Involuntary Separations


Involuntary separations occur when management decides to terminate its relationship with an employee because of either economic necessity or a poor fit between the employee and the organization. Examples of involuntary separations include discharges, layoffs, and downsizing or "right"-sizing (a term used by firms to make downsizing appear more palatable, generally positioning it as an attempt to make the firm the "right" size for its needs by implementing layoffs).
 
 
Dismissal
Usually, this process is perceived negatively by employees. An employer uses his right to terminate the contract of an employment. There can be many reasons for an employer to terminate the contract of employment but some of the common reasons are: 
  • Non-Performance
India's largest software services provider TCS  axed 1,000 jobs in the country due to non-performance by its employees. Jan 15, 2015,  PTI
  • Indiscipline
  • Misconduct
  • Insubordination
  • Theft and etc.
Wrongful dismissal will tend to arise first as a claim by the employee so dismissed. Many jurisdictions provide tribunals or courts which will hear actions for wrongful dismissal. A proven wrongful dismissal will tend to lead to two main r
emedies: reinstatement of the dismissed employee, and/or monetary compensation for the wrongfully dismissed.

Facts [+]

On a recent flight, the managing director of an international broking firm was sitting next to Journalist. With two hours of uninterrupted time at our hands, I asked him how he handled losses in his business. "Recently, one of my employees made a calculation mistake and we lost $250,000 at the click of a button," he said. "So, did you fire the guy?" I asked him. "Of course not!" he said, "I paid $250,000 for his training. Why would I fire him?"

His answer left me dumfounded and taught me a great lesson in handling people who goof up. Firing the man is not the optimum solution, fixing the loophole of error is.

To expect flawless execution from team members and colleagues would be quite unreal. People do make errors based on incorrect or incomplete data, altered information or simply, wrong judgment. But to terminate someone's services or take severe irrevocable action against them, would be an even bigger blunder. Here is what you can do, when you are faced with a loss, on someone else's erroneous
execution. 

India, Maruthi Suzuki India, Ltd.  violence 
18,July,2012: Maruthi Suzuki India Ltd.,general manager human resource was burnt to death at manufacturing plant located at Maneser (Haryana) by the workers in a dispute between workers and management due to the disciplinary action taken against worker by the management. Workers union alleges that this incident was caused due to the supervisor made objectionable remark against a permanent worker, who belongs to the Scheduled Caste category. When we opposed it, they misbehaved with us and suspended the worker that led to violence. Company had huge loss of property, damage and burned, police complaint was filed and the Indian penal code (IPC) against  the workers who indulged in violence, killing general manager, severely hurting almost 100 workers and 40 executives and managers. Companies top Management decided to dismiss the workers who ever involved in these activities and declare that there is no further reinstatement of dismissed employees.
 
In U.S More than 25% of employers have terminated employees for misusing the Internet, according to a recent American Management Association survey. Recent surveys of Internet use in the workplace indicate a majority of workers use these tools for personal use. Management experts suggest organizations should have a written computer usage policy with specific consequences for violation. 

 
Termination
Termination means removal of employee from employment by his employer mainly on the following grounds,
  • Due to the expiratory of employment contract period between employee and his employer.
  • Due to the Ill-health of the employee.

Being terminated for any of the items listed below may constitute wrongful termination:

  • Discrimination: The employer cannot terminate employment because the employee is a certain race, nationality, religion, sex, age, or in some jurisdictions, sexual orientation.
  • Retaliation: An employer cannot fire an employee because the employee filed a claim of discrimination or is participating in an investigation for discrimination. In the United States, this "retaliation" is forbidden under civil rights law.
  • Employee's Refusal to Commit an Illegal Act: An employer is not permitted to fire an employee because the employee refuses to commit an act that is illegal.
  • Employer Not Following Own Termination Procedures: Often, the employee handbook or company policy outlines a procedure that must be followed before an employee is terminated. If the employer fires an employee without following this procedure, the employee may have a claim for wrongful termination.
Retrenchment (permanent removal of employee)
Retrenchment, like lay-off, also results in separation of the employee from the organisation. Retrenchment means a permanent termination of the services of an employee for economic reasons in a going concern. An employee to be retrenched is required to be given three months notice before his retrenchment or in lieu of the notice he must be paid his remuneration for the period of the notice. The retrenched employee is entitled to get gratuity payment from his employer. For retrenchment of the employee, notice is required to be given to the appropriate government authority and permission for retrenchment must be obtained from the authority. The principle of 'last come, first go* is followed for deciding which employee should be retrenched.
Indian employees inadequately prepared for retirement: Survey


