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I D Act – 25F retrenchment compensation is not required to be given to a fixed term employee

Contents News/Article  Date : 20th October  2023

Relating to which  Act : The Indian Constitution grants the Central and state governments the powers to enact laws to protect the employees and foster a professional work environment. Based on the industry, nature of the work, number of employees in the company, location, and more, there are various legislations like the Industrial Disputes Act 1947 (ID Act), Factories Act 1948 (Factories Act), and Shops and Establishment Acts in relevant states (S&E Act).  

Applicable to which State : Acts  and Rules are applicable to all States

Type : Judgement in the case of Rajendrabhai Chandubhai Gondaliya versus Deputy Engineer – Gujarat High Court

Pertains to : Establishments and Employees who work on fixed term basis

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And in this instance : Retrenchment, as commonly understood is termination of an employee on the grounds of surplus labour or incapacity of employees due to some economic grounds. However, the Industrial Dispute Act, 1947 (the “ID Act”) is the governing legislation for “retrenchment”, which takes the wider view of termination of employee as against the ordinary meaning of the term retrenchment. Section 2(oo) of the Act states that “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 workmen 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;

(c) termination of the service of a workman on the ground of continued ill-health.”

Subject  : Industrial Disputes Act – Compliance of Section 25F pertaining to retrenchment compensation, is not required on a termination of a fixed term employee


Attached is the title of the judgement



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