A Study on Retrenchment of Workers under

Labour Law: Bangladesh Perspective

Contents
Executive Summary................................................................................................................................... vi
Introduction................................................................................................................................................. 1
1.1 Problem and Purpose......................................................................................................................... 1
1.2 Objectives of the Study...................................................................................................................... 1
1.3 ethodolo!y...................................................................................................................................... 2
1." Scope and #imitation......................................................................................................................... 2
1.$ %eport Or!ani&ation...........................................................................................................................3
%esearch 'indin!s....................................................................................................................................... "
2.1 %etrenchment..................................................................................................................................... "
2.2 (onditions for a valid %etrenchment................................................................................................."
2.3 Procedure of retrenchment................................................................................................................. $
2." %etrenchment compensation..............................................................................................................$
2.$ %e)employment of retrenched *or+ers..............................................................................................,
2., (ondition of re)employment for retrenchment *or+ers.....................................................................,
2.- (ase Study......................................................................................................................................... -
2.. %ecent incidents of *or+er/s retrenchment in 0an!ladesh..............................................................11
(onclusion................................................................................................................................................. 11
3.1 'indin!s........................................................................................................................................... 11
3.2 %ecommendations............................................................................................................................11
3.3 Scope of further study...................................................................................................................... 12
0iblio!raphy.............................................................................................................................................. 13
Executive Summary
2he total economy of a country !reatly depends upon the industrial sector.2he !ro*th of the
industrial sector involves some major aspects li+e natural resources3 local investment policy3
forei!n direct investment policy3 labour mana!ement etc.0esides these3 Proper mana!ement of
labour is an essential matter for !ro*th of industrial sector.
#abour ri!ht is most essential in 0an!ladesh. 0ut the labours are i!norant of their ri!ht. 2hey
don/t +no* properly about labour la*s and education. It is a !reat problem. 'or this reason3very
often they are retrenched by the employers *ithout any le!al process. %etrenchment of labour by
any ille!al process cannot be supported. %etrenchment of labour should be le!al and humane.
2his report is an effort to !ive the reader some insi!hts into the retrenchment practices in the
industrial sector of 0an!ladesh under the labour act of 211, and its implications on the affected
*or+ers and their families. Some case studies and recent events re!ardin! retrenchment of
*or+ers are !iven to a!ain to put emphasis on the importance of retrenchment in the industrial
sector of 0an!ladesh.
I su!!est the !overnment implement la*s strin!ently in order to serve the *or+force of the
country properly. 4lso the !overnment should implement proper safe!uards and controls in order
to prevent the abuse of po*er and la*.
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Introduction
1.1 Problem and Purpose
'or any !ood employer3 terminatin! the services of an employee for reasons other than due
retirement may be a painful exercise. 4ll the same3 there may arisecircumstances *here the
employer has to ta+e this painful decision. 2he dictum 5hire and fire5 is no more available to the
employer. 0an!ladesh #abour #a* 211, 6(hapter 23 Employment and condition of Service7
reco!ni&es mana!ement8s prero!ative to employ and for reasons of redundancy to terminate3
dismiss3 dischar!e and lay)off an employee sho*in! proper cause and excuse. 9o*ever3 the
labour court also has the ri!ht to interfere into any mana!ement prero!atives and stri+e do*n any
unfair labour practices or victimi&ation.
1.2 Objectives of te Study
2he object of the la* is to establish a continuous process of harmonious relationship bet*een the
employers and employee. 2hey have another object of fastenin! to!ether both the labour and
capital in order to create an atmosphere that they are an indivisible *hole in production. 2he
ultimate object of labour and industrial la* is to maintain industrial peace security and steady
!ro*th of production.
2he ori!in and !ro*th of labour la* may be ascribed mostly to the development of or!ani&ed
industry *here a lar!e number of *or+ers includin! *omen and children are employed under
conditions *hich tend to be detrimental to their safety and *elfare and a!ainst *hich they are
often to protect themselves.
'rom historical point of vie* labour la* has !iven birth to some fundamental industrial ri!hts to
labours in the field of production. 4t the same time it has also provided protection for those
ri!hts.
'rom a practical point of vie* labour and industrial la* provide for three types of dispute
settlement measures voluntary settlement machinery3 :uasi)judicial machinery and judicial
machinery
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1.!"etodolo#y
2he report *ill mostly focus on !atherin! information usin! secondary sources.2he methodolo!y
used in thisstudy is ;ualitative ethodolo!y. 2he research *or+s are based on
1. 9istorical Study and 2. 4nalytical Study.
