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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 Methodology ....................................................................................................................................... 2 1.4 Scope and Limitation .......................................................................................................................... 2 1.5 Report Organization ............................................................................................................................ 3 Research Findings ......................................................................................................................................... 4 2.1 Retrenchment ...................................................................................................................................... 4 2.2 Conditions for a valid Retrenchment .................................................................................................. 4 2.3 Procedure of retrenchment .................................................................................................................. 5 2.4 Retrenchment compensation ............................................................................................................... 5 2.5 Re-employment of retrenched workers ............................................................................................... 6 2.6 Condition of re-employment for retrenchment workers ..................................................................... 6 2.8 Case Study .......................................................................................................................................... 8 2.9 Recent incidents of workers retrenchment in Bangladesh ............................................................... 10 Conclusion .................................................................................................................................................. 11 3.1 Findings............................................................................................................................................. 11 3.2 Recommendations ............................................................................................................................. 11 3.3 Scope of further study ....................................................................................................................... 12 Bibliography ............................................................................................................................................... 13

Executive Summary
The total economy of a country greatly depends upon the industrial sector. The growth of the industrial sector involves some major aspects like natural resources, local investment policy, foreign direct investment policy, labour management etc. Besides these, Proper management of labour is an essential matter for growth of industrial sector. Labour right is most essential in Bangladesh. But the labours are ignorant of their right. They dont know properly about labour laws and education. It is a great problem. For this reason,very often they are retrenched by the employers without any legal process. Retrenchment of labour by any illegal process cannot be supported. Retrenchment of labour should be legal and humane. This report is an effort to give the reader some insights into the retrenchment practices in the industrial sector of Bangladesh under the labour act of 2006 and its implications on the affected workers and their families. Some case studies and recent events regarding retrenchment of workers are given to again to put emphasis on the importance of retrenchment in the industrial sector of Bangladesh. I suggest the government implement laws stringently in order to serve the workforce of the country properly. Also the government should implement proper safeguards and controls in order to prevent the abuse of power and law.

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

Introduction
1.1 Problem and Purpose For any good employer, terminating the services of an employee for reasons other than due retirement may be a painful exercise. All the same, there may arise circumstances where the employer has to take this painful decision. The dictum "hire and fire" is no more available to the employer. Bangladesh Labour Law 2006 (Chapter 2, Employment and condition of Service) recognizes management's prerogative to employ and for reasons of redundancy to terminate, dismiss, discharge and lay-off an employee showing proper cause and excuse. However, the labour court also has the right to interfere into any management prerogatives and strike down any unfair labour practices or victimization. 1.2 Objectives of the Study The object of the law is to establish a continuous process of harmonious relationship between the employers and employee. They have another object of fastening together both the labour and capital in order to create an atmosphere that they are an indivisible whole in production. The ultimate object of labour and industrial law is to maintain industrial peace security and steady growth of production. The origin and growth of labour law may be ascribed mostly to the development of organized industry where a large number of workers including women and children are employed under conditions which tend to be detrimental to their safety and welfare and against which they are often to protect themselves. From historical point of view labour law has given birth to some fundamental industrial rights to labours in the field of production. At the same time it has also provided protection for those rights. From a practical point of view labour and industrial law provide for three types of dispute settlement measures voluntary settlement machinery, quasi-judicial machinery and judicial machinery

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

1.3 Methodology The report will mostly focus on gathering information using secondary sources. The methodology used in this study is Qualitative Methodology. The research works are based on 1. Historical Study and 2. Analytical Study. 1. Historical Study: It has a historical back ground of workers movement for the establishment of their rights. The workers movement becomes successful. Now the modern world, Modern state and United Nations Organization highlighted the worker in their dignity, honor, position, participation social work political activity etc. In Bangladesh the workers retrenchment are guaranteed in their constitution, state laws, and social and state activities. Through the historical revolution the workers right has come to this position. The history workers movement started from 1971 after successful victory of the Bangladesh war of Independence. 2. Analytical Study: In this study the formation development and solutions regarding workers right and retrenchment are to be discussed. In this process of analysis the laws related to the subject and solutions from the judicial process are to be discussed. The enforcement of workers right is judicial matter. So in this process of study, the analytical study is necessary and important for this work. For the research works the analytical study was followed. The main object of the study is to evaluate effects and importance on persons, society and the state. The study is mainly qualitative in nature because, the impact that the study has searched would not be possible to assess without qualitative data. Legal issues, judicial rulings and administrative management of the government and the public, all are related with the issues. The research work is involved with the legal matter, administrative matter and judicial decision of the workers retrenchment. Under these circumstances a regulated research work will be suitable to solve the problems after investigating different variables such as laws relating to A Study on Retrenchment of workers under Labour Law: Bangladesh Perspective. 1.4 Scope and Limitation The discussion will be limited mainly to discussions about retrenchments including conditions and procedure of valid retrenchment, retrenchment compensation, Re-employment of retrenched workers, Condition of re-employment for retrenchment workers and Distinction between lay-off and retrenchment and some case studies and examples.

