For a worker with at least one year of continuous service (240 days in 12 months):
- Retrenchment (s. 70):
- one month's written notice, or wages in lieu;
- compensation of 15 days' average pay for every completed year, with a part year above six months counted as a year;
- notice to the appropriate government.
- Re-skilling fund (s. 83): the employer also pays 15 days' last drawn wages into the worker re-skilling fund, within 45 days of retrenchment.
- Lay-off (s. 67): 50% of the total basic wages and DA for each day of lay-off, except weekly holidays. Lay-off compensation is limited to 45 days in 12 months unless there is an agreement.
- Closure (s. 75): compensation as for retrenchment. If closure is due to unavoidable circumstances beyond the employer's control, compensation cannot be more than three months' average pay.
- Last come, first go: the last person employed in the category is retrenched first, unless reasons are recorded. Retrenched workers get preference in re-employment.
Use the retrenchment calculator on the Labour law calculators page.
Last reviewed 17-10-2026. General information, not legal advice for a specific case. Check the latest Act, Rules and notifications of the appropriate government before acting.