Question

Which of the following best describes the retrenchment compensation payable under the Industrial Disputes Act, 1947?

• A. The payment is at the discretion of the employer
• B. One month salary only
• C. Ten days average pay for every completed year of service
• D. Fifteen days average pay for every completed year of service

Hint:

Retrenchment compensation is generally fifteen days average pay for every completed year of service.

Answer 1

The Correct Option is D

Concept: Retrenchment means termination of service by the employer for reasons other than those specifically excluded by the Act. The Industrial Disputes Act provides conditions for valid retrenchment.

Step 1: Understand retrenchment compensation.
When a workman is retrenched, the employer must pay compensation as required by law. \[ \text{Retrenchment} \Rightarrow \text{Statutory compensation} \]

Step 2: Recall the amount.
The compensation is equivalent to fifteen days average pay for every completed year of continuous service or any part thereof in excess of six months. \[ \text{Compensation} = 15 \text{ days average pay per completed year} \]

Step 3: Reject wrong options.
It is not merely at the discretion of the employer. It is also not only one month's salary or ten days average pay. Therefore, the correct answer is option (D).