Millennials in India are inadequately prepared for their post-retirement life as retirees are facing challenges in form of rising consumerism, higher medical and education expenses, as also weakening joint family system, says a survey.

According to the Willis Towers Watson Global Benefits Attitudes Survey, employees are facing the issue despite the fact that Indians save more than their counterparts in the western world.

Increasing consumerism, spiralling medical and education expenses, inflationary pressures and a weakening joint family system are some key reasons for this concern, the report said adding that "if not acted upon soon, in the next decade or two, India might be faced with the critical challenge of retirees having inadequate income".

Moreover, research indicates the proportion of workers who are beneficiaries of a formal retirement savings plan (via either the state or an employer) is relatively low. Most workers have to provide the majority of their income in retirement from their own wealth.It is high time that employers seize the opportunity to educate and prepare employees for retirement.

Else, a decade or two down the line, the country could be facing a distressing scenario of retirees having inadequate income over a retirement period potentially longer than their earning lifetime.

Recent  studies have indicated that the three foremost motivations for saving are buying a house, saving towards children's education and/or wedding and provision for an income in old age.

"Lack of awareness, unrealistic assessment of what to expect on retirement and a short-sighted approach to retiral savings are potential causes of this concern,

Patel added that employers should use retirement planning tools to understand the effect of their retirement plans on the overall savings for employees and must play a key role in educating them.

By PTI | Feb 18, 2016, 05.55 PM IST


 
The primary reason organization engage in downsizing is to promote future, competitiveness. According to surveys, they do this by meeting five
 
Objectives :
 
1. Reducing costs. Labour is a large part of a company's total costs, so downsizing is an attractive place to start cutting costs. 
 
Facts [+] 

Aug-2015: Renault Nissan,India- Since struggling to increase in sales after market recovery, the company has decided to go for optimisation strategy by retrenching 1200 jobs from its workforce. Overall plant has 8000 employees with a plant capacity of 400000.

June 2014: Foxconn India announced layoffs/retrenchment to its employees due to continuous fall in business and fall in production since it is major supplier to Nokia India, which has been struggling to stand in its competitive market, subsequently it has started cutdown  in its production and its employees.

4/12/2012, London: British Airways
division planned to cut 400 cabin crew for the purpose of minimising cost due to slowdown in the economy. unlike other organisations, British airways opted for voluntary scheme to retrench its employees.
source:TOI
year 2012:The Indian telecom company Aircel, which has about 66 million customers and a pan-India 2G presence,  scale down operations in Madhya Pradesh, Punjab, Haryana, Rajasthan and Gujarat in its bid to cut costs and reallocate resources to profitable zones. The company has about 800 employees and 6 million customers in these five circles. 

TOKYO, 2012: Sony's cellphone division planned to cut  nearly 1,000 jobs of its global workforce, mostly in Sweden by the next two fiscal years through March 2014.  Sony Mobile Communications said  the job cuts are an effort to reduce costs and boost profits. The Japanese electronics and entertainment company posted record losses for the fiscal year ended March-2012, battered by competition from Samsung Electronics Co and Apple Inc.

Zurich, Nov, 2012: SWISS airlines belongs to Lufthansa Germany airlines decided to cut almost 100 jobs in human resource, financial, sales departments as a cost cutting measure due increase in fuel cost and sluggish growth in market. 
 
2. Replacing labour wth technology. Closing outdated factories, automating, or introducing other technological changes reduces the need for labour. Often, the labour savings outweighs the cost of the new technology. 

