Section 145: Retrenchment may be made

1) Where an enterprise faces financial problems in its operation, the labourers become redundant because of the merger of more than one enterprise, or the enterprise needs to be closed down partially or completely because of any other reason, the employer may retrench the number of labourers.

2) When retrenching the labours pursuant to sub-section (1), the employer shall, in advance of at least thirty days before the date for retrenchment, give a notice, setting out the reason requiring retrenchment, possible date for retrenchment and probable number of labours to be retrenched to the Office and the authorised trade union, if any, of the enterprise or in the absence of such a
union, to any trade union which is active in the enterprise or the labour relation committee.

3) After giving the notice pursuant to sub-section (1), the employer shall hold discussion with the concerned trade union or the labour relation committee on the matters concerning the alternatives to the retrenchment of labourers and the grounds and conditions for the selection of the labours for retrenchment, and the labours may be retrenched as per the agreement reached
upon the discussion.

4) Where the trade union or the labour relation committee does not want to hold a discussion pursuant to sub-section (3) or no agreement is reached upon the discussion, the employer may, by giving information of that matter to the Office, retrench the labours.

5) While retrenching the labours pursuant to this Section, retrenchment shall be made generally in the following order:

(a) foreign labours,

(b) those labourers who have been awarded more punishments comparatively for misconduct,

(c) labourers whose standard of work performance is rather weak,

(d) labours who have been appointed at the last out of the labours engaged in the same type of work.

Provided that if it is necessary to retrench the labourers who were appointed earlier, instead of making retrenchment in the order so specified as to retrench those who have been appointed at last, retrenchment may be made by setting out the reason for the same.

6) Notwithstanding anything contained in sub-section (5), except as otherwise agreed with the trade union, the office-bearers of the collective bargaining committee or the authorised trade union shall be retrenched last in the order of priority.

7) While retrenching the number of labourers, the employer shall pay a lump sum amount to be set by calculating at the rate of one month’s basic remuneration for each year of his or her service as compensation to labour who has completed the service period of at least one year.

Provided that if the service period is less than one year, he or she shall get the compensation proportionately.

8) Notwithstanding anything contained in sub-section (7), the labour who is entitled to the unemployment allowance under the social security laws shall not receive the compensation pursuant to sub-section (7).

9) Where any enterprise is required to close down the whole or any part of the enterprise in pursuance of the order of the Government of Nepal or Labour Court in accordance with law or any enterprise in the special economic zone is required to retrench its labours, the provisions of sub-sections (1), (2), (3) and (4) shall not be applicable.

10) Notwithstanding anything contained elsewhere in this Section, the provision contained in this Section shall not be applicable to any employer who employs ten or less than ten labourers and makes retrenchment of labourers.