1. $istorical Study< It has a historical bac+ !round of *or+er/s movement for the establishment
of their ri!hts. 2he *or+er/s movement becomes successful. =o* the modern *orld3 odern
state and >nited =ations Or!ani&ation hi!hli!hted the *or+er in their di!nity3 honor3 position3
participation social *or+ political activity etc.
In 0an!ladesh the *or+er/s retrenchment are !uaranteed in their constitution3 state la*s3 and
social and state activities. 2hrou!h the historical revolution the *or+er/s ri!ht has come to this
position. 2he history *or+er/s movement started from 1.?1 after successful victory of the
0an!ladesh *ar of Independence.
2. %nalytical Study< In this study the formation development and solutions re!ardin! *or+er/s
ri!ht and retrenchment are to be discussed. In this process of analysis the la*s related to the
subject and solutions from the judicial process are to be discussed. 2he enforcement of *or+er/s
ri!ht is judicial matter. So in this process of study3 the analytical study is necessary and important
for this *or+. 'or the research *or+s the analytical study *as follo*ed.
2he main object of the study is to evaluate effects and importance on persons3 society and the
state. 2he study is mainly :ualitative in nature because3 the impact that the study has searched
*ould not be possible to assess *ithout :ualitative data. #e!al issues3 judicial rulin!s and
administrative mana!ement of the !overnment and the public3 all are related *ith the issues. 2he
research *or+ is involved *ith the le!al matter3 administrative matter and judicial decision of the
*or+er/s retrenchment. >nder these circumstances a re!ulated research *or+ *ill be suitable to
solve the problems after investi!atin! different variables such as la*s relatin! to @4 Study on
%etrenchment of *or+ers under #abour #a*< 0an!ladesh PerspectiveA.
1.&Scope and 'imitation
2he discussion *ill be limited mainly to discussions about retrenchments includin! conditions
andprocedure of valid retrenchment3 retrenchment compensation3 %e)employment of retrenched
*or+ers3 (ondition of re)employment for retrenchment *or+ers and Bistinction bet*een lay)off
and retrenchment and some case studies and examples.
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1.()eport Or#ani*ation
2he report consists of 3 parts
Introduction
Bescription
(onclusion and %ecommendations
2he introduction *ill provide the bac+!round3 purpose3 scope3 limitation3 objective and the
methodolo!y of the report.
2he body *ill be titled research findin!s and *ill provide the results and analysis of the survey
in a detailed manner.
'inally3 the conclusion *ill or!ani&e the results in a manner that the reader *ill understand and
provide recommendations in an enumerated list.
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)esearc +indin#s
2.1 )etrencment
Section 26117 define the term retrenchment as the termination by the employer of service of
*or+ers not as a measure of punishment inflict by *ay of discipline action but on the !round of
redundancy. @%etrenchmentA means the termination by the employer of the services of *or+ers
on the !round of redundancy Csec. 26:7D. 2hus retrenchment measure to remove surplus staff it
results in a complete severance of employer relationship. 2he definition also ma+es it clear that
retrenchment is a +ind of termination but every termination is not retrenchment. 2o be
retrenchment the termination must be on the !round of sedentary.
1
2.2 Conditions for a valid )etrencment
4ccordin! to section 21 read *ith section 26117 the conditions of a valid retrenchment are as
follo*s<
1. 2he *or+ers to be retrenchment must be !iven one month/s noticeE
2. 2he notice must be !iven in *ritin!E
3. 2he notice must contain reasons for retrenchmentE
". 4lternative to condition 627 above3 instead of !ivin! one month3 a *or+er may be
retrenched instantly by !ivin! him payment of *a!es for the period of noticeE
$. 4 copy of the notice of retrenchment must be send to the chief inspectorE
,. 4 copy of the notice must be send to the (04E
?. 2here must be termination of services of a *or+man on the !round of redundancy or
surplus labour.
1
Md. Abdul Halim, The Bangladesh Labour Code, 2006,CCB Foundation, Ed.1, .!6
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2.! Procedure of retrencment
Section 21 of the code incorporates the *ell)reco!ni&ed principle of retrenchment in industrial
la*
2
3 namely3 the @last come first !oA or @first come last !oA. 2he principal laid do*n in section
21 for retrenchment procedure are to be adhered to by every employer. 2he conditions *hich this
section prescribes for the procedure of retrenchment are as follo*s<
1. 2he claimin! of the protection of retrenchment procedure under section 21 must be a
F*or+er/ *ithin the definition in clause6,$7 of secion2E
2. 2he person must belon! to a particular cate!ory of *or+ers in the establishment concernedE
3. 2here should not be any a!reement bet*een the employer and employee contrary of Flast
come first !o/E
". 2he employer is bound to comply *ith all the above conditions *hile retrenchin! a *or+er.
