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    Labour Law Assignment

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    SowvickSil
    This document discusses a case study involving the retrenchment of an employee named Mr. Y from an organization with 10 employees. Mr. Y had worked at the organization for 17 years but was not meeting performance expectations, while Mr. X was a new high performer. The organization was considering retaining Mr. X according to the "Last Come First Go" rule, but Mr. Y's long-term poor performance provided grounds for retrenchment. Indian law requires one month's notice pay and 15 days' average pay compensation for each year of service over 6 months for retrenchment. The compensation amount calculated for Mr. Y was Rs. 248,000.

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    Labour Law Assignment

    Uploaded by

    SowvickSil
    120 views4 pages
    This document discusses a case study involving the retrenchment of an employee named Mr. Y from an organization with 10 employees. Mr. Y had worked at the organization for 17 years but was not meeting performance expectations, while Mr. X was a new high performer. The organization was considering retaining Mr. X according to the "Last Come First Go" rule, but Mr. Y's long-term poor performance provided grounds for retrenchment. Indian law requires one month's notice pay and 15 days' average pay compensation for each year of service over 6 months for retrenchment. The compensation amount calculated for Mr. Y was Rs. 248,000.

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    This document discusses a case study involving the retrenchment of an employee named Mr. Y from an organization with 10 employees. Mr. Y had worked at the organization for 17 years but was not meeting performance expectations, while Mr. X was a new high performer. The organization was considering retaining Mr. X according to the "Last Come First Go" rule, but Mr. Y's long-term poor performance provided grounds for retrenchment. Indian law requires one month's notice pay and 15 days' average pay compensation for each year of service over 6 months for retrenchment. The compensation amount calculated for Mr. Y was Rs. 248,000.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    120 views4 pages

    Labour Law Assignment

    Uploaded by

    SowvickSil
    This document discusses a case study involving the retrenchment of an employee named Mr. Y from an organization with 10 employees. Mr. Y had worked at the organization for 17 years but was not meeting performance expectations, while Mr. X was a new high performer. The organization was considering retaining Mr. X according to the "Last Come First Go" rule, but Mr. Y's long-term poor performance provided grounds for retrenchment. Indian law requires one month's notice pay and 15 days' average pay compensation for each year of service over 6 months for retrenchment. The compensation amount calculated for Mr. Y was Rs. 248,000.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 4

    4/11/2012

    Labour Law
    Case Study, PGCHRM - 12
    [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.]

    Labour Law Case Study 3:


    The case discussed is a case of retrenchment, because as per section 2(OO) of ID act 1947, Retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include the followings: Voluntary retirement Reaching age of Superannuation Non-Renewal of the contract of Employment Continued ill-health.

    In this case, the cause of employee retrenchment is non-performance of the employee which falls in the ground of retrenchment, as per sec 25G (ID Act, 1947). Our prime inputs of this case are like below: Mr. X Joined the organization recently and a high performer. Mr. Y, have spent 17 years in the organization but not as per the companys performance expectation. Both of them are paid similarly. Monthly income of both the employees is Rs. 21780 per month as on 01JAN-2000. Yearly increment would be given Rs. 1500 per month. Company has not provided any notice to Mr. Y for retrenchment as on 31JAN-2007. No. of employees in the company is 10. Issue regarding the retaining Mr. X. As per sec-25G of ID Act, the company should follow a Last Come First Go methodology to retrench workforce. On this ground Mr. X, who is a new-comer in the organization should be retrenched w.r.t. Mr. Y. But it would be quite illogical to retain a non performing employee Mr. Y, as per companys performance record for last 17 year, just to abide by the Labour laws. Issue regarding the retrenchment of Mr. Y. As the overall population of the company is lesser than 100 employees, sec-25F of ID act can be applicable in this case. If the company needs to retrench Mr. Y, the followings need to be accomplished: The employee should be informed with a one months of notice, as he has already spent 17 years in the organization. AND

    XLRI PGCHRM - 12

    Labour Law
    At the time of retrenchment, the company need to pay a

    compensation which shall be equivalent to fifteen days' average pay *[for every completed year of continuous service] or any part thereof in excess of six months.

    Compensation = (MW(a)/30) * 15 * No. Of Years


    MW(a) => Average Pay => 3 months Pay/3
    There was also a problem regarding the retrenchment procedure of Mr. Y. He had already spent 17 years in the organization, and as per ID Act- Sec25F, employers had to opt for retrenchment of a junior employee instead of Mr. Y. which was probably the primary legal concern to the organization. But also, the employer can take the employee performance under consideration, and if found unsatisfactory as per the organizational requirements & expectations, the company can retrench the employee and retain the junior high performer. The only concern here is the organization should produce evidence may be in form of a tracker that can record his low performance. Hence I this case Company. Procedure to be followed by the employer As the employee has not given any prior notice, the employer has to take the following procedure: Process the full and final settlement for the employee on or before the last working day i.e. 31-JAN-2007. The employer may provide the retrenchment letter to the employee along with the compensation amount (1 month notice pay + retrenchment compensation). The amount should be paid beforehand to the employees o Bank account or o In cheque mode In case the employee refuses to accept the cheque, the same would preferably be couriered to his registered mailing address through registered post. Amount to be paid to the Employee Assumptions: Increment is given on 01-Jan of every year XLRI PGCHRM - 12

    Labour Law
    Rs. 1500/- per month per year i.e. Rs. (1500 * 12) is paid as a part of gross salary & Increment is paid only once in a Year. PF contribution of Rs. 780 has been considered as a part of CTC. Other CTC is also not a part of gross salary. The employee should get the increment of the Jan-2007 i.e. 1500 The employee should be paid on two heads as per the law: Notice pay, because the company didnt processes any notice to the employee before retrenchment. This should be equal to the employees one month salary i.e. (21780 - 780 - 6000) + (1500 * 7) => 15000 + 10500 => 25500 Plus The employee should get the increment of the Jan-2007 i.e. 1500 Total gross salary as on 31-JAN-2007 => 25500 + 1500 => 27000 Compensation as per 25F i.e. Monthly average salary would be calculated for last 3 months i.e. Nov2006, DEC-2006 & JAN-2007. MW(a) => (25500 + 25500 + 27000) / 3 => 26000 Total Compensation =>( MW(a)/30) * 15 * 17 => Rs. 221000 Total amount to be paid => Notice pay + Compensation => 27000 + 221000 => 248000 Considerations: Salary increment takes place in the month of April every year. The employee will be entitled for 17 years compensation pay because as on 31-JAN-2007 he completes 17 Years and 1 month.

    XLRI PGCHRM - 12

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