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

1.5 Report Organization The report consists of 3 parts Introduction Description Conclusion and Recommendations The introduction will provide the background, purpose, scope, limitation, objective and the methodology of the report. The body will be titled research findings and will provide the results and analysis of the survey in a detailed manner. Finally, the conclusion will organize the results in a manner that the reader will understand and provide recommendations in an enumerated list.

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

Research Findings
2.1 Retrenchment Section 2(11) define the term retrenchment as the termination by the employer of service of workers not as a measure of punishment inflict by way of discipline action but on the ground of redundancy. Retrenchment means the termination by the employer of the services of workers on the ground of redundancy {sec. 2(q)}. Thus retrenchment measure to remove surplus staff it results in a complete severance of employer relationship. The definition also makes it clear that retrenchment is a kind of termination but every termination is not retrenchment. To be retrenchment the termination must be on the ground of sedentary. 1 2.2 Conditions for a valid Retrenchment According to section 20 read with section 2(11) the conditions of a valid retrenchment are as follows: 1. 2. 3. 4. The workers to be retrenchment must be given one months notice; The notice must be given in writing; The notice must contain reasons for retrenchment; Alternative to condition (2) above, instead of giving one month, a worker may be retrenched instantly by giving him payment of wages for the period of notice; A copy of the notice of retrenchment must be send to the chief inspector; A copy of the notice must be send to the CBA; There must be termination of services of a workman on the ground of redundancy or surplus labour.

5. 6. 7.

Md. Abdul Halim, The Bangladesh Labour Code, 2006,CCB Foundation, Ed.1, p.76

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

2.3 Procedure of retrenchment Section 20 of the code incorporates the well-recognized principle of retrenchment in industrial law2, namely, the last come first go or first come last go. The principal laid down in section 20 for retrenchment procedure are to be adhered to by every employer. The conditions which this section prescribes for the procedure of retrenchment are as follows: 1. The claiming of the protection of retrenchment procedure under section 20 must be a worker within the definition in clause (65) of secion2; The person must belong to a particular category of workers in the establishment concerned; There should not be any agreement between the employer and employee contrary of last come first go; The employer is bound to comply with all the above conditions while retrenching a worker. However, the employer can deviate from this procedure on justifiable reasons which must be recorded.

2. 3.

4.

2.4 Retrenchment compensation Under clause (c) of section 20(2) payment of compensation for retrenchment is mandatory. The provisions of compensation for retrenchment are as follows: (1) At the time of retrenchment the worker must be paid compensation equivalent to thirty days wages for every completed year of service or for any part thereof in excess of six months or gratuity, if any, whichever is higher, To claim compensation for retrenchment the worker must show that he has been in continuous service for not less than one year under that employer who has retrenched him; If a worker, who is to be laid-off even after first 45 days in a calendar year under section 16(7), is retrenchment instead of laying-off, no notice will be required. However, he shall be paid 15 days wages in addition to the compensation or gratuity which may be payable; Wages as compensation for retrenchment will mean the average of the basic wages plus dearness allowances, if any, paid during the period of twelve months immediately preceding the date of retrenchment.

(2)

(3)

(4)

Md. Abdul Halim, The Bangladesh Labour Code, 2006,CCB Foundation, Ed.1, p.77

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

2.5 Re-employment of retrenched workers Retrenchment of surplus workers causes undue suffering not only to the retrenched worker but to all his dependents. Therefore in order to avoid hardship to the worker and his family the provisions have been made in section 21 of the code that such workman should be given an opportunity to join service whenever an occasion arises to employ another hand. This principle was regarded as of general application in industrial adjudication on the ground that it was based on considerations of fair play and justice. The section provides that after effecting retrenchment, if the employer proposes to take into his employment any person: (1) He shall give opportunity to the retrenched workers who offer themselves for reemployment; and These retrenchment workers will have preference over the new applicants. Thus section 21 imposes legal obligation on the employers to give preference to retrenched workers when he subsequently employers any person.

