Retrenchments in Kerala: Labour codes and its rules | Explained
The story so far U.S. technology firm CorroHealth Infotech Private Limited retrenched about 800 employees from its Kochi and Kozhikode centres. While the company cited
The story so far U.S. technology firm CorroHealth Infotech Private Limited retrenched about 800 employees from its Kochi and Kozhikode centres. While the company cited operational losses for the decision, both the Government of Kerala and the Opposition in the State said the move was illegal. Kerala Labour Minister Bindu Krishna said she will raise the matter with Union Labour Minister Mansukh Mandaviya on Monday (July 13, 2026). While the Union Government is tight-lipped about the matter, senior officials have been arguing that had Kerala implemented the four Labour Codes, the workers would have received a better deal. Senior Congress MP K.C. Venugopal and former Kerala Labour Minister and CPI(M) leader V. Sivan Kutti blamed the implementation of the Labour Codes for such unilateral retrenchments. The provisions in Labour Code The Industrial Disputes Act of 1947, the Trade Unions Act of 1926 and the Industrial Employment (Standing Orders) Act of 1946 are merged into the Code on Industrial Relations. It defines retrenchment as the termination by the employer of the service of a worker for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action. It does not include retirement or termination of the service of the worker as a result of the non-renewal of the contract or after ending fixed term of employment. Chapter IX of the Industrial Relations Code lays down the conditions for lay-off, retrenchment and closure in establishments.
It has provisions for conditions precedent to retrenchment of workers, procedure for retrenchment, reemployment of retrenched workers, and compensation to workers in case of transfer of establishment. It says that no worker shall be retrenched until the worker has been given one month’s notice in writing indicating the reasons for retrenchment, compensation equivalent to fifteen days’ average pay for every completed year of continuous service and a notice to the appropriate authority on retrenchment. Provisions in Rules The Rules of the Industrial Relations Code, published recently, mandate that the employer shall serve prior notice of retrenchment in Form-XIII to the Central Government and to the concerned Deputy Chief Labour Commissioner (Central) through e-mail or speed post on the retrenchment. “An application shall be made in Form XIV by the employer to the Central Government electronically, stating clearly the reasons for the intended retrenchment therein and a copy of such application shall be sent to the concerned workers electronically, or in person, or by speed post,” the Rule says. Worker Skilling Fund Chapter XI of the Code provides that the appropriate Government shall set up a worker re-skilling fund. The employer must contribute to the fund an amount equal to 15 days’ wages last drawn by the worker immediately before the retrenchment. “The fund shall be utilised by crediting fifteen days’ wages last drawn by the worker to his account who is retrenched within forty-five days of such retrenchment, in such manner as may be prescribed,” the Code adds.
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