Retrenchment compensation

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Guest

Guest (Querist)

27 August 2015 Dur to Shutdown of Nokia Plant in Chennai,an employee joined in our client office.here the issue is he rcvd RETRENCHMENT COMPENSATION .For calculation of retrenchment compensation the nomenclature used is 'Average salary of 3 months'.Here what is average salary ?? . I believe it is only Basic Salary

Amol S Joglekar

Amol S Joglekar (Expert)
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27 August 2015 RETRENCHMENT COMPENSATION – SECTION 10 (10B)

The retrenchment compensation received by a workman is exempt provided that in general it does not exceed the sum calculated on the basis provided in Section 25F(b) of Industrial Disputes Act, 1947 or any such amount as is specified by the Central Govt. by a Notification, whichever is less. The maximum exemption is Rs. 5 lakhs where retrenchment is on or after 1-1-1997

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Guest

Guest (Querist)

27 August 2015 But What i asked here is the "average pay" means whether it includes only Basic salary or Total Gross Salary including allowances.I am clarified with that "average pay" includes allowances and not any perquisites.Bcoz S.2(rr) of Indutrial Disputes Act,1947 defines "Wages" to include all the allowances which are paid in cash.So "average pay" means simple average of last 3 months drwan salary.

Amol S Joglekar

Amol S Joglekar (Expert)
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27 August 2015 yes, you are right. Salary includes every things if the terms of employment so provide.
In NOKIA's case you can take the average salary which is inclusive of every thing.

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