Section 25F of IDA : Section 25F: Conditions Precedent To Retrenchment Of Workmen

Explanation using Example

Imagine a factory in India where a worker, Mr. Sharma, has been employed for the past two years. Due to economic downturns, the factory decides to retrench some of its workers, including Mr. Sharma. According to Section 25F of The Industrial Disputes Act, 1947, the factory must adhere to the following conditions before retrenching Mr. Sharma:

1. Mr. Sharma must be given a written notice of one month, explaining the reasons for his retrenchment, or he must be paid his wages for one month in lieu of the notice period if the company chooses not to serve the notice.
2. He must be paid retrenchment compensation equivalent to fifteen days' average pay for each year he has worked. Since Mr. Sharma has worked for two years, he should receive compensation equal to thirty days' average pay.
3. The factory must notify the appropriate government authority about Mr. Sharma's retrenchment in the manner prescribed by the government.

If Mr. Sharma were employed in the Union Territory of Jammu and Kashmir or Ladakh, the compensation would be higher due to the state amendment, which requires thirty days' average pay for each completed year of service instead of fifteen days.