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Industrial Disputes Act, 1947 · Chapter VA: Lay-Off and Retrenchment

Section 25FF: Compensation to workmen in case of transfer of undertakings

The Industrial Disputes Act, 1947 was repealed and replaced by the Industrial Relations Code, 2020 from 21 November 2025. It still applies to matters and proceedings from before that date, as the repealing law provides.

In plain words

When ownership or management of an undertaking passes to a new employer, workmen with at least one year of continuous service are entitled to notice and compensation as if retrenched.

  • This does not apply if their service is uninterrupted, their terms are no less favourable, and the new employer is liable to count their earlier service for any future retrenchment.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

Where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who has been in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched:

Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if—

(a) the service of the workman has not been interrupted by such transfer;

(b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and

(c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.

Source: India Code (Legislative Department), the text of the Act as it stood before its repeal. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the section 25FF