Layoff and Termination of Employment during Covid-19 Pandemic – Part 2 (Retrenchment under Industrial Dispute Act)

Layoff and Termination of Employment during Covid-19 Pandemic – Part 2

Retrenchment under Industrial Dispute Act:-

Under section 2(oo) of the Industrial Dispute Act, 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

(c)   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

(d)  Termination of the service of a workman on the ground of continued ill- health.

The honourable Supreme Court interpreted the meaning of “Termination for any reason whatsoever” in L. Robert D'Souza vs The Executive Engineer [1982 AIR 854, 1982 SCR (3) 251] as “termination of service for any reason whatsoever' now covers every kind of termination of service except those not expressly included in s. 25F or not expressly provided for by other provisions of the Act such as ss. 25FF and 25FFF.”

It further exclaims “The definition of expression 'retrenchment' in s. 2(oo) is so clear and unambiguous that no external aids are necessary for its proper construction. Therefore, we adopt as binding the well settled position in law that if termination of service of a workman is brought about for any reason whatsoever, it would be retrenchment except if the case falls within any of the excepted categories, i.e.,

(i)                Termination by way of punishment inflicted pursuant to disciplinary action;

(ii)              Voluntary retirement of the workman;

(iii)            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

(iv)            Termination of the service on the ground of continued ill-health.

Once the case does not fall in any of the excepted categories the termination of service even if it be according to automatic discharge from service under agreement would nonetheless be retrenchment within the meaning of expression in section 2(oo).”

Retrenchment can only be held valid if the preconditions furnished under section 25F are fulfilled. The following conditions are provided in section 25F –

(i)                One month's notice in writing specifying the reasons for retrenchment or wages in lieu of notice;

(ii)              Compensation to be paid according to the measure provided in the clause, the payment to be simultaneous with the retrenchment; and

(iii)            The notice in the prescribed manner to be served on the appropriate Government.

Thus, the terminations made during the current pandemic in derogation of provisions mentioned above will be illegal retrenchment.