What is Retrenchment?
Retrenchment is the termination of a worker's service by the employer for any reason other than punishment, such as redundancy. Under the Industrial Relations Code, 2020 it needs prior notice and retrenchment compensation of 15 days' average pay for each completed year of service, plus a contribution to the workers' re-skilling fund.
Example
In an industrial establishment with 300 or more workers, the employer needs the government's prior permission before retrenchment and must give three months' notice, per the Ministry's handbook.
Related
See Industrial Relations Code and lay-off.
Related terms and guides
Sources
- Ministry of Labour and Employment, Compliance Handbook for Employers under the Four Labour Codes, https://www.labour.gov.in/static/uploads/2026/02/83978455025732b99b0165def80ab171.pdf, live official page, linked for readers; link checked 2026-10-31
- PIB, Government makes the four Labour Codes effective (21 Nov 2025), https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2192463®=3&lang=2, live official page, linked for readers; link checked 2026-10-31
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.