9o*ever3 the employer can deviate from this procedure on justifiable reasons *hich must
be recorded.
2.& )etrencment compensation
>nder clause 6c7 of section 21627 payment of compensation for retrenchment is mandatory. 2he
provisions of compensation for retrenchment are as follo*s<
617 4t the time of retrenchment the *or+er must be paid compensation e:uivalent to thirty
day/s *a!es for every completed year of service or for any part thereof in excess of six
month/s or !ratuity3 if any3 *hichever is hi!her3
627 2o claim compensation for retrenchment the *or+er must sho* that he has been in
continuous service for not less than one year under that employer *ho has retrenched himE
637 If a *or+er3 *ho is to be laid)off even after first "$ days in a calendar year under section
1,6?73 is retrenchment instead of layin!)off3 no notice *ill be re:uired. 9o*ever3 he shall
be paid 1$ day/s *a!es in addition to the compensation or !ratuity *hich may be payableE
6"7 Ga!es as compensation for retrenchment *ill mean the avera!e of the basic *a!es plus
dearness allo*ances3 if any3 paid durin! the period of t*elve months immediately
precedin! the date of retrenchment.
2
Md. Abdul Halim, The Bangladesh Labour Code, 2006,CCB Foundation, Ed.1, .!!
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2.( )e,employment of retrenced -or.ers
%etrenchment of surplus *or+ers causes undue sufferin! not only to the retrenched *or+er but to
all his dependents. 2herefore in order to avoid hardship to the *or+er and his family the
provisions have been made in section 21 of the code that such *or+man should be !iven an
opportunity to join service *henever an occasion arises to employ another hand. 2his principle
*as re!arded as of !eneral application in industrial adjudication on the !round that it *as based
on considerations of fair play and justice. 2he section provides that after effectin! retrenchment3
if the employer proposes to ta+e into his employment any person<
617 9e shall !ive opportunity to the retrenched *or+ers *ho offer themselves for re)
employmentE and
627 2hese retrenchment *or+ers *ill have preference over the ne* applicants. 2hus section 21
imposes le!al obli!ation on the employers to !ive preference to retrenched *or+ers *hen
he subse:uently employers any person.
2./ Condition of re,employment for retrencment -or.ers
4 retrenched *or+er may claim preference under section 21 on the fulfillment of the follo*in!
conditions<
617 2o apply for preference under section 21 the *or+er concerned must have been retrenched
in last one year time prior to re)employment 6thus a dismissed or dischar!ed *or+er cannot
claim preference in employment7
627 2he *or+er must offer himself for re)employment in response to the notice by the employerE
637 Gor+ers *ill have priority accordin! to the len!th of his service under the employerE
2.01istinction bet-een lay,off and retrencment
617 In case of lay)off there is failure3 refusal or inability of the employer to !ive employment to
a *or+man for a temporary period *hile in retrenchment the *or+man is deprived of his
employment permanently by his employer.
627 2he !rounds of lay)off are ay. In lay)off the failure refusal or inability to !ive
employment is on account of one or more of the reasons specified in section 26$-7 such as
shorta!e of coal shorta!e of po*er3 ra* materials3 brea+ do*n of machinery etc. *hile in
retrenchment the termination of service is on the !round of surplus labour only. 2hus the
!round of retrenchment and lay)off are completely different.
637 2he reasons of lay)off are completely different as compared to reasons of retrenchment.
2he situation of surplus labour may arise due to economic drive3 rationali&ation in the
industry installation of ne* labour savin! machinery etc. 0ut in lay)off reasons of non)
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employment are mainly non)availability of po*er ra* materials3 coal or brea+ do*n of
machinery etc.
6"7 In lay)off labour force is not surplus but in retrenchment labour force is surplus *hich is to
be retrenched.
6$7 In lay)off employment relationship of employer and employer and employers is not
terminated but suspended *hile in retrenchment relationship is terminated.
3
3
Md. Abdul Halim, The Bangladesh Labour Code, 2006,CCB Foundation, Ed.1, .!"
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2.2 Case Study
2his section *ill briefly describe t*o cases and their analysis. It has been added in order to
demonstrate a *or+in! +no*led!e on the elementary concepts of la*s
Case 1
"3S Caltex oil 4Pa.istan5 'td. 6s. 7e cairman
Second labour court 418/05 18 1') 2/&
&
Hud!e< S.B 4hmed and 4bdul 9a+im Ihan
9eard on< 3rd3 ,th3 ?th arch 1.,?
