Layoffs in India: the legal floor and the company's 'policy'

Notice, retrenchment compensation and the words HR uses instead of 'layoff'.

Checked 20 October 2026 against the official sources below.

Indian law calls it retrenchment: ending a worker's job for reasons other than punishment, retirement or ill health. Since 21 November 2025 it's governed by the Industrial Relations Code.

The floor, for a "worker" with at least a year of continuous service

• One month's written notice, or a month's wages instead.
• Retrenchment compensation of 15 days' average pay for every completed year of service.
• Larger establishments, with 300 or more workers, generally need government permission before retrenchment.

The catch

The Code's definition of "worker" excludes people employed mainly in managerial or administrative roles, and some supervisory roles above a pay level. Whether you count depends on what you actually do, not your title. Many companies' own severance policies are more generous than the floor. Many are less clear.

What the email will call it

Rightsizing. Restructuring. Role elimination. Mutual separation. That's The Restructuring Haiku: the worse the news, the softer the words.

Worth asking for in writing

Your last working day, the notice pay, the severance calculation, the leave encashment and the date of the full and final settlement.

This is general information about how workplaces and the rules usually work, not legal advice about your contract. For your own situation, read your appointment letter and policies, and talk to your state labour department, a union or an employment lawyer.

More guides

• Quiet firing: the PIP, the RTO and the managed exitWhen a company makes a job worse until you leave on your own.