HR Glossary
Retrenchment
The termination of employment due to surplus staffing, typically for economic or operational reasons.
Definition
Retrenchment is the formal termination of employees due to workforce surplus — driven by cost-cutting, automation, or restructuring — and is governed by specific statutory notice and compensation requirements in India.
Why It Matters
Retrenchment has stricter legal obligations than a standard resignation-driven exit, and getting the process wrong carries real risk.