(2)

2.6 Condition of re-employment for retrenchment workers A retrenched worker may claim preference under section 21 on the fulfillment of the following conditions: (1) To apply for preference under section 21 the worker concerned must have been retrenched in last one year time prior to re-employment (thus a dismissed or discharged worker cannot claim preference in employment) The worker must offer himself for re-employment in response to the notice by the employer; Workers will have priority according to the length of his service under the employer;

(2)

(3)

2.7 Distinction between lay-off and retrenchment

(1)

In case of lay-off there is failure, refusal or inability of the employer to give employment to a workman for a temporary period while in retrenchment the workman is deprived of his employment permanently by his employer. The grounds of lay-off are May. In lay-off the failure refusal or inability to give employment is on account of one or more of the reasons specified in section 2(58) such as shortage of coal shortage of power, raw materials, break down of machinery etc. while in retrenchment the termination of service is on the ground of surplus labour only. Thus the ground of retrenchment and lay-off are completely different. The reasons of lay-off are completely different as compared to reasons of retrenchment. The situation of surplus labour may arise due to economic drive, rationalization in the industry installation of new labour saving machinery etc. But in lay-off reasons of non-

(2)

(3)

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

employment are mainly non-availability of power raw materials, coal or break down of machinery etc. (4) In lay-off labour force is not surplus but in retrenchment labour force is surplus which is to be retrenched. In lay-off employment relationship of employer and employer and employers is not terminated but suspended while in retrenchment relationship is terminated.3

(5)

Md. Abdul Halim, The Bangladesh Labour Code, 2006,CCB Foundation, Ed.1, p.79

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

2.8 Case Study This section will briefly describe two cases and their analysis. It has been added in order to demonstrate a working knowledge on the elementary concepts of laws Case 1 M/S Caltex oil (Pakistan) Ltd. Vs. The chairman Second labour court (1967) 19 DLR 2644 Judge: S.D Ahmed and Abdul Hakim Khan Heard on: 3rd, 6th, 7th March 1967 Judgment date: 9th March 1967

Dr. F.K.M.A Muslim Vs. M.M Golam Hafiz

.. (Petitioner)

(Respondandent)

Issue: Whether to effect retrenchment condition of the section must be fulfilled or not Fact: In this case, Service of the employees has not been terminated in the manner provided in section (12) of the Act. The termination of the service on the ground of retrenchment in terms of section 12 can only take place when all the condition mentioned there under have been complied with and not before. In the present case it is obvious that one of the condition, namely, dispatching the notice in respect of the retrenchment to the chief inspector was not complied with. The Labour court was, therefore justified and acted quite within its jurisdiction in holding that the termination of the service of the respondents concerned was under section 19 of the Act and not under section 12 and claimed by the petitioner. The essential of a termination on the ground of retrenchment as prescribed under section 12 are (a) the worker must be given one month notice is writing indicating the reason for retrenchment or he has been paid in lieu of such notice in respect of retrenchment in sent to the chief inspector and(c) the worker has been paid at the time of

M/S Caltex oil (Pakistan) Ltd. Vs. The chairman second labour court (1967) 19 DLR 264

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

retrenchment compensation or gratuity whichever is higher as required under clause (c) of the section 12. If notice in the chief inspector has not been served in terms of diction 12, the retrenchment of the employee by the employer is not is according with law. Judgment: For the purpose of calculation of the compensation under the section, wages shall mean the verge of the basic wages plus dearness allowance. If any paid to the worker during period the date of retrenchment. For the reasons stated above, we dont think that the impugned order passed by the labour court suffers from any illegality. We accordingly discharge the rule in each one of the two petitioners without any order as to costs. Judge Abdul Hakim Khan also agrees with. Case 2 Aminul Islam Vs James Finlay Co. Ltd 26DLR (SC) 335 Fact: Mr.Aminul Islam was a head Clerk-cum Accountant under James Finally Company Ltd at Khulna. His service was terminated allowing him wages in lieu of 90 days notice. The company preferred to pay his wages for that period in addition to compensation at the rate of 14 days wages for every completed year or part thereof in excess of six months. It was asserted that the termination was for trade union activities of the workers and that it was case of victimization. The labour court upheld the contention of the worker. On the appeal before the high court no opinion was expressed on merits as the case was remanded to the labour court since the opinion of a member was not obtained. On farther appeal to the Appellate division, it was held on fact that the workers service was terminated without any stigma or charge and it was a termination simplicater. Judgment: It has been contended that the service of Aminul Islam ware terminated due to his trade union activities and as such it was act of victimization and the termination

