Meaning of Retrenchment

Retrenchment is like a lay-off, also results in separation of the employee from the organization.

Retrenchment means a permanent termination of the services of an employee for economic reasons in a going concern.

Notice of Retrenchment

As far as possible, affected employees should be informed of the impending retrenchment before notice of retrenchment is given.

An employee to be retrenched is required to be given three months notice before his retrenchment or in lieu of the notice or the duration of notice will depend on what is stipulated in the contract of service.

Remuneration during Retrenchment

He must be paid his remuneration for the period of notice.

The retrenched employee is entitled to get salaries and all other dues to the employees on the last day of work and gratuity payment from his employer.

Permission for Retrenchment

For retrenchment of the employee, permission for retrenchment must be obtained from the authority. Retrenchment should be undertaken in consultation with the union

The principal of last come, first go is followed for deciding which employee should be retrenched.

Alternative to Retrenchment

1] Temporary laying off employees for a short period of time.

2] Implementing a shorter work week.

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