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Retrenchment Compensation

Retrenchment Compensation

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Under the Industrial Disputes Act, retrenchment is defined as the termination of a worker’s employment by an employer for any reason other than voluntary retirement, reaching retirement age, or disciplinary action. This includes layoffs due to downsizing, closure of a business, or a reduction in the workforce for any other reason.

It is a form of financial compensation provided to employees who have been retrenched from their jobs. However, in order to receive retrenchment compensation, the employee should have been working for the employer for a continuous period of at least 1 year.

Calculation for exemption for retrenchment compensation

The LEAST of the following amounts is allowed as exemption for retrenchment compensation received by the employee:

(i) Actual retrenchment compensation received

(ii) Compensation equivalent to 15 days average salary {based on average salary of last 3 months} for every completed year or part thereof in excess of 6 months

(iii) Maximum amount as prescribed by the government i.e. Rs. 5,00,000

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NexWage

A68, Nathu colony
NOIDA Uttar Pradesh

8 Months

+91-8938990191

More About Retrenchment Compensation -

  • NexWage understands that managing payroll is often a pain point for many organizations. That is why we provide a cloud based payroll solution. NexWage simplifies automation for everything associated with employee management, including but not limited to onboarding, attendance, payroll processing, employee reimbursement, and compliance with governance regulations such as statute law. ANVM Business Solutions (P) Ltd . has supported us through the years and it’s safe to say that NexWage is a product of decades of industrial insight coupled with advancement in technology. Our leadership team offers a wealth of 36 years of shared experience in HR, finance, and compliance, providing unmatched security and credibility when it comes to payroll solutions for businesses of different scales. We do not sell just software. We offer relief for businesses. Our services manage the entire payroll so that clients can concentrate on other operations without worrying about compliance or timely payments. Like other companies, we do not intend to exhaust our clients. At NexWage, we believe in empowering every company out there by enabling them to trust us with a payroll system.

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