Hud!ment date< .th arch 1.,?
Br. '.I..4 uslim JJJ.. 6Petitioner7
Ks.
. Lolam 9afi& JJJ 6%espondandent7
Issue9
Ghether to effect retrenchment condition of the section must be fulfilled or not
+act9
In this case3Service of the employees has not been terminated in the manner provided in section
6127 of the 4ct. 2he termination of the service on the !round of retrenchment in terms of section
12 can only ta+e place *hen all the condition mentioned there under have been complied *ith
and not before.
In the present case it is obvious that one of the condition3 namely3 dispatchin! the notice in
respect of the retrenchment to the chief inspector *as not complied *ith. 2he #abour court *as3
therefore justified and acted :uite *ithin its jurisdiction in holdin! that the termination of the
service of the respondents concerned *as under section 1. of the 4ct and not under section 12
and claimed by the petitioner. 2he essential of a termination on the !round of retrenchment as
prescribed under section 12 are 6a7 the *or+er must be !iven one month notice is *ritin!
indicatin! the reason for retrenchment or he has been paid in lieu of such notice in respect of
"
M#$ Calte% oil &'a(istan) Ltd. *s. The +hairman se+ond labour +ourt &1"6!) 1" ,L- 26.
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retrenchment in sent to the chief inspector and6c7 the *or+er has been paid at the time of
retrenchment compensation or !ratuity *hichever is hi!her as re:uired under clause 6c7 of the
section 12.
If notice in the chief inspector has not been served in terms of diction 123 the retrenchment of the
employee by the employer is not is accordin! *ith la*.
:ud#ment9
'or the purpose of calculation of the compensation under the section3 *a!es shall mean the ver!e
of the basic *a!es plus dearness allo*ance. If any paid to the *or+er durin! period the date of
retrenchment. 'or the reasons stated above3 *e don/t thin+ that the impu!ned order passed by the
labour court suffers from any ille!ality. Ge accordin!ly dischar!e the rule in each one of the t*o
petitioners *ithout any order as to costs. Hud!e 4bdul 9a+im Ihan also a!rees *ith.
Case 2
%minul Islam 6s :ames +inlay Co.
'td 2/1') 4SC5 !!
(
+act9
r.4minul Islam *as a head (ler+)cum 4ccountant under Hames 'inally (ompany #td at
Ihulna. 9is service *as terminated allo*in! him *a!es in lieu of .1 days/ notice. 2he company
preferred to pay his *a!es for that period in addition to compensation at the rate of 1" days
*a!es for every completed year or part thereof in excess of six months. It *as asserted that the
termination *as for trade union activities of the *or+ers and that it *as case of victimi&ation.
2he labour court upheld the contention of the *or+er. On the appeal before the hi!h court no
opinion *as expressed on merits as the case *as remanded to the labour court since the opinion
of a member *as not obtained. On farther appeal to the 4ppellate division3 it *as held on fact
that the *or+er/s service *as terminated *ithout any sti!ma or char!e and it *as a termination
simplicater.
:ud#ment9
It has been contended that the service of 4minul Islam *are terminated due to his trade union
activities and as such it *as act of victimi&ation and the termination
$
Aminul /slam *s 0ames Finla1 Co. Ltd 26,L- &$C) 22
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2.8 )ecent incidents of -or.er;s retrencment in <an#lades
)etrencment in #arments industry
In recent times3 *or+ers of the four different !arment factories *ere ille!ally retrenched. .?
*or+ers of 0enson 4pparels of 2ej!aon *ere retrenched on arch 223 2111. 31 *or+ers of %i&
'ashion of atuail *ere retrenched on Becember 1"3 2111. 2$ *or+ers of 4diti 4pparels of
irpur*ere retrenched on Becember 123 2111 and "$ *or+ers of 0risti Larments *ere
retrenched on Sepetember ?3 2111. 2he ana!ement of all these factories refrained from payin!
le!al dues and compensations to the retrenched *or+ers.
Bemandin! immediate payment of dues and arrears to the *or+ers of these factories3 spea+ers
alle!ed that the problem *as not solved even after submission of !rievance petitions and
memorandum to the 0LE4.
4fter the hun!er stri+e pro!ram3 a five)member dele!ation led by =LG' Leneral Secretary
s.SafiaParveen submitted a memorandum to the inistry of #abour3 ur!in! the !overnment to
ta+e effective action immediately.
