grounds, then it is not a
retrenchment
 SECTION 25F
 Section 25-F lays down conditions for a valid retrenchment
 Section is only applicable for workmen/worker who has been in continuous service for
not less than one year
 Three conditions are prescribed under this section:
1. the workman/worker 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:
2. the worker has been paid, at the time of retrenchment, compensation which  shall be
equivalent to fifteen days' average pay for every completed year of  continuous
service or any part thereof in excess of six months; and
3. notice in the prescribed manner is served on the appropriate Government or such
authority as may be specified by the appropriate Government by notification in the
Official Gazette. (Rule 76)
COMPENSATION

 The requirement of paying compensation is mandatory pre-condition

 Non-payment will not only invalidate the retrenchment but will also attract the penalty under
Section 31 (2) of the Act
 If retrenchment is proved unlawful, the worker has a right to reinstatement with  continuity of
service and right to wages for such period
 In other words, if the pre-requisites ( and Section 2(00)) have not been complied with, then the
termination of service would be void ab initio
 Worker is entitled to a declaration that the worker continued to be in service  with all
consequential benefits and if he was not paid all the benefits including  salary he shall be
entitled to recover the same as arrears.
CLAUSE (A)

 Give notice of retrenchment or pay wages in lieu of it

 Mandatory provisions: Non-compliance with either of the conditions precedent to
retrenchment would make retrenchment invalid and inoperative
 What all things will make a retrenchment null and void?

1. Notice period is less than one month

2. Wages in lieu of the notice period not paid
3. Notice does not indicate the reason for retrenchment
4. Rule of “Last come first go” not followed
 CLAUSE (B)
 Amount of compensation is as provided in clause (b) of Section 25F
 Can you extend the quantum of compensation on the ground of social justice?
 Right to compensation of worker depends upon the fulfilment of conditions

1. If there is retrenchment within the meaning of Section 2 (oo) and

2. Whether requirement of Section 25 F is fulfilled
Compensation is recovered from the employer either under Section 33-C of IDA Act
or under Payment of Wages Act
When the compensation as due is  rendered unconditionally, then it amounts to 
payment even if it is refused by the worker with a view to invalidating  retrenchment.
 RETRENCHMENT AND GRATUITY
 Gratuity is an amount paid to the worker after retirement.
 The cause of retirement and retrenchment compensation is expected to give some relief to
tide over the difficulties caused by sudden termination of employment
 Court does not prevent payment of both gratuity and retrenchment compensation
 The gratuity schemes provide that either retrenchment compensation shall be payable in
lieu of gratuity or gratuity shall be payable in addition to the retrenchment compensation
 Therefore, whether a retrenched worker may claim the benefit of a gratuity  scheme in
addition to retrenchment compensation under Section 25F or not  depends on the
construction of relevant provisions of  the gratuity scheme  considered in the light of
provisions of Section 25F of the Act
 CLAUSE (C)
 Requires the employer to serve a notice on the appropriate Government regarding
retrenchment.
 “ Clause (c) cannot be held to be a condition precedent like clauses (a) and (b)  even
though it has been included in Section 25 F which prescribes conditions  precedent”.
 It does not protect the interest of the workman/worker but is intended to keep the 
Government informed about the conditions of employment in the industries within  its
area (Bombay Union of Journalists v. State of Bombay)
 Therefore, failure to serve a notice on the AG would not invalidate the retrenchment.
 It will attract penalty under Section 33 (2).
 Notice should be served in the prescribed format, if not before, then after retrenchment
REINSTATEMENT OF RETRENCHED
WORKMEN
 When retrenchment of a worker is invalid reinstatement can be ordered
 When the order terminating the services of a workman is struck, it is as if the order has
never been and so it must ordinarily lead to back wages also.
 Where a worker is entitled to be reinstated with full back wages but employer  prefers
to pay compensation instead of reinstating him, it is necessary that  adequate amount of
compensation should be paid to him in order to meet justice.
 Exceptional circumstances
Example: Industry may have closed down or might be in severe financial situations,
the  worker concerned might have secured better or other employment elsewhere and 
so on. In such situation the Court has discretion to make consequential orders.
 SECTION 25N
1. Three months notice and prior permission of the appropriate Government or the specified
authority required before retrenchment.
2. Application to be made for permission.
3. Order granting or refusing permission for retrenchment to be communicated to
employer and workmen.
4. Presumption of permission if no order communicated within 60 days.
5. Order binding on all parties for 1 year.
6. Review of order.
7. Consequences of illegal retrenchment.
8. Exemption.
9. Compensation in case of permission for retrenchment- 15 days wages for every completed year of
service.
10. Penalty for illegal retrenchment is imprisonment up to 1 month or fine up to Rs.1000 (or) both.
SECTION 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
SECTION 25H

