Meaning of Retrenchment
Retrenchment (oo). - Retrenchment connotes in its ordinary expectation that the business itself is being continued, but that a portion of the staff of labour force is discharged as surplusage (
Piparaich Sugar Mills Ltd. v. Piparaich Sugar Mills Mazdoor Union, AIR 1957). It means the discharge of surplus labour or staff by the employer for any reason whatsoever (
Harprasad Shiv Shankar v. A.D. Diwekar, AIR 1957). The order of termination must be actuated with motive of economy.
Section 2(oo) The Industrial Disputes Act, 1947 which define the term "Retrenchment" may be analysed as follows :
- Retrenchment means the termination by the employer of the service of a workman;
- The termination may be for any reason whatsoever;
- But the termination should not be as a measure of punishment by way of disciplinary action.
The following are retrenchment :
- (a) voluntary retirement of a workman, or
- (b) retirement of a 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 a workman as a result of the non-renewal of the contract of employment between the employer and workman concerned on its expiry or of search contact being terminated under a stipulation in that behalf contained therein, or
- (c) termination of the service of workmen on the ground of continued in ill-health.
For any reason whatsover. - Action taken by the employer may be for any reason. When a portion of the stuff or labour force is discharged as surplusage in a running or continuing business, termination of service which follows may be due to a variety of reasons, e.g., economy, rationalisation in industry, installation of a new labour saving machinery etc (
Piparaich Sugar Mills Ltd. v. Piparaich Sugar Mills Mazdoor Union AIR 1957). It does not matter why the employer is discharging the surplusage. If other requirements of the definition are fulfilled, then it is retrenchment.
