Retrenchment and closure 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 V to XIII of the Industrial Relations (Lakshadweep) Rules, 2025 are the dispute-time rules: how an employer gives notice of a change in service conditions, what happens in arbitration, conciliation and before the Tribunal, which forms carry strike, lock-out, retrenchment and closure notices, and what an employer pays into the re-skilling fund. This article gives only what the Lakshadweep text prints.
A change in service conditions needs a notice in Form VII (rule 36). Strike notice is in Form XII, lock-out notice in Form XIII, and an employer who receives or gives either must tell the conciliation officer and the Secretary (Labour) within five days (rule 44). An employer in a Chapter X establishment applies in Form XV for closure permission at least ninety days before the intended date (rule 53). On retrenchment the employer transfers fifteen days of last drawn wages per worker to the notified account within ten days (rule 55).
The rule set and commencement
The rules are the Industrial Relations (Lakshadweep) Rules, 2025, as notified on 25 March 2026 (F.No.08/02/2024-LE&T/73, Lakshadweep Gazette Extraordinary of 30 March 2026). Later amendments and State notifications under these rules should be checked in the State Gazette. Rule 1(iii) says they "shall come into force on the date of their publication in the Official Gazette"; the four Codes were brought into force from 21 November 2025. Rule 62 repeals the Lakshadweep Industrial Employment (Standing Orders) Central (Amendment) Rules, 2020, the Industrial Dispute Act (Lakshadweep Amendment) Regulation, 2025 and rules framed under the Industrial Disputes Act, 1947 by the Administration, with orders and actions under them treated as made under the corresponding new rules.
Bi-partite forums, trade unions and standing orders are in the first article of this set, on the Lakshadweep Works Committee, trade union and standing order rules. For strategy in a live dispute or a closure, our legal dispute resolution team can work through the forms and notices with you.
How the rules sit with the Central rules
The Central rules on arbitration are in rules 20 to 22, on conciliation in rule 23, on strike and lock-out notices in rules 25 and 26, on retrenchment and closure in rules 27 to 29, and on the re-skilling fund in rule 37. Compounding and the Central forms are in rule 38 and the Central Forms 14 to 16. The Lakshadweep numbering is different, so cite the Lakshadweep rule.
Chapters V and VI: notice of change and arbitration
- Notice of change (rule 36). An employer intending to change conditions of service on a matter in the Third Schedule to the Code gives notice in Form VII to the worker affected. The notice is displayed conspicuously on the notice board at the main entrance and at the office of the concerned Manager, and where a registered trade union exists a copy is served on its Secretary, or on each Secretary.
- Arbitration agreement (rule 37). In Form VIII, signed by the parties, with the written or electronic consent of the arbitrator or arbitrators. The employer signs personally or, for a company, by an authorised agent, manager or officer; workers sign by an authorised officer of the registered union or by three representatives authorised at a meeting of the workers; an individual worker signs personally or through a union officer.
- Notification (rule 38). Where the Administration is satisfied that those making the reference represent the majority of each party, it publishes a notification in the Official Gazette, so that others concerned can present their case.
- No union (rule 39). Workers choose a representative by a resolution of the majority of the concerned workers in Form IX; they are bound by that representative's acts.
Chapter VII: conciliation and the Tribunal
Rule 40 provides for the Judicial Member of the Tribunal (a High Court judge or former judge, or a person who has been a district judge or additional judge for not less than three years) and rule 41 for the Administrative Member (not below the rank of Special Secretary or equivalent), each taking an oath in Form X. Rule 42 then sets the procedure that matters to an employer.
| Step | Rule | Period or detail as printed |
|---|---|---|
| Conciliation Officer gives formal intimation of intention to begin | 42(1) | Date specified in the intimation |
| Union or worker sends statement of demands before the specified date | 42(1)(a),(b) | With spare copies for each opposite party |
| Opposite party files rejoinder | 42(1)(b) | Within one week of receipt, extendable by the officer |
| Report if no settlement | 42(2) | Within seven days of the end of conciliation |
| Application to the Tribunal | 42(5) | Form XI, within ninety days of the report |
| Statement of claim | 42(6) | Within thirty days of filing the application |
| First hearing | 42(7) | Within one month of receipt of the application |
| Written statement by opposite party | 42(7) | Within thirty days of the first hearing |
| Arguments | 42(10) | Not beyond fifteen days from closure of evidence |
| Adjournments | 42(11) | Ordinarily not above a week at a time; not more than three in all |
| Award communicated | 42(13) | Within one month of pronouncement |
The Tribunal may proceed ex-parte against a defaulting party and revoke that order before the award on justifiable grounds (rule 42(12)). Copies of an award or document cost Rs. Two per page, with Re. Two per page for certification, both payable electronically, and an additional fee of one-half for immediate delivery (rule 42(16)). Proceedings are in open court, with a power to hold them by video conferencing or in-camera (rule 42(18)).
Chapter VIII: strikes and lock-outs
Rule 43 requires notice of strike under section 62(1) to be given to the employer in Form XII, signed by the President or General Secretary and five elected representatives of the registered union, with a copy electronically or otherwise to the conciliation officer and the Secretary (Labour). Under rule 44(1), notice of lock-out is given by the employer in Form XIII to the President or General Secretary of every registered union, with a copy to the conciliation officer and the Secretary (Labour) electronically, and displayed on a notice board or electronic board at the main entrance. An employer who receives a strike notice, or who gives a lock-out notice, must intimate the conciliation officer and the Secretary (Labour) within five days (rule 44(2) and (3)).
