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Section 72: Re-employment of retrenched workers

The Industrial Relations Code, 2020 (Act No. 35 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IX: Lay-off, Retrenchment and Closure
Competent Labour Forum
Act No. 35 of 2020
Section 71 All 104 Sections of Industrial Relations Code, 2020 Section 73

Legal Commentary & Landmark Judgments: Section 72

Section 72 of the Industrial Relations Code, 2020 establishes a mandatory statutory preference for retrenched Indian citizen workers when an employer proposes to hire new hands, guaranteeing a right of first refusal and re-employment priority within the prescribed statutory period to mitigate the economic hardship of previous involuntary disengagement.

  • Preferential Right of Re-employment: Where any workers are retrenched and the employer subsequently proposes to take into employment any persons in the establishment, the employer must offer an opportunity to the retrenched workers who are citizens of India to present themselves for re-employment, granting them statutory preference over fresh candidates from the open market.
  • Mandatory Notice of Vacancies and Outreach: The employer is statutorily obligated to notify existing vacancies to all retrenched workers within the prescribed timeframe (typically within one to three years of retrenchment) through registered post, speed post, or digital communications to their last known addresses, alongside notices affixed at the factory premises.
  • Legal Status and Incident of Re-employment: Retrenched workers offering themselves for re-employment must be selected in order of their past seniority within the relevant category. While re-employment constitutes fresh employment in terms of wage scale and probation unless otherwise provided by award or settlement, the statutory preference operates as an absolute bar against recruiting strangers without first exhausting the roster of willing retrenched workers.
Key Landmark Precedents:
  • Cawnpore Tannery Ltd. v. S. Guha AIR 1967 SC 667: The Supreme Court ruled that the right to re-employment under Section 25H of the IDA (now Section 72) applies whenever an employer seeks to recruit for vacancies in the category from which workers were retrenched, irrespective of whether the subsequent vacancies are temporary, seasonal, or permanent.
  • Central Bank of India v. S. Satyam (1996) 5 SCC 419: The Supreme Court held that the benefit of re-employment applies to all retrenched workers, including temporary and casual workers whose disengagement fell within the expansive definition of retrenchment, establishing that preference is an ongoing statutory right.
  • State Bank of India v. Central Government Industrial Tribunal (2014) 14 SCC 535: Reaffirmed that preferential re-employment does not automatically grant back wages or absorption with past seniority; it provides a statutory right of priority consideration at the threshold of new recruitment which can be enforced via tribunal directions.
Courtroom Practice & Strategic Litigation Guidance:

Employers must maintain an updated 'Register of Retrenched Workers' containing Aadhaar-linked identity details, permanent addresses, mobile numbers, and bank account details. Before releasing public advertisements or engaging recruitment agencies, send individual call letters by registered post and email to retrenched workers granting a minimum of 10 to 15 days to offer themselves. Retain postal tracking receipts and dispatch manifests as primary documentary defense against claims of illegal bypass or unfair labour practices under Section 84.

Section 71 All 104 Sections of Industrial Relations Code, 2020 Section 73