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 VIII to XI of the Industrial Relations (Andhra Pradesh) Rules, 2026 prescribe the forms, copies and periods for strikes, lock-outs, retrenchment, closure and lay-off, and the payment an employer makes into the worker re-skilling fund after retrenchment.
Before an exit, a retrenchment or a closure, a review by our employment and labour law advisory team can check each notice and its copies.
The rules are the Industrial Relations (Andhra Pradesh) Rules, 2026, as notified by G.O.Rt.No.111 dated 12 June 2026. Retrenchment notice goes in Form-XIII; an application for prior permission for closure goes in Form XIV at least ninety days before the closure takes effect (rule 37). After retrenchment the employer pays fifteen days of last drawn wages per worker into the re-skilling fund account within ten days (rule 39).
Notification and commencement
The rules are the Industrial Relations (Andhra Pradesh) Rules, 2026, as notified by G.O.Rt.No.111 dated 12 June 2026. Later amendments and State notifications under these rules should be checked in the State Gazette. Rule 1(2) says they come into force on the date of their publication in the Official Gazette; the four Labour Codes were brought into force from 21 November 2025. Dispute procedure is in our article on arbitration and conciliation.
Strike and lock-out notices (rules 27 and 28)
The Central rule is rules 25 and 26 of the Central Rules. Under the Andhra Pradesh text:
- Strike (rule 27). Notice under section 62(1) is given to the employer in Form-XI, signed by the Secretary of the registered union or, where there is none, by five elected representatives of the workers. A copy goes to the conciliation officer and the Commissioner of Labour electronically, by registered or speed post. If the employer receives a strike notice from any person employed by him, he must intimate it electronically to the conciliation officer and Commissioner of Labour within five days of receiving it.
- Lock-out (rule 28). Notice under section 62(2) is given by the employer in Form-XII to the Secretary of every registered union, by registered or speed post or electronically, with a copy to the conciliation officer and the Commissioner of Labour electronically. It is displayed at the main entrance and may be posted on the establishment's portal. If the employer gives a lock-out notice to any person employed by him, he intimates the conciliation officer and Commissioner of Labour electronically within five days of the notice.
Retrenchment notice and re-employment (rules 29 and 30)
Where an employer desires to retrench a worker with continuous service of not less than one year, he gives prior notice in Form-XIII to the State Government and to the Deputy Commissioner of Labour, Joint Commissioner of Labour and Commissioner of Labour concerned, by email or registered or speed post. The Central rule is in rules 27 to 29 of the Central Rules. The timing in Andhra Pradesh is:
| Situation | Time for the Form-XIII notice |
|---|---|
| Notice given to the worker | Within three days from the date notice is served on the worker |
| No notice; one month's wages paid instead | Within three days from the date the wages are paid |
| Retrenchment under an agreement with a termination date | To reach the State Government, with a copy to the Deputy Commissioner of Labour, at least one month before that date |
| Agreement date within thirty days of the agreement | Within three days of the agreement |
For re-employment (rule 30), the employer prepares a seniority list of the category from which retrenchment is contemplated and pastes it on a conspicuous notice board at least seven days before the actual date of retrenchment. When a vacancy arises, workers retrenched within one year before the proposal, if citizens of India and willing, get preference by seniority. The vacancies are displayed at least fifteen days before they are to be filled, and are intimated to eligible retrenched workers by registered or speed post or email at their latest address. Where vacancies are fewer than retrenched workers, it is enough to intimate the senior-most workers, double the number of vacancies. A vacancy of less than one month needs no individual intimation, and a retrenched worker who does not present himself without sufficient cause shown in writing may be left out of later intimations. The employer then informs the negotiating union or council or the unions of the vacancies and names.
Closure notice (rule 31)
An employer intending to close an establishment gives notice within the time specified in section 74(1) of the Code, in Form-XIII, to the State Government with a copy to the Deputy Commissioner of Labour, by email or registered or speed post, and sends a copy to the registered unions or authorised representatives of the workers.
