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Industrial Disputes Act, 1947 · Chapter VB: Special Provisions Relating to Lay-Off, Retrenchment and Closure in Certain Establishments

Section 25N: Conditions precedent to retrenchment of workmen

The Industrial Disputes Act, 1947 was repealed and replaced by the Industrial Relations Code, 2020 from 21 November 2025. It still applies to matters and proceedings from before that date, as the repealing law provides.

In plain words

In establishments covered by Chapter VB, a workman with at least one year of continuous service cannot be retrenched without three months' written notice, or wages instead, and the prior permission of the government.

  • The employer must apply with reasons and copy the workmen. The government decides after a hearing, and permission is treated as granted if no decision comes within sixty days.
  • The order lasts one year and can be reviewed or referred to a Tribunal, which decides within thirty days.
  • Retrenchment without permission, or after refusal, is illegal from the date of notice.
  • When permission is granted or deemed granted, each workman gets compensation of fifteen days' average pay for every completed year of service, counting any part over six months.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Read the in-depth explanation, with key Supreme Court rulings ↓

Official text

(1) No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until,—

(a) the workman has been given three months’ notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; and

(b) the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereafter in this section referred to as the specified authority) has been obtained on an application made in this behalf.

(2) An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner.

(3) Where an application for permission under sub-section (1) has been made, the appropriate Government or the specified authority, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.

(4) Where an application for permission has been made under sub-section (1) and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.

(5) An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub-section (6), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order.

(6) The appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant

permission under sub-section (3) or refer the matter or, as the case may be, cause it to be referred, to a Tribunal for adjudication:

Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.

(7) Where no application for permission under sub-section (1) is made, or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workman and the workman shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him.

(8) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is necessary so to do, by order, direct, that the provisions of sub-section (1) shall not apply in relation to such establishment for such period as may be specified in the order.

(9) Where permission for retrenchment has been granted under sub-section (3) or where permission for retrenchment is deemed to be granted under sub-section (4), every workman who is employed in that establishment immediately before the date of application for permission under this section shall be entitled to receive, at the time of retrenchment, 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.]

Source: India Code (Legislative Department), the text of the Act as it stood before its repeal. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Understanding this section

Section 25N applies to larger establishments covered by Chapter VB, generally factories, mines and plantations with at least one hundred workmen. A workman with one year of continuous service there cannot be retrenched without three months' notice or pay in lieu, and the prior permission of the appropriate Government.

The permission procedure

The employer applies stating the reasons, and serves a copy on the workmen. The Government holds an inquiry, hears the employer, the workmen and others interested, and grants or refuses permission by a reasoned order, considering the genuineness and adequacy of the reasons and the interests of the workmen.

If the Government does not communicate an order within sixty days of the application, permission is deemed granted. The Government may review its order or refer the matter to a Tribunal under sub-section (6). A retrenchment without permission, or after refusal, is treated as illegal, and the workmen are entitled to all benefits as if not retrenched.

Compensation

A workman retrenched with permission is entitled to compensation of fifteen days' average pay for every completed year of continuous service, the same measure as section 25F.

Key Supreme Court rulings

Common mistakes

  • Applying only section 25F to an establishment with one hundred or more workmen.
  • Forgetting the deemed permission after sixty days.

Read with: Section 25K Industrial Disputes Act, 1947, Section 25-O Industrial Disputes Act, 1947, Section 25F Industrial Disputes Act, 1947

Prepared with AI assistance as a study aid. Every ruling listed was checked against the Supreme Court's own judgments on this site, and quoted words appear in those judgments; linked names open the full judgment. Read the judgments themselves before relying on them. Not legal advice.

Supreme Court judgments citing the section 25N