Retrenchment and explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Chapters VII to X of the Industrial Relations (Gujarat) Rules, 2021 (rules 24 to 35) fix the forms, notices and periods an employer in Gujarat follows on strikes and lock-outs, retrenchment, closure, applications for prior permission and the worker re-skilling fund.
The rules are the Industrial Relations (Gujarat) Rules, 2021, as notified on 5 October 2021 (No. KHR-2021-129-IDA-122020-539471-M(2)), in force from the commencement of the Industrial Relations Code, 2020. Retrenchment and closure notices go in Form VIII; permission applications in Form IX, closure permission being sought at least ninety days before closure (rule 33). On retrenchment, the employer transfers fifteen days of last drawn wages per worker to the re-skilling account within ten days (rule 35).
Later amendments and State notifications under these rules should be checked in the State Gazette.
Commencement and Central rules
Rule 1(3) reads: "They shall come into the force from the commencement of the Industrial Relations Code, 2020." The four Labour Codes were brought into force from 21 November 2025. The Central rules are in rules 25 and 26 on strike and lock-out, rules 27 to 29 on retrenchment and closure and rule 37 on the re-skilling fund. Gujarat's own text is below; for advice on a restructuring, see our employment and labour law advisory service.
What the employer must do
| Obligation | Rule | Form | Time limit as printed | Authority |
|---|---|---|---|---|
| Notice of lock-out | 25(1) | Form VII | Displayed at the main entrance; copy electronically | Secretary of each registered union; Conciliation Officer; Commissioner/Director of Labour |
| Intimate a strike notice received | 25(2) | Electronic | Within five days of receiving it | Conciliation Officer; Commissioner/Director of Labour |
| Intimate a lock-out notice given | 25(3) | Electronic | Within five days of the notice | Same |
| Retrenchment notice (worker in continuous service for not less than one year) | 26 | Form VIII | Not stated | State Government; Deputy Commissioner of Labour |
| Offer re-employment | 27 | Registered or speed post and electronic | At least 10 days before filling the vacancy | Retrenched Indian-citizen workers |
| Closure notice | 28 | Form VIII | Not stated | State Government; copy to Deputy Commissioner of Labour |
| Permission to lay off | 29 | Form IX | Not stated | State Government |
| Permission to retrench | 31 | Form IX | Not stated | State Government |
| Permission to close (Chapter X establishments) | 33 | Form IX, electronically | At least ninety days before closure takes effect | State Government |
| Re-skilling contribution | 35 | Electronic transfer | Within ten days of retrenching | State account displayed on the Labour department website |
Strikes and lock-outs (rules 24 and 25)
A strike notice under section 62(1) is given to the employer in Form VI, signed by the Secretary and five elected representatives of the registered Trade Union of the establishment, with a copy to the Conciliation Officer and the Commissioner/Director of Labour. A lock-out notice is given by the employer in Form VII to the Secretary of every registered union, with a copy to the Conciliation Officer and the Commissioner/Director of Labour electronically, and displayed conspicuously on a notice board or electronic board at the main entrance. The employer also intimates each strike notice received, and each lock-out notice given, within five days.
Retrenchment and closure notices (rules 26 to 28)
An employer who desires to retrench a worker with not less than one year's continuous service gives notice in Form VIII to the State Government and the Deputy Commissioner of Labour, electronically, personally or by registered or speed post. Where a vacancy arises and workers were retrenched within one year before the proposal, the employer offers them an opportunity at least 10 days before, by registered or speed post and electronically, to those who are citizens of India; those willing get preference. An intended closure is notified in Form VIII to the State Government with a copy to the Deputy Commissioner of Labour.
Prior permission (rules 29 to 34)
For establishments to which the special provisions apply, the employer applies to the State Government in Form IX. A lay-off or retrenchment application states the reasons and is served at the same time on the worker concerned, electronically and by registered or speed post, and displayed on the notice board or electronic board at the main entrance. A closure application is made electronically at least ninety days before the intended effective date, with a copy to the workers' representatives electronically and by registered or speed post. The State Government may review its order granting or refusing permission, on its own motion or on application by the employer or any worker, within thirty days from the date of the order (rules 30, 32 and 34).
The worker re-skilling fund (rule 35)
An employer who has retrenched workers must, within ten days, at the time of retrenchment, transfer electronically an amount equal to fifteen days of the last drawn wages of each retrenched worker to the account the State Government maintains; the account name is displayed on the websites of the Labour and Employment Department and the Commissioner/Director of Labour. The State transfers the funds to each worker's account within forty-five days of receipt, and the worker uses the amount for re-skilling. The employer also submits a list with each worker's name, the amount and bank account details.
A worked example
Tapi Packaging Pvt Ltd, Surat, retrenches 12 workers, each with more than a year of continuous service. It files Form VIII with the State Government and the Deputy Commissioner of Labour, transfers fifteen days of last drawn wages per worker electronically to the State account within ten days, and sends the list with bank details. Six months later it has a vacancy; it writes by speed post and electronically to the retrenched Indian-citizen workers at least ten days before filling it, and gives willing workers preference.
Need help with retrenchment or closure?
Notices, permissions and the fund transfer must follow each other in order. Our employment and labour law advisory team can prepare the forms and the timeline for your Gujarat establishment.
Key takeaways
- Strike notice is Form VI; lock-out notice is Form VII; both are intimated electronically.
- Retrenchment and closure notices are in Form VIII; prior permission applications in Form IX.
- Closure permission must be applied for at least ninety days before the effective date.
- The State may review a permission order within thirty days of the order.
- Re-skilling contribution is fifteen days of last drawn wages per retrenched worker, transferred within ten days.
Read next
- Industrial Relations (Gujarat) Rules, 2021: arbitration, conciliation and Tribunal procedure
- Industrial Relations (Gujarat) Rules, 2021: compounding of offences, protected workers and Forms
- Rules 30, 31 and 32 of the Central Rules: application for lay-off, continuation and review
Disclaimer: Based on the State or Union territory rules named above, as notified under the Labour Codes and consulted on 4 October 2026. Later amendments, State notifications, fees and forms should be checked in the State Gazette and on the State labour department website. This article is general information, not legal advice; check the official text before acting.