Prior permission: lay-off, retrenchment and closure (rules 32 to 38)
Chapter X applies to the establishments to which Chapter X of the Code applies. The Central posts are rules 30 to 32 and rules 35 and 36.
- Lay-off (rule 32). Application under section 78(1) is made in Form-XIV to the State Government with a copy to the Deputy Commissioner of Labour, stating the reasons. A copy is served on the workers concerned electronically, in person or by registered or speed post, and the application is displayed at the main entrance.
- Continuing a lay-off in a mine (rule 33). For a mine under section 78(3) where workers other than badli or casual workers were laid off for fire, flood, excess of inflammable gas or explosion, the employer applies in Form-XIV within thirty days of the start of the lay-off, stating the number of days, workers laid off, total workers, date of lay-off and reasons.
- Retrenchment (rule 35). Application for prior permission under section 79(1)(b) in Form-XIV electronically, with a copy to the Deputy Commissioner of Labour and the workers, and displayed at the entrance.
- Closure (rule 37). Application in Form XIV electronically for prior permission, with a copy to the Deputy Commissioner of Labour, "at least ninety days before the date on which the intended closure is to become effective", with a copy to the workers' representatives.
- Review (rules 34, 36 and 38). The State Government may review its order on its own motion or on application. The employer or any worker may apply for review within thirty days of the order; the Government disposes of it within two months of the application after a hearing. On its own motion it may take steps within one month of the order and dispose of the review within two months of the decision to review.
The Worker Re-skilling Fund (rule 39)
The Central rule is rule 37 of the Central Rules. In Andhra Pradesh, an employer who has retrenched a worker under the Code:
- within ten days of the retrenchment, electronically transfers an amount "equivalent to fifteen days of last drawn wages" of each retrenched worker to the account of the Assistant Commissioner of Labour having jurisdiction (the account name is displayed on the State Labour Department website);
- the Assistant Commissioner's office transfers it to each worker's account within forty-five days of retrenchment, for the worker's re-skilling;
- the employer also submits a list with each worker's name, the amount and bank account details to the offices of the Assistant Commissioner, Deputy Commissioner and Joint Commissioner of Labour.
A worked example
Nellore Aqua Feeds, an invented company, retrenches a technician with more than one year of service, paying one month's wages in lieu of notice. It sends the Form-XIII notice to the State Government and the labour officers within three days of paying those wages. Within ten days of the retrenchment it transfers the equivalent of fifteen days of his last drawn wages into the Assistant Commissioner's account and sends the list with bank details. Before the retrenchment it had displayed the seniority list for seven days.
Common lapses
- Sending Form-XIII after the three-day window.
- Skipping the notice board display of the seniority list.
- Forgetting to give copies of a Form-XIV application to workers and to the Deputy Commissioner of Labour.
- Missing the ten-day transfer to the re-skilling account, or the list with bank details.
- Treating a closure as outside Chapter X without checking the Code's applicability.
Need help with a retrenchment or closure?
Exit decisions carry statutory forms and fixed periods that are difficult to recover if missed. Our employment and labour law advisory team can plan the notices and copies with you.
Key takeaways
- Form-XI (strike), Form-XII (lock-out), Form-XIII (retrenchment and closure notice), Form XIV (prior permission).
- Retrenchment notice: three days from notice or wages in lieu; seniority list seven days before.
- Closure permission application at least ninety days before effect.
- Review: thirty days to apply, two months to dispose.
- Re-skilling fund: fifteen days of last drawn wages within ten days.
Read next
- Industrial Relations (Andhra Pradesh) Rules, 2026: arbitration, conciliation and dispute resolution
- Industrial Relations (Andhra Pradesh) Rules, 2026: compounding of offences, miscellaneous rules and Forms
- Rule 37 of the Industrial Relations Central Rules, 2026: worker re-skilling fund contribution
- Rules 27 to 29 of the Industrial Relations Central Rules, 2026: retrenchment and closure notices
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.