Dec,2012: The United States based Citigroup bank planned to cut jobs, which can be replaced by way of automation as a measure for minimising expenses due to financial crisis and slowdown in the economy.
 
3. Mergers and acquisitions. When organizations combine, they often need less bureaucratic overhead, so they lay off managers and some professional staff members. After software maker Oracle Corporation acquired PeopleSoft, it laid off about 5,000 employees, almost one out of ten. It kept most of PeopleSoft's technical employees so that the company could continue meeting plans for product development and support, meaning the vulnerable positions were those involving administrative functions.

4. drop in demand: when there is a situation of a drop in demand for goods or commodities produced by concerned organisation, to save cost of employees will be retrenched. TATA Steel in United Kingdom cut nearly 900 jobs due to drop in demand for steel in European market.
 
Facts [+] 

May 2012 Google Inc  acquired (buyout) Motorola Mobility for $12.5 billion, following this in August 2012 Google Inc cut 4000 jobs in the United States due to drop in its profits due to drop in sales and announced severance package costs about $275 million for the retrenched employees . Google stated that his decision was taken to minimise its costs and make business profitable in future. 
 
4. Moving to more economical locations. In recent years, British Columbia has been attractive to U.S. film and television production companies. Other moves, however, have shifted Canadian jobs to other countries. Celestica Inc. announced that it would close an electronics factory employing 700 people in the Montreal area. Celestica has been shifting operations from North America and Western Europe to low-cost Asian countries. 
 
Facts [+] 
Unilever to cut 500 jobs in Britain
 

LONDON: The Anglo-Dutch food and cosmetics giant Unilever planned to cut 500 jobs in Britain as part of a restructuring programme. The retrenchment would occur by the end of 2013, added the company whose brands include Lipton tea, Persil washing powder and Signal toothpaste. Unilever company has operations in more than 100 countries, employing over 171,000 employees.
 
NEW YORK: Global food and beverages giant PepsiCo will cut 8,700 jobs across 30 countries as part of a programme to save up to USD 1.5 billion by 2014 to offset high commodity costs and increased spending on advertising and marketing.
 
Citigroup let go of 100 employees across India in January 2012 month, many functional heads received an unusual brief.
 
Finnish-German telecom equipment maker Nokia Siemens Networks, which had 74,000 employees worldwide, announced plans to reduce its global workforce by approximately 17,000 by the end of 2013, adding that its restructuring plan was aimed at cutting annual costs by one billion euros ($1.3 billion) compared to 2011 outlays. [2,900 job cuts in Germany and 1,200 in Finland.
 
 
More than 1000 to lose jobs in Finland as Nokia shifts base to Asia
Apr, 2012,: Squeezed by fierce competition from Apple Inc.'s iPhone, Samsung Electronics and cheaper brands running Google Inc.'s popular Android software, Nokia has been forced to slash costs, primarily affecting its operations in Europe. Nokia has already closed plants in Germany, Hungary and Romania; and now it's the turn of the Finnish assembly plant. Some 1,000 of the 3,500 jobs in Salo (Town in southern Finland) - which until recently was Nokia's flagship assembly hub - are being cut this year.
 
Feb, 2012, BOCA RATON: Procter & Gamble Co plans to cut a total of 5,700 non-manufacturing jobs as part of a new plan to reduce costs by $10 billion by the end of fiscal 2016, Chief Executive Officer Bob McDonald said. 

 
Layoff
 
This is the separation of an employee initiated by the employer due to business reverses, the introduction of labor-saving devices, or the reduction in the demand for particular skills. Management, as temporary measures during periods of business recession, industrial depression, or seasonal fluctuation, resorts to layoff or downsizing. Most managers say that downsizing is their toughest decision. To help employees who have lost their jobs, employees can provide services such as outplacement or helping employees find a new job, relocation assistance, and family counseling.
 
Companies can justify layoff decisions by such evidence as lagging sales, growing inventory, or a depressed economy. Employers should also provide evidence that they considered all other options, such as transferring employees into vacant positions, placing them in newly created part-time positions, or allowing them to work a shorter workweek. 
 