Chapters IX and X: lay-off, retrenchment and closure
| Matter | Rule | Form | As printed |
|---|---|---|---|
| Notice of retrenchment (worker with continuous service of not less than one year) | 45 | Form XIV | To the Administration and the Secretary (Labour), by e-mail, registered post or speed post |
| Re-employment of retrenched workers | 46 | Offer by registered post, speed post and e-mail | At least 15 days before; workers retrenched within one year before the proposal; Indian citizens; preference if willing |
| Notice of intended closure | 47 | Form XIV | To the Administration, copy to Secretary (Labour) |
| Permission for lay-off (Chapter X) | 48 | Form XV | Reasons stated; copy served on the worker electronically and by registered or speed post; displayed at the entrance |
| Continuing lay-off in a mine | 49 | Form XV | Within thirty days of commencement of lay-off |
| Permission for retrenchment | 51 | Form XV | Reasons stated; copy to workers; displayed at the entrance |
| Permission for closure | 53 | Form XV | At least ninety days before the closure; copy to worker representatives |
| Review of orders on lay-off, retrenchment, closure | 50, 52, 54 | None | Within thirty days from the date of the order, on own motion or on application |
Chapter X applies to the establishments to which it extends under the Code; rules 48 to 54 print no size threshold of their own, so read the Code's section 77 for that. The rules do not print the length of the notice in rule 45 either; the Code's retrenchment provisions apply.
Chapter XI: the Worker Re-skilling Fund (rule 55)
Every employer who has retrenched a worker or workers must, within ten days, at the time of retrenching, electronically transfer an amount equivalent to fifteen days of the last drawn wages of each retrenched worker to the account whose name is displayed on the website of the Labour Department of the Administration. The Administration transfers the amount to each worker's account electronically within forty-five days of receiving it. The employer also submits a list with each worker's name, the fifteen-day amount and bank account details.
Chapters XII and XIII: offences, complaints and the Forms
For section 85(1), the Administration may appoint an officer not below the rank of Under Secretary to the Government of India or an equivalent officer to hold the enquiry (rule 56). Under rule 57, where prosecution has not been instituted, the compounding officer sends the accused a notice in Form XVI in three parts: the offence and amount, the consequences of non-compounding, and the application. The accused returns Part III electronically and deposits the amount within fifteen days of receipt of the notice. If the accused complies, the offence is compounded for the amount deposited and no complaint can be filed; where prosecution is already pending, the Court may allow composition on application, and then discharges the accused. The rules print no compounding percentage; the Code's compounding provisions apply.
A worker's complaint under section 91 is made electronically and by registered or speed post in Form XVII, verified by the worker or an authorised representative (rule 58). A worker without a union and an employer outside an association may authorise a representative in Form IX (rules 59 and 60). Rule 61 requires the employer to submit statistics on strikes, lock-outs, lay-off, retrenchment and closures electronically to the Administration and the Director General, Labour Bureau.
The Forms are: Form I (memorandum of settlement), II (annual return and auditor's declaration), III to VI (trade union application, affidavit, register and certificate), VII (notice of change), VIII (arbitration agreement), IX (authorisation of representative), X (oath of office), XI (application to the Tribunal), XII (strike notice), XIII (lock-out notice), XIV (retrenchment and closure notice), XV (permission applications), XVI (compounding notice) and XVII (complaint).
A worked example
A hotel operator in Minicoy decides to retrench three workers, each with more than one year's continuous service. The operator gives notice in Form XIV to the Administration and the Secretary (Labour), offers re-employment under rule 46 to any retrenched workers of the previous year at least 15 days before filling a vacancy, and, at the time of retrenchment, transfers fifteen days of last drawn wages for each worker to the notified account within ten days and sends the list of names and bank details.
Common lapses
- Using Form XIV for a permission application that belongs in Form XV.
- Not telling the conciliation officer and the Secretary (Labour) within five days of a strike or lock-out notice.
- Treating the closure permission application as due at any time before closure, rather than at least ninety days before.
- Transferring the re-skilling amount after ten days, or without the list of names and bank details.
Need help with a dispute, retrenchment or closure in Lakshadweep?
If you face a dispute, a strike notice or an intended retrenchment or closure, our legal dispute resolution service can prepare the notices and applications against the Lakshadweep forms and keep the time limits in view.
Key takeaways
- Form VII for notice of change; Form VIII for arbitration agreement; Form XI for the Tribunal.
- Strike notice Form XII, lock-out notice Form XIII; five days to intimate the conciliation officer and Secretary (Labour).
- Closure permission in Form XV at least ninety days before the closure; review orders within thirty days.
- Re-skilling fund: fifteen days of last drawn wages per retrenched worker, within ten days.
- Compounding by Form XVI; the accused deposits within fifteen days of the notice.
Read next
- Industrial Relations (Lakshadweep) Rules, 2025: Works Committee, trade unions and standing orders
- Code on Social Security (Lakshadweep) Rules, 2025: organisations, cess, records and vacancy reporting
- Rules 25 and 26 of the Central Industrial Relations rules: notice of strike and lock-out
- State rules under the four Labour Codes: which States have notified final rules
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.