Over !== >P employees retrenced
Over 311 employees of county/s mobile !iant Lrameenphone 6LP7 have lost their job so far in
the on!oin! retrenchment process.
4t least $1 employees faced the termination measure in the name of job savin! Fexamination/. So
that notoriousM FExamination/ has become a panic for the LP employees creatin! a sta!nant
situation in the company. 2hose *ho are still in job they are passin! days throu!h frustration and
panic.
2*elve employees have filed cases a!ainst the LP authorities for forcefully terminatin! them.
2he LP employees filed the cases *ith Bha+a #abour (ourt)1 a!ainst the mobile !iant under
section 33 of the #abour #a* on 2hursday.
(onfirmin! the matter3 plaintiffs/ la*yer Selim4hsan Ihan said3 @y clients *ere terminated for
formin! trade union. #ater3 the LP authorities compelled them to submit resi!nation letters under
duress.A
@2hey did not submit any resi!nation letter. 4ctually3 the mobile company compelled them to
si!n a piece of paper by exertin! continues threat and pressure3A he added.
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Conclusion
!.1 +indin#s
Gor+er/s retrenchment is a very essential function of the labour la*. It hasserious implications
for #abours and the Employers. =o *or+er employed in any shop or commercial or industrial
establishment *ho has been in continuous service for not less than one year under an employee
shall not be retrenched by the employer unless)
4a5 2he *or+er has been !iven one month/s notice in *ritin!3 indicatin! the reason for
retrenchment or the *or+er has been paid in lieu of such notice3 *a!es for the period of
noticeE
4b5 4 copy of the notice in respect of the retrenchment is send to the chief inspector or any other
officer authori&ed by him E and
4c5 2he *or+er has been paid3 at the time of retrenchment3 compensation *hich shall be
e:uivalent of fourteen days/ *a!es for every completed year of service or for any part
thereof in excess of six month3 or !ratuity3 if any3 *hichever is hi!her.
'or the purpose of calculation of compensation under this Section3 *a!es shall mean the avera!e
of the basic *a!es plus dearness allo*ance3 if any3 paid to the *or+er durin! the period of
t*elve month immediately precedin! the date of retrenchment
!.2 )ecommendations
2he importance of labour la* is very much in 0an!ladesh perspective. It is hi!hly importance in
0an!ladesh perspective of labour la*. Ge +no* that labour is a most important part of an
industry. So3 *e cannot thin+ an industry *ithout labour. #abour ri!ht is most essential in
0an!ladesh. 0ut the labours are a*are about their ri!ht. 2hey don/t +no* properly about labour
education. It is a !reat problem.
'or this reason3 they retrenched by the employee as the employers *ish. Kery often3 they
retrenched *ithout any le!al process. 2his is injustice and in human. 2his should be protected for
the interest of industriali&ation in 0an!ladesh. Proper and strict provisions should be included in
#abour la*s and state la*s. 2he labours should not be deprived. 2heir ri!hts should be
protected.
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Ille!al retrenchment by the employer is inhuman and increased the sufferin! of the labours. In
this respect he follo*in! action should be ta+en<
1. 2he cause of retrenchment should !enuine and proper in the eye of la*.
2. Proper notice for three months should be !iven to the respective labour for his self)defense3
3. if not3 the labour should be paid three months/ salary and other benefits allo*able as per la*.
!.! Scope of furter study
2he discussion of this thesis *ill be limited *ithin the scope of the ori!in and historical
development of #abour la* of 0an!ladesh3 the problems of #abour la* of 0an!ladesh3 problems
of #abour education in 0an!ladesh and some case studies.
In 0an!ladesh perspective *e find that there are several problems remain related *ith #abour
disputes3 Gor+ers Problem3 2rade >nion Problems3 Employments problems3 Gor+in! 9our
Schedule etc. So *e thin+ further study may be done on the follo*in! issues<
1. #abour disputes solution process.
2. 2rade >nion Problems and their functions
3. Employers and Employees relation
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<iblio#rapy
1. 9alim3 . 6211-7. The Bangladesh Labour Code 2006. Bha+a< ((0 'oundation.
2.9alim3 . N %ahman Saifur 6211?7. The Bangladesh Labour Code 2006. Bha+a< ((0
'oundation.
3Bhar3 =irmalendu3 6211"7. Labour3/ndustrial La4s o5 Bangladesh. Bha+a< %emisi Publishers.
". htt6##444.bdne4s2..+om
$. htt6##444.thedail1star.net
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