Closure and Retrenchment

Closure means permanent closing down of a place of employment or a part thereof.
Here, the employer is constrained to close the establishment permanently.
Nonetheless the due process has to be complied with when it comes to rolling out a plan of closure.
These procedures nonetheless do not apply to an undertaking setup for the construction of buildings, bridges, roads, canals, dams or for other construction work.
ID Act 1947, originally does not contain the provision related to the closure of an industry. The provisions related to closure were inserted in the year 1957 in view of the supreme court judgement in the case Hariprasad Shivashankar Shukla Vs. A. D. Diwelkar, AIR 1957 S. C 121.
Over the years laws related to closure has undergone a series of amendments from time to time and thus was consolidated to the present position in the year 1982.

Retrenchment is defined under section 2 (oo). It means the discharge of surplus labour or staff by the employer for any reason. It does not include the following:-
Voluntary retirement
Retirement of workmen on reaching the age of superannuation
Termination of the service of workmen as a result of non renewal of the contract.
Continued ill health.
Termination of the service of workmen when the business ceases to exist is not included within the meaning of the definition.

In the following cases termination of services amounted to retrenchment:-
Discharge of a workman on account of his failure to pass confirmation test.
Termination of service for unauthorised absence from duty.
Termination of service on account of recession and reduction of volume of the work.
Termination of service of probationer of unsuitability.
Compulsory retirement of a workman on amounting to termination of services.

In the following cases there was no retrenchment:-
Termination of service for the loss of confidence in workman.
Discharge due to ill health termination of service owing to general closure or take over of the undertaking by another employer.
If an employer wants to close down and undertake in he has to give a prior notice to the appropriate government. The notice should include the reasons why we want to close down his undertaking and he has to send the notice prior to 90 days before closing down his establishment.

After receiving application
• Necessary enquiry
• Shall give reasonable opportunity of being heard to the EMPLOYER & the WORKMEN.
• After judging all the factors
• Pass order in WRITING.
• GRANT or REFUSE to grant such permission
• COPY shall be communicated to the EMPLOYER & the WORKMEN
• If not communicated within 60 days
• DEEMED to have been granted

According to Section 2(oo) of the Industrial Disputes Act, 1947 (IDA),
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

According to Section 2(cc) of the Industrial Disputes Act, “closure” means the permanent closing down of a place of employment or part thereof.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.