Sections 68 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.
Section 68 makes the employer keep a muster roll even during a lay-off, s.69 lists three cases where a laid-off worker gets no compensation, and s.70 sets the three conditions before a worker with a year of continuous service can be retrenched: one month's notice or pay, compensation of fifteen days' average pay per year, and notice to the Government.
The employer must keep a muster roll and let laid-off workers sign in (s.68). No lay-off compensation is payable if the worker refuses alternative work, does not report once a day, or the lay-off is due to a strike or slowing-down in another part of the establishment (s.69). A worker with one year of continuous service cannot be retrenched until he has had one month's written notice with reasons (or pay in lieu), been paid fifteen days' average pay for every completed year (or part over six months), and notice has been served on the appropriate Government (s.70).
Section 68: muster roll
"Notwithstanding that workers in any industrial establishment have been laid-off, it shall be the duty of every employer to maintain for the purposes of this Chapter a muster roll, and to provide for the making of entries therein by workers who may present themselves for work at the establishment at the appointed time during normal working hours." The muster roll is the record that proves attendance, which s.69(ii) and s.67 depend on.
Section 69: when no lay-off compensation is paid
| Clause | No compensation if the worker... |
|---|---|
| (i) | Refuses alternative employment in the same establishment, or in another establishment of the same employer in the same town or village or within eight kilometres, if in the employer's opinion it needs no special skill or previous experience and the worker can do it, provided the wages normally paid are offered for that work too |
| (ii) | Does not present himself for work at the appointed time during normal working hours at least once a day |
| (iii) | Is laid off because of a strike or slowing-down of production by workers in another part of the establishment |
The alternative-work test has four parts, all on the face of the text: same establishment or the same employer's other establishment within the stated distance; employer's opinion that no special skill or experience is needed; the worker can do it; and normal wages are offered. Section 67 is explained in section 67.
Section 70: conditions precedent to retrenchment
Section 70 applies to "any worker employed in any industry who has been in continuous service for not less than one year under an employer". Such a worker "shall be retrenched by that employer until":
| Clause | Condition |
|---|---|
| (a) | The worker has been given one month's notice in writing indicating the reasons and the period has expired, or has been paid wages for the notice period in lieu |
| (b) | The worker has been paid, at the time of retrenchment, compensation equivalent to fifteen days' average pay, or average pay of such days as may be notified by the appropriate Government, for every completed year of continuous service or any part thereof in excess of six months |
| (c) | Notice in the prescribed manner is served on the appropriate Government or the authority it specifies by notification |
Reading each condition
- Notice or pay in lieu. The notice must be written and state the reasons. The alternative is wages for the notice period. "Continuous service" is in s.66 (see sections 65 and 66).
- Compensation. "Average pay" is defined in s.2 (see our article on wages and average pay). The Code's default is fifteen days per year, but the appropriate Government may notify a different number of days. The "part in excess of six months" rule rounds a part-year up to a full year only if the part exceeds six months.
- Government notice. Served as prescribed, on the appropriate Government or the authority it specifies by notification.
- Set-off. Where s.67's second proviso applies, lay-off compensation paid in the preceding twelve months may be set off against the retrenchment compensation.
Worked example (illustrative figures). A worker retrenched after seven years and seven months of continuous service has seven completed years plus a part of seven months, which is in excess of six months, so compensation is for eight years. At fifteen days' average pay per year, that is 120 days' average pay. A worker with seven years and five months has seven completed years plus a part not in excess of six months, so seven years, or 105 days' average pay. The employer must also give notice or pay in lieu and serve the Government notice. For a formula-based walk-through under the old Act, see retrenchment compensation calculation: formula and examples. For tax, see tax on retrenchment compensation.
Payroll teams should run the full-and-final computation with the average-pay definition before payment. Our labour law compliance team can help you set the checklist.
Central Rules, 2026: rules 27 and 37
The Industrial Relations (Central) Rules, 2026 (G.S.R. 342(E), 8 May 2026) apply to Central-sphere establishments; where the State Government is the appropriate Government, State rules apply.
Rule 27: notice of retrenchment. The employer serves prior notice in Form XIII on the Central Government and the concerned Deputy Chief Labour Commissioner (Central), by e-mail or speed post:
| Case | When to send the notice |
|---|---|
| (a) Notice given to the worker under s.70(a) | Within three days from the day the notice is served on the worker |
| (b) No notice; one month's wages paid in lieu | Within three days from the day the wages are paid |
| (c) Retrenchment under an agreement specifying a termination date | So as to reach the Central Government, with a copy to the Deputy Chief Labour Commissioner, at least one month before that date; if the date is within thirty days of the agreement, within three days of the agreement |
Rule 37: worker re-skilling fund. Every employer who has retrenched a worker must, within ten days of the retrenchment, electronically transfer an amount equivalent to fifteen days of last drawn wages of each retrenched worker to the fund account displayed on the website of the Ministry of Labour and Employment and of the Chief Labour Commissioner (Central). That office transfers it to each retrenched worker's account within forty-five days of retrenchment for re-skilling. The employer also submits a list with the name, the amount and bank account details. This is in addition to the s.70 compensation; the rules are the source for this payment, and the Code text of s.70 does not mention it. Check your State's rules for non-Central establishments.
Sequence for an employer
- Confirm the worker has one year of continuous service and that s.70 applies.
- Give one month's written notice with reasons, or pay wages for that period.
- Compute and pay the compensation at the time of retrenchment.
- Send Form XIII within the rule 27 time, for Central-sphere establishments.
- Transfer the re-skilling amount under rule 37 within ten days.
- Follow the order of retrenchment in section 71.
Need help with a retrenchment?
The notice, the compensation and the government filing each have their own clock. Our labour law compliance team can help you check eligibility, compute dues and prepare the notices.
Key takeaways
- The employer must keep a muster roll even during lay-off (s.68).
- No lay-off compensation for refusing alternative work, not reporting daily, or lay-off from a strike or slowing-down elsewhere in the establishment (s.69).
- Retrenchment of a worker with one year's continuous service needs one month's written notice or pay, fifteen days' average pay per year, and notice to the appropriate Government (s.70).
- Central-sphere: Form XIII within three days, or one month before an agreed date (rule 27); re-skilling transfer within ten days (rule 37).
Read next
- Section 67: rights of laid-off workers to compensation
- Section 71-72: procedure for retrenchment and re-employment of retrenched workers
- Section 73: compensation on transfer of ownership or management
- Retrenchment: Section 25F requirements
Disclaimer: Based on the Industrial Relations Code, 2020 (as enacted) and, where noted, the Industrial Relations (Central) Rules, 2026 (G.S.R. 342(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.