Aminul Islam Vs James Finlay Co. Ltd 26DLR (SC) 33

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

2.9 Recent incidents of workers retrenchment in Bangladesh Retrenchment in garments industry In recent times, workers of the four different garment factories were illegally retrenched. 97 workers of Benson Apparels of Tejgaon were retrenched on March 22, 2011. 30 workers of Riz Fashion of Matuail were retrenched on December 14, 2010. 25 workers of Aditi Apparels of Mirpur were retrenched on December 12, 2010 and 45 workers of Bristi Garments were retrenched on Sepetember 7, 2011. The Management of all these factories refrained from paying legal dues and compensations to the retrenched workers. Demanding immediate payment of dues and arrears to the workers of these factories, speakers alleged that the problem was not solved even after submission of grievance petitions and memorandum to the BGMEA. After the hunger strike program, a five-member delegation led by NGWF General Secretary Ms. Safia Parveen submitted a memorandum to the Ministry of Labour, urging the government to take effective action immediately. Over 300 GP employees retrenched Over 300 employees of countys mobile giant Grameenphone (GP) have lost their job so far in the ongoing retrenchment process. At least 50 employees faced the termination measure in the name of job saving examination. So that notorious! Examination has become a panic for the GP employees creating a stagnant situation in the company. Those who are still in job they are passing days through frustration and panic. Twelve employees have filed cases against the GP authorities for forcefully terminating them. The GP employees filed the cases with Dhaka Labour Court-1 against the mobile giant under section 33 of the Labour Law on Thursday. Confirming the matter, plaintiffs lawyer Selim Ahsan Khan said, My clients were terminated for forming trade union. Later, the GP authorities compelled them to submit resignation letters under duress. They did not submit any resignation letter. Actually, the mobile company compelled them to sign a piece of paper by exerting continues threat and pressure, he added.

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Conclusion
3.1 Findings Workers retrenchment is a very essential function of the labour law. It has serious implications for Labours and the Employers. No worker employed in any shop or commercial or industrial establishment who has been in continuous service for not less than one year under an employee shall not be retrenched by the employer unless(a) The worker has been given one months notice in writing, indicating the reason for retrenchment or the worker has been paid in lieu of such notice, wages for the period of notice; (b) A copy of the notice in respect of the retrenchment is send to the chief inspector or any other officer authorized by him ; and (c) The worker has been paid, at the time of retrenchment, compensation which shall be equivalent of fourteen days wages for every completed year of service or for any part thereof in excess of six month, or gratuity, if any, whichever is higher. For the purpose of calculation of compensation under this Section, wages shall mean the average of the basic wages plus dearness allowance, if any, paid to the worker during the period of twelve month immediately preceding the date of retrenchment 3.2 Recommendations The importance of labour law is very much in Bangladesh perspective. It is highly importance in Bangladesh perspective of labour law. We know that labour is a most important part of an industry. So, we cannot think an industry without labour. Labour right is most essential in Bangladesh. But the labours are aware about their right. They dont know properly about labour education. It is a great problem. For this reason, they retrenched by the employee as the employers wish. Very often, they retrenched without any legal process. This is injustice and in human. This should be protected for the interest of industrialization in Bangladesh. Proper and strict provisions should be included in Labour laws and state laws. The labours should not be deprived. Their rights should be protected.

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A Study on Retrenchment of Workers under Labour Law: Bangladesh Perspective

Illegal retrenchment by the employer is inhuman and increased the suffering of the labours. In this respect he following action should be taken: 1. The cause of retrenchment should genuine and proper in the eye of law. 2. Proper notice for three months should be given to the respective labour for his self-defense, 3. if not, the labour should be paid three months salary and other benefits allowable as per law. 3.3 Scope of further study The discussion of this thesis will be limited within the scope of the origin and historical development of Labour law of Bangladesh, the problems of Labour law of Bangladesh, problems of Labour education in Bangladesh and some case studies. In Bangladesh perspective we find that there are several problems remain related with Labour disputes, Workers Problem, Trade Union Problems, Employments problems, Working Hour Schedule etc. So we think further study may be done on the following issues: 1. Labour disputes solution process. 2. Trade Union Problems and their functions 3. Employers and Employees relation

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Bibliography
1. Halim, M. (2008). The Bangladesh Labour Code 2006. Dhaka: CCB Foundation. 2. Halim, M. & Rahman M Saifur (2007). The Bangladesh Labour Code 2006. Dhaka: CCB Foundation. 3 Dhar, Nirmalendu, (2004). Labour & Industrial Laws of Bangladesh. Dhaka: Remisi Publishers. 4. http://www.bdnews24.com 5. http://www.thedailystar.net

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