Gretchin are notoriously cowardly by Ork standards so in battle they are led (or rather driven forward) by an Ork Slaver. In the case of these units Morale checks are made against the Ork's Leadership value – but there is no Mob Rule for Gretchin. Grotz don't count when it comes to counting heads!
Gretchin are affected by Morale checks for losing an assault just like normal troops. However, Gretchin who fail a Morale check caused by enemy shooting or tank shock or which fail to regroup after falling back from close combat, 'go to ground' and hide with almost preternatural skill; in the blink of an eye they disappear under rocks, behind foliage, and whatever else they can hide in. The Gretchin mob is removed and the Slaver is left in place to indicate their position (as he starts the thankless task of rounding them up again). If no Slaver is present (ie, he has been slain or was not included in the mob for some reason) the Gretchin mob may not regroup and counts as being destroyed.
Gretchin can attempt to regroup each turn as long as the Slaver is still alive, even if the Gretchin mob has been reduced below 50% of its original strength or the enemy is within 6". If the Gretchin have gone into hiding, when they regroup they are replaced on the tabletop in coherency with the Slaver but not more than 6" from him. Whilst they are hiding Gretchin cannot be harmed.
Ork Slaverz trying to regroup Gretchin can be attacked as normal by shooting and in close combat. The Slaver may not move, shoot or initiate an assault (although he can still fight back if attacked in close combat). If the Slaver is killed the Gretchin mob counts as being destroyed.
Errata — Chapter Approved: Codex: Orks Q&A (v1.0): The Living Shield rule (that Gretchin can be used as cover for models "shot through") relies on the fact that individual models block line of sight in Warhammer 40,000, not whole squads — so a shooter can target a unit behind a Gretchin mob as long as the shot passes between models in the interposing mob, and when this happens Living Shield applies to the targeted models.