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Article
Published in the Express Magazine Dated July 22,
2001
General Attorney : Rajiv K. Luthra
I work for a small manufacturing unit with
approximately 50 people on their staff but since
it was doing badly, the owners sold the unit to
another group. The new management is reducing the
staff and in the process several of us are
threatened of losing our jobs. Don't we have any
legal recourse?
Anuj Kapoor, Ahmedabad
Industrial law recognizes and provides for certain
kinds of termination of services, one such being
retrenchment. The management has the right to
reorganize its business in any manner it likes for
the purpose of economy or convenience. In giving
effect to such reorganization the services of an
employee could be terminated. However, the
employer should act with bonafide intention. It
should not be done in bad faith, indiscriminately
or with the intention to victimise or get rid of
the services of the employee. The necessity of
retrenchment is entirely an internal management
decision. A question of good faith would depend on
the finances of the company, the effect of
retention of dead weight of extra staff and like
considerations. If the management establishes a
case on the ground of economisation and
rationalization, the Industrial Tribunal will not
interfere. Only those workmen who have been in
continuous service for not less than one year in
the undertaking immediately before the transfer of
management fall under the retrenchment procedure.
In giving effect to retrenchment, the principle
followed is that of "last come, first go". Where
there are less than 100 employees to retrench
personnel, the management is required to serve a
month's written notice indicating the reasons for
retrenchment or pay compensation.
This shall be equal to 15 days average pay for
every completed year of completed service or any
part thereof in excess of six months. In case no
notice is given to the employee, he is entitled to
receive his wages for the period of notice. Also,
notice has to be served upon the appropriate
Government. Therefore, if you fall under the
retrenchment procedure and unless you can prove
that your employer has terminated your services
for malafide reasons or due to any biases or has
not followed the prescribed procedure, you may not
have a fit case against such termination.
I wish to retire from my partnership firm. How
is it possible? What would be my liabilities
thereafter? Will my retirement dissolve the whole
firm?
P. Gupta, Pune
There is no inherent right to “retire” from a
partnership under the Partnership Act, 1890. A
partner may retire voluntarily with the consent of
all the partners, or through an express agreement
between the partners or where it is a
partnership-at-will, by giving a written notice of
the same. The retirement of a partner from a firm
does not release him from the liabilities arising
to third parties for any act done by him or by any
of the other co-partners for the firm, during his
tenure as a partner, until such time as a public
notice is given informing the retirement of such
partner. However, he shall not be held liable for
any act with third parties, if the third parties
deal with the firm without knowledge of such
person being a partner, irrespective of whether a
public notice has been issued or not.
A retired partner maybe discharged from any
liability to any third party for acts of the firm
done before his retirement by an agreement made by
him with such third party and the partners of the
reconstituted firm and this agreement may be
implied by a course of dealing between such third
party and the reconstituted firm after he had
knowledge of the retirement. Unless specifically
provided for in the partnership agreement,
retirement of a partner from a firm shall end up
in the dissolution of the firm.
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