Retrenchment Compensation
Compensation under Section 25F of the Industrial Disputes Act.
Compute retrenchment compensation payable under the Industrial Relations Code, 2020 (effective 21 November 2025), which subsumes the Industrial Disputes Act, 1947. Statutory rate: 15 days' average pay for each completed year of continuous service.
Retrenchment Compensation
Years considered0
Per-day wages (Basic + DA / 26)₹ 0
Compensation @ 15 days/year₹ 0
Notice pay (if applicable)₹ 0
Other dues (gratuity, leave encashment)As applicable
Total Payable₹ 0
Retrenchment compensation under Sec 70 of IR Code 2020. Workman with less than 240 days of continuous service in preceding 12 months is not entitled (but may have notice pay rights).
Retrenchment - statutory framework:
- Section 70, IR Code 2020: Workman who has rendered continuous service for not less than 1 year cannot be retrenched without (i) one month notice in writing, (ii) compensation @ 15 days' average pay per completed year of service, (iii) intimation to the appropriate Government.
- Continuous service: 240 working days in 12 months (190 days for mines below ground).
- Threshold for prior permission: 300+ workers - permission of Central / State Government mandatory under Section 79 before retrenchment, lay-off or closure.
- Lay-off compensation: 50% of basic wages + DA for the lay-off period (Sec 67).
- Last-in-first-out: Rule of seniority - the most recently appointed workman of the same category must be retrenched first (Sec 71).
- Re-employment preference: Retrenched workmen have first preference for re-employment for 1 year (Sec 72).
- Tax treatment: Retrenchment compensation up to Rs 5,00,000 is exempt under Section 10(10B) of Income Tax Act for non-government employees.
What is NOT retrenchment:
- Voluntary retirement / resignation
- Termination on disciplinary grounds after due inquiry
- Non-renewal of fixed-term contract on expiry (per IR Code)
- Retirement at age of superannuation
- Continued ill-health
Important note: This tool provides an indicative output only. It does not factor in every special provision, surcharge, exception, or recent notification. Verify with the firm before acting on any computation.
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