Question

XYZ Textiles Ltd., a manufacturing company, recently terminated 04 workers without providing any compensation. The termination was because of the misconduct enquiry part of the worker. The company issued a show cause notice and the disciplinary enquiry was also conducted. On the basis of the recommendations of the committee, the services of these employees were terminated. The workers claimed the retrenchment compensation which was rejected by the management. Aggrieved by the rejection the workers have filed a complaint in the Labour Court under the provisions of the Industrial Disputes Act, 1947.
Based on the above problem, select the correct answer.

• A. The termination does not amount to retrenchment, hence no compensation.
• B. The termination amounts to lay-off, hence compensation will be awarded.
• C. The termination amounts to retrenchment, hence compensation will be awarded.
• D. The termination violated the provisions under the Industrial Disputes Act, 1947, hence compensation will be awarded.

Answer 1

The Correct Option is A

Retrenchment refers to the termination of employment due to business reasons, such as downsizing or closure. In this case, the termination was based on misconduct by the workers. Therefore, it is not considered retrenchment. Since the termination was for misconduct, the workers are not entitled to retrenchment compensation.