Section 25G of Industrial Disputes Act 1947 - Procedure for Retrenchment
Section 25G of the Industrial Disputes Act, 1947 prescribed the ordinary order in which workmen belonging to the same category were to be selected for retrenchment. In the absence of an agreement governing the matter, the employer was ordinarily required to retrench the workman who was the last person employed in that category, unless another workman was selected for reasons recorded by the employer.
What is Section 25G?
Section 25G was titled "Procedure for retrenchment." It applied where a workman in an industrial establishment, being a citizen of India, was to be retrenched and belonged to a particular category of workmen in that establishment.
The provision established a statutory rule for choosing among workmen in the relevant category. It is commonly described as the "last come, first go" principle.
Section 25G - Statutory rule
Where a workman in an industrial establishment who was a citizen of India was to be retrenched, and the workman belonged to a particular category of workmen in that establishment, the employer was ordinarily required, in the absence of an agreement between the employer and the workman on the matter, to retrench the workman who was the last person employed in that category.
The employer could depart from that ordinary order and retrench another workman, but the provision required reasons for doing so to be recorded.
Meaning of the last come, first go rule
The basic principle under Section 25G was seniority-based selection within the relevant category. Ordinarily, the workman most recently employed in that category was selected for retrenchment before workmen who had entered that category earlier.
The provision did not state an absolute rule that could never be departed from. Its use of the word "ordinarily", together with the express exception permitting another workman to be retrenched for recorded reasons, allowed departure where the employer had reasons that could lawfully justify a different selection.
Particular category of workmen
Section 25G operated with reference to the particular category to which the workman belonged in the industrial establishment. The statutory comparison was therefore not necessarily between every employee in the establishment. The relevant category and the relative position of workmen within that category had to be identified on the facts and under the applicable service structure, rules and industrial law.
Agreement between employer and workman
The statutory sequence applied in the absence of an agreement between the employer and the workman in this behalf. Accordingly, an applicable agreement concerning the order or method of retrenchment could affect the operation of the ordinary statutory selection rule. The legal effect of any settlement, award, standing order or other binding arrangement had to be examined separately.
Departure from seniority requires recorded reasons
Section 25G expressly permitted an employer to retrench a workman other than the last person employed in the category, but required the employer to record reasons for doing so. The existence and legal sufficiency of those reasons could become relevant where the selection was challenged in industrial adjudication.
Section 25G and Section 25F
Section 25G dealt principally with which workman should ordinarily be selected for retrenchment within the relevant category. Section 25F, by contrast, prescribed conditions precedent to retrenchment of a qualifying workman, including notice or wages in lieu, retrenchment compensation and prescribed notice to the Government or specified authority.
The two provisions therefore addressed different aspects of retrenchment and had to be examined together where both applied.
Meaning of retrenchment
The statutory meaning of "retrenchment" was contained in Section 2(oo) of the Industrial Disputes Act, subject to the text, exclusions and amendments applicable to the relevant period and jurisdiction. Whether a termination attracted Section 25G first required examination of whether it fell within the applicable statutory concept of retrenchment.
Practical checklist under Section 25G
- Determine whether the proposed termination legally amounted to retrenchment.
- Identify whether the employee was a workman to whom the provision applied.
- Identify the particular category of workmen relevant to the retrenchment.
- Determine the relative order of employment or seniority within that category.
- Check whether an agreement governed the order of retrenchment.
- If the last person employed was not selected, identify whether reasons for the departure were recorded.
- Separately verify compliance with Section 25F and any other applicable retrenchment provisions.
- Check applicable rules, State amendments, standing orders, settlements, awards and binding service conditions.
Related provisions of the Industrial Disputes Act
Section 25G formed part of Chapter V-A of the Industrial Disputes Act. Closely related provisions included Section 25FF on transfer of undertakings, Section 25FFA on notice of intended closure, Section 25FFF on closure compensation and Section 25H on re-employment of retrenched workmen.
Chapter V-B establishments
For industrial establishments to which Chapter V-B applied, additional statutory provisions could govern retrenchment. Section 25K dealt with application of Chapter V-B, while Section 25N prescribed conditions precedent to retrenchment in establishments covered by that Chapter. The applicable statutory regime therefore had to be identified before assessing compliance.
Official legal resources
Authoritative statutory material can be checked through the India Code portal and the Ministry of Labour and Employment. State amendments, rules, notifications and the law applicable on the date of the dispute should also be verified.