Under the Industrial Relations Code, 2020, what is the

Solution

Under the Industrial Relations Code, 2020, retrenchment compensation is payable at the rate of 15 days' average pay for every completed year of continuous service, or any part thereof in excess of 6 months. A worker must have completed at least 1 year of continuous service to be entitled to retrenchment compensation. The employer must give the worker one month's notice or wages in lieu of notice before effecting retrenchment. A significant concern raised by labour law experts is that the Code's revised definition of "wages" (which excludes several allowances) may result in only a reduced portion of actual remuneration being taken into account for computing compensation, effectively reducing the payout compared to the earlier Industrial Disputes Act, 1947. Where a retrenched worker is re-employed within 1 year of retrenchment, the employer must give preferential treatment to that worker over other fresh candidates. Contravention of retrenchment compensation obligations attracts a fine ranging from ₹50,000 to ₹2 lakhs.