Facts [+]
ET Bureau | 22 Oct, 2015: Samsung Electronics proposed to lay off almost 5 per cent of its staff in India across managerial-level executives and factory and blue-collar workers as the Korean chaebol takes steps to become leaner and reduce costs amid slowing sales, five senior industry officials said.

The remainder would likely be shunted out in phases by December and March, with a total of 750 to 1,000 employees set to lose their jobs unless their performance improves. At that time, there were about 22,000 employees in Samsung India, including workers at the company's two factories.

Textile sector: 45 lakh persons become jobless in last 2 years 
INDIA: About 45 lakh people in the textile sector have lost jobs in the last two years mainly due to global economic slowdown and problems at domestic front, apparel exporters body Apparel Export Promotion Council said.
 
The recent trend toward downsizing leading to massive layoffs has been triggered by three factors:
 
  • Decline or crisis in the firm - There is a decrease in the demand for the firms' products or services due to a recession in business climate and increased international competition.
  • Technological advances enabling many companies to produce more with fewer people
  • Organizational restructuring - modification of the firm's structure to become less hierarchical by cutting out the layer of middle management.        More Detailed >>
     
The following are some of the alternatives to layoffs: 
  1. Freeze hiring
  2. Restrict overtime
  3. Re-train/Re-deploy
  4. Switch to job sharing
  5. Use unpaid vacations
  6. Use a shorter workweek
  7. Use pay reductions
  8. Use sabbaticals
  9. Implement early retirement programs
IT companies which have announced job cuts in 2012.
 
  • In May, Hewlett Packard (HP) announced it will lay-off 27,000 employees across the globe. This included 9,000 job cuts in the USA, while CEO Meg Whitman assured that this move would not affect employees in India.
  • Sony in April said it will shed 10,000 employees as part of its 'One Sony' initiative. This means that the company will lose 6% of its global staff in a bid to once again become profitable.
  • As part of its restructuring programme, BlackBerry maker Research in Motion (RIM) would slash 5,000 jobs. In August, reports quoting insiders came that the company would fire another 3,000 staffers.
  • The embattled Japanese manufacturer Sharp in August announced it would cut 5,000 jobs as part of its cost cutting efforts. Later, sources said that the company would sell two plants and, thus, slash 3,000 jobs, while news reports said Sharp may eventually shed 10,000 jobs.
  • Nokia Siemens' restructuring programme includes 2,900 job cuts in Germany in March, while 630 jobs were slashed in Finland. The company shed 3,500 jobs in Latin America as it exited a service and maintenance deal with Brazil's Oi.
  • Alcatel-Lucent decided to let go off 5,000 employees in order to lower its spending and produce more profit. All divisions except research and development would be affected by this move, which would be completed by 2013-end.
  • Under Google, Motorola Mobility cut 4,000 jobs across the globe. This move, announced in August, translates into 20% employees of the company being laid off as part of the restructuring process. The company would also shut down approximately 30 offices across the world and 'shrink operations' in India.
  • In July, Cisco announced that it would lay off 1,300 people from its workforce, which amounts to 2% of its total staff. The technology giant was compelled to take this step as its sales reduced under intense competition and limping economic conditions.
  • In February, Alliance@IBM, an organisation by IBM employees, released data that IBM laid-off 1,202 employees in various business units throughout the world. It reported the data based on the severance documents it received from the staffers who were let go by the company.
Source: TOI
 
Retirements 
Retirements occur when employees reach the end of their careers. The age for an employee's superannuation differs. In some States it is 58 years and in Central Government it is 60. There is a thinking to raise the limit to 60 and 62 respectively as there is shortage of skilled people to fill up the vacant jobs.
 
Retirement differs from quits. When the employee superannuates and leaves the organization, he or she carries several benefits with himself or herself. Such a privilege is denied to the employee who quits. Second, retirement occurs at the end of an employee's career but the quit can take place at any time. Third, superannuation shall not leave any soured relationship behind the retiree but a quit is likely to result in hurt feelings with the employer. 
 
