Section 25F of Industrial Disputes Act 1947 - Conditions Precedent to Retrenchment of Workmen

Section 25F of the Industrial Disputes Act, 1947 prescribed mandatory conditions to be satisfied before an employer could retrench a workman who had been in continuous service for not less than one year. The provision dealt with notice or wages in lieu, retrenchment compensation and notice to the appropriate Government or specified authority.

Historical legal scope: This article explains the law applicable before the Bharatiya Sakshya Adhiniyam, 2023 came into force on 1 July 2024. That enactment concerns evidence law and did not itself amend Section 25F. For a current labour dispute, the law applicable on the relevant date, including subsequent labour-code commencement, repeal, savings and transitional provisions and any State amendment, should be separately verified.

What is Section 25F?

Section 25F was headed "Conditions precedent to retrenchment of workmen." It protected a workman employed in an industry who had completed the statutory qualifying period of continuous service. Such a workman could not be retrenched until the conditions stated in clauses (a), (b) and (c) were satisfied.

Section 25F - Statutory requirements

Qualifying requirement: The workman must have been in continuous service for not less than one year under the employer.

Clause (a) - Notice: The workman must be given one month's notice in writing indicating the reasons for retrenchment and the notice period must expire, or the workman must be paid wages in lieu of that notice.

Clause (b) - Compensation: At the time of retrenchment, the workman must be paid compensation equivalent to fifteen days' average pay for every completed year of continuous service, or any part thereof in excess of six months.

Clause (c) - Government notice: Notice in the prescribed manner must be served on the appropriate Government or on an authority specified by the appropriate Government by notification in the Official Gazette.

Meaning of retrenchment

For the Industrial Disputes Act, the meaning of "retrenchment" was governed by the statutory definition in Section 2(oo), subject to the inclusions, exclusions and amendments applicable to the relevant period and jurisdiction. Whether a particular termination amounted to retrenchment therefore depended on the statutory definition and the facts of the termination; Section 25F supplied the conditions precedent where the provision applied.

Meaning of continuous service

Section 25B governed "continuous service" for purposes of Chapter V-A. It addressed uninterrupted service and statutory deemed continuity in specified circumstances. The qualifying condition in Section 25F was continuous service for not less than one year under the employer.

One month's written notice or wages in lieu

Clause (a) required a written notice stating the reasons for retrenchment and one month's notice period. Instead of allowing that period to run, the employer could pay wages for the notice period in lieu of notice. The requirement was therefore not merely an informal advance intimation: the statute specified written notice with reasons or the alternative payment contemplated by the clause.

Retrenchment compensation under clause (b)

The central provision prescribed compensation equivalent to fifteen days' average pay for every completed year of continuous service and for a part of a year exceeding six months. The payment was required at the time of retrenchment. Applicable State amendments must be checked because a State law may alter the central position for establishments within its legislative field.

Meaning of average pay

"Average pay" was a defined expression under Section 2(aaa) of the Industrial Disputes Act. Its statutory computation depended on the category and payment pattern of the workman. Accordingly, calculation of compensation under Section 25F(b) required use of the statutory concept of average pay rather than an assumed daily wage figure.

Notice to the appropriate Government

Clause (c) required notice in the prescribed manner to the "appropriate Government" or to an authority specified by it through an Official Gazette notification. The expression "appropriate Government" was separately defined in the Act, and the applicable Government depended on the nature and control of the industry and the statutory definition relevant to the period in question.

Practical checklist for Section 25F

Determine whether the person was a "workman" under the Act for the relevant period.
Determine whether the termination fell within the statutory meaning of "retrenchment".
Verify the qualifying continuous service under Section 25B.
Check the written notice, stated reasons and expiry of the one-month period, or payment of wages in lieu.
Calculate compensation using statutory average pay and completed years of continuous service.
Confirm that compensation was paid at the time required by clause (b).
Verify service of the prescribed notice under clause (c).
Check applicable Central Rules, State Rules, State amendments and notifications.

Related provisions

Section 25F formed part of Chapter V-A dealing with lay-off and retrenchment. Related provisions included Section 25A, Section 25B, Section 25C, Section 25D and Section 25E. Sections 25FF and 25FFF also adopted Section 25F notice and compensation principles for specified transfers and closures.

Official legal resources

Authoritative statutory material can be checked on the India Code portal and the Ministry of Labour and Employment website. State-specific amendments, rules and notifications should also be verified for the relevant establishment and period.