Question:medium

Termination of a worker from service due to economic losses is called:

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Lay-off = Temporary unemployment. Lock-out = Employer temporarily closes workplace. Retrenchment = Permanent removal of surplus employees. Closure = Entire business shuts down permanently.
Updated On: Jun 5, 2026
  • Lock out
  • Lay off
  • Removal due to closure of company
  • Retrenchment
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The Correct Option is D

Solution and Explanation

Step 1: Read the question.
A worker is permanently removed from service because the company is facing economic losses. We need the correct legal term.

Step 2: Recall retrenchment.
Under Section 2(oo) of the Industrial Disputes Act, 1947, retrenchment is termination of a worker for reasons other than punishment.

Step 3: Link it to economic loss.
Cutting staff due to losses, falling production or surplus labour, while the firm still runs, is retrenchment.

Step 4: Separate the other terms.
Lay-off is temporary inability to give work, lock-out is a temporary shutdown by the employer during a dispute, and closure is shutting the whole establishment down.

Step 5: Conclude.
Permanent removal due to economic loss, with the business continuing, is retrenchment.

Answer: Retrenchment (Option 4).
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