Termination Letter Formats for Indian Employers

That single omission is what turns an ordinary exit into a contested one.

Start with the definition, because it is wider than almost anyone expects. Section 2(zh) of the Industrial Relations Code says retrenchment is the termination by the employer of the service of a worker for any reason whatsoever, other than as a punishment inflicted by way of disciplinary action. Any reason whatsoever. A role made redundant is retrenchment. So is a restructuring, a performance exit, and the polite version where it simply is not working out. Only five things are carved out: voluntary retirement, superannuation, non-renewal of a contract on its expiry or under a stipulation in it, completion of the tenure of fixed term employment, and continued ill-health. One word to be careful with: a lay-off under s.2(t) is not any of this. It is a temporary inability to give work to somebody still on the muster rolls, the employment continues, and sending a termination letter instead ends the job of somebody you meant to keep.

Once it is retrenchment, section 70 attaches three conditions for anyone with a year of continuous service, and they are conditions precedent rather than afterthoughts. One month's notice in writing indicating the reasons, or wages in lieu of it. Compensation of fifteen days' average pay for every completed year of continuous service and for any part of a year in excess of six months, paid at the time of retrenchment. And notice served on the appropriate Government. The third is the one almost nobody sends, and it is the easiest to prove was never sent.

Then there is the rule that is quoted everywhere with its scope left off. Yes, section 79 replaces one month's notice with three months and adds the prior permission of the appropriate Government, with a copy of the application served on the worker at the same time. But it only does that for establishments Chapter X applies to, and section 77(3) defines those as a factory, a mine or a plantation. A four hundred person software firm is none of the three, so it never needs that permission and section 70 keeps governing its exits. Look the three terms up in the OSH Code rather than the Acts section 77(3) names, because its section 143 repealed all of them on 21-Nov-2025: a factory is now twenty workers with power or forty without, where it used to be ten and twenty, and a hotel, restaurant or eating place is expressly not one. Where Chapter X does apply it replaces section 70 rather than adding to it: section 82 carries only sections 66, 71, 72, 73 and 76 across, so the compensation comes from section 79(9) and there is no section 70(c) notice to send. Read the other way round the mistake is worse, so it is worth saying that section 65 confines only sections 67 to 69 to those three kinds of workplace: section 70 itself is not limited that way and does reach an ordinary office.

Two things outlive the letter. Section 71 says that within a category you ordinarily retrench the last person employed unless you record your reasons for doing otherwise, and section 72 gives retrenched workers an opportunity and a preference for a year if you hire for the same work again. Both are worth a diary note on the day the letter goes out. The labour codes readiness kit covers what else changed on 21 November 2025, and the relieving and experience formats pick up the paperwork the day after the last working day.