Retrenchment compensation calculator
Average pay as defined in Section 2(aaa). We divide monthly wage by 26 to derive daily average wage.
Part of a year of 6 months or more is treated as a full year.
If unchecked, the calculator adds one month's wages in lieu of notice.
Eligibility: one year of continuous service (240 days, Section 25B). Below that, retrenchment compensation under Section 25F is not payable.
Compensation equals fifteen days average pay for every completed year of continuous service, where average daily wage is the monthly wage divided by 26. A part year of six months or more counts as a completed year.
One month notice pay is payable in addition where notice is not served.
Establishments with 300 or more workmen require prior Government permission for retrenchment under Section 25N of the ID Act (threshold raised from 100 to 300 by the IR Code, 2020).
Retrenchment must follow "last come, first go" within the same category unless the employer records reasons for a different order (Section 25G).
Re-employment opportunity must be given to retrenched workmen under Section 25H.
Gratuity, leave encashment and unpaid wages are payable separately. Use the gratuity calculator.
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