Re-employment of retrenched workmen

Where any workmen are retrenched, and the employer proposes to take into his employ
any persons, he shall, in such manner as may be prescribed, give an opportunity [to the
retrenched workmen who are citizens of India to offer themselves for reemployment and
such retrenched workman] who offer themselves for re-employment shall have
preference over other persons
REGULARIZATION AND EMPLOYMENT

• Difference between Regularization and Employment

• Effect of Regularization
CASES
Uptron v Shammi Bhan (1998) 6 SCC 538 to determine whether termination of service on account
of non-renewal of contract of employment will be deemed as retrenchment- here held that it will not be treated as
retrenchment since there was no fixed-term of contract of service– hence, there cannot be a question of the
contract being terminated at the end of the expiry.

Clause (bb); one was the termination of service on the ground of continued ill-health of the workman and the other
was termination of service on account of non-renewal of the contract of employment on the expiry of the term of
that contract. If such contract of employment contained a stipulation for termination of service and the services of
the workman are terminated in accordance with that stipulation, such termination, according to Clause (bb), would
also not amount to "Retrenchment".
What was contended before the Tribunal as also before the High Court was that the termination of the services of
respondent was covered by Clause (bb) of Section 2(oo) and, therefore, it could not be treated as "Retrenchment”.
This argument which was not accepted by the Tribunal and the High Court
The respondent was a permanent employee of the petitioner. There was no fixed-term contract of service between
them. There was, therefore, no question of services being terminated on the expiry of that contract.
 CONTD…
The SC held that Clause 17(g) of the certified standing order which provided that the services of a workman
are liable to automatic termination if he overstays on leave without permission for more than 7 days would be
bad if it does not provide an opportunity of heating to the concerned employee.

The contract of employment referred to in the earlier part of Clause (bb) has to be the same as it referred to in
the latter part. What the Clause, therefore, means is that there should have been a contract of employment for a
fixed-term between the employer and the workman containing a stipulation that the services could be
terminated even before the expiry of the period of contract. If such contract, on the expiry of its original period,
is not renewed and the services are terminated as a consequences of that period, it would not amount to
"Retrenchment".

Similarly, if the services are terminated even before the expiry of the period of contract but in pursuance of a
stipulation contained in that contract that the services could be so terminated, then in that case also, the
termination would not amount to "retrenchment".
ANAND BIHARI V. RAJASIHAN STATE ROAD
TRANSPORT CORPORATION
• "The question whether a State Road Transport Corporation can retire the bus drivers on the
ground of their defective or subnormal eye-sight developed during the course of the employment
has been examined by this Court in the case of Anand Bihari v. Rajasihan State Road Transport
Corporation,.
• This Court held that such terminations of service were unjustified, inequitable and discriminatory,
though not amounting to retrenchment within the meaning of Section 2(oo) of the Industrial
Disputes Act. It was impressed by this Court that service conditions of the bus drivers must
provide adequate safeguards because such bus drivers have developed defective eye-sight or
subnormal eye-sight because of the occupational hazards.
• A scheme was directed to be framed for providing alternative jobs along with retirement benefits
and for payment of additional compensation proportionate to the length of service rendered by
them, in case of non availability of alternative jobs, it was brought to our notice that in view of the
judgment in Anand Bihari v. Rajasthan State Road Transport Corporation.
State of Bihar V Deodhar Jha  AIR  1958  Pat 51 

In this case the court held that neither the employees is restrained  from going on strike  nor the
employer is restrained  from locking out  the industry  but some minimum conditions before 
striking  or locking out  are required to fulfilled.
 RAMNAGAR CANE AND SUGAR CO. LTD. V.
JATIN CHAKRAVORTY, AIR 1960 SC 1012

If a conciliation proceeding is pending between one union and the employer and it
relates to matters concerning all the employees of the employer, the pendency of
the conciliation proceeding would be a bar against all the employees of the
employer to go on a strike during the pendency of the said proceedings under S. 22
(1) (d).
GUJARAT STEEL TUBES V MAZDOOR SABHA AIR 1980 SC 1896
VIDYASAGAR INSTITUTE OF MENTAL HEALTH V
HOSPITAL EMPLOYEES UNION (2006) ILLJ 781