Facts [+] 
A recent AARP national survey of 1,500 workers age 45 to 74 showed that nearly 70% plan to work in some capacity during their retirement years. Companies can leverage this tremendous source of experienced human capital. Mature, older workers can be positioned as mentors or assigned to cross-generational teams so that workers of all ages can learn from and appreciate each other.
 

Faced with the expected wave of retiring baby boom employees, organizations are looking to entice retirees and seniors back into their organizations as employees or as consultants. Several new websites have emerged to address these organizational needs. The websites are: yourencore.com, seniors4hire.org, enrge.us and seniorjobbank.com.
 
Retirement in specific countries
 
Country Early retirement age Normal retirement age Employed, 55–59 Employed, 60–64 Employed, 65–69 Employed, 70+
Austria 60 (57) 65 (60) 39% 7% 1% 0%
Belgium 60 65 45% 12% 1% 0%
Cambodia 50 55 ? ? ? ?
Denmark none 65 77% 35% 9% 1%
France 62* 65* 51% 12% 1% 0%
Germany 65 67 64% 23% 3% 0%
Greece 57 65 51% 31% 8% 1%
Italy 57 65 (60) 34% 12% 1% 0%
Netherlands 60 65 53% 22% 3% 0%
Norway 62 67 ? ? ? ?
Spain 60** 65** 46% 22% 0% 0%
Sweden 61 65 78% 58% 5% 1%
Switzerland 63 (61), [58] 65 (64) 77% 46% 7% 2%
Thailand 50 60 ? ? ? ?
United Kingdom none 65 69% 40% 10% 2%
United States 62 67 66% 43% 20% 5%
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Germany stands first in quiet low unemployment and it is still trying towards full employment next followed by  France stands second in world countries . Due to the low unemployment, companies in these countries are facing hard situation in finding experienced and talented employees to attract in to their companies.  Hence, the companies are planning to raise the payment of incentives to their employees with  postponement of retirement age to retain the employees and also induce women workforce to maintain the required level of workforce.
 

 
 
Facts [+] 
80 is the new 65 when it comes to retirement
 

CHICAGO  - When it comes to retirement, many middle class Americans said 80 is the new 65 and plan to delay retirement because of worries over money, according to a new survey.
 
Three-fourths of those surveyed said they expect to work in their retirement years. One quarter said they will "need to work until at least age 80" to live comfortably in retirement.
 
Of Americans who will work in retirement, "47% said that they are going to continue in the same job or a similar job of similar responsibility," Joe Ready, Well Fargo's director of institutional retirement and trust, told Reuters Insider.
 
"That raises a lot of social and economic implications. Will they have the physical ability to work, the mental capacity? What does that mean for the younger work force in terms of coming through and looking to get ahead?"
 
Three-fourths of Americans said it is more important to have a specific amount saved before retirement, regardless of age, while only 20% said it is more important to retire at a specific age regardless of savings.
 
"For several years now, we've seen that Americans are undersaving for retirement and a majority do not trust the stock market as a place to invest for retirement," Ready said.
 
"We did find a bright spot among middle class Americans — more than three-quarters do not want to retire with mortgage debt. This is an important goal, particularly for younger Americans," said Laurie Nordquist, director of Wells Fargo institutional retirement and trust.
 
Eighty-six percent of respondents said it's important to own their home debt-free by retirement.

 
Severance packages (Compensation that an employer gives to someone who is about to lose his or her job.)are most typically offered for employees who are laid off or retire. Severance pay was instituted to help protect the newly unemployed. Sometimes, they may be offered for people who resign, regardless of the circumstances; or are fired.    More >>
 
Facts [+] 

There is no legal requirement in the U.S. to provide severance pay to terminated employees. Many employers routinely give severance packages to employees in order to bridge the gap between one job and the next and to hedge themselves against lawsuits. On average, severance-paying organizations provide terminated employees between one and two weeks pay for each year of service.
Severance contracts often stipulate that the employee will not sue the employer for wrongful dismissal or attempt to collect on unemployment benefits, and that if the employee does so, then they must return the severance money.  More >>