Layoff / Laid off and Retrenchment- Definitions - Rule Position - Differences

Tata Teleservices

Tata Teleservices recently fired between 500 and 600 employees. The severance package being offered to the employees impacted by the decision is one-month's salary for every year of service.

http://economictimes.indiatimes.com/jobs/mass-layoffs-in-it-and-telecom-spook-job-market-in india/cognizant/slideshow/58595577.cms

Layoffs in 2016: Companies that gave the pink slips

Downsizing has taken a rampant turn this year, with both start-ups and MNCs laying off staff by the hundreds. Here are some that have given the pink slips.

QUIKR (Classified advertising platform)

Layoffs: 150 employees of Common Floor, which Quikr had acquired in January.

FLIPKART (E-retailer)

Layoffs: 1,000 across India.

TWITTER (Online social networking service)

Layoffs: 20 jobs in Bengaluru.

OLA (Online cab service)

Layoffs: 700 employees pan-India.

CISCO (E-commerce shopping list firm)

Layoffs: 14,000 jobs worldwide, with 7,000 engineers in India’s R&D centre likely to be severely affected.

ASKME (E-commerce shopping list firm)

Layoffs: 4,000 employees, after shutting down in July due to the unplanned exit of its principal investor, Astro Holdings.

GROFERS (Online grocery delivery)

Layoffs: 150-200 employees in Bengaluru. Revoked 67 job offers.

http://economictimes.indiatimes.com/wealth/earn/job-cuts-on-the-rise-in-2016-companies-that-gave-the-pink-slips-this-year/articleshow/54868731.cms

Veiyra M.A. vs Fernandez C.P. And Anr. on 7 December, 1955

Bench: M Chagla, P Dixit

JUDGMENT Chagla, C.J.

Bombay High Court held that employer has an option for lay-off or retrenchment.

Layoff

Non-applicability of layoff provisions to certain establishments

According to section 25A of chapter VA of Industrial Dispute Act 1947, certain establishments do not have any provisions relating to layoff of the employees by the employer. In such circumstances, layoff would be considered without any authority of law.

Such establishments are:

• 1. Industrial establishments in which less than 50 workmen are employed, on an average per working day.

  2. Industrial establishments which are of a seasonal character and in which work is performed only intermittently.

Employees employed in the above said establishments do not have right for laid-off compensation. However if there is any agreement between employer and employee for that purpose or on the grounds of social justice, laid-off competition can be paid.

In South India Corporation Ltd. v. All Kerala Cashewnut Factory Workers' Federation the Court held that if any establishment is not covered within the scope of this Chapter V-A, the Tribunal has no right to grant relief on the basis of any fanciful notions of social justice.

Except above said industrial establishments, all other industrial establishments ( 50 workmen and above industrial establishments which are not of seasonal character) have provisions relating to lay off of the employees by the employer.

Right of Compensation by workmen laid-off

[Right of workmen laid-off for compensation] Industrial Disputes Act,1947 Section 25-C

workman has right to lay-off compensation subject to the following conditions, they are:

• 1. Workman name should be borne on muster rolls of the establishment and he/she is not a badli workman or a casual workman; and

  2. The workman should have completed not less than one year continuous service as defined under Section 25-B; and

  3. The workman should have laid-off, continuously or intermittently;

  4. Then the workman shall be entitled to lay-off compensation for all days during which he was so laid-off;

  5. However, the workman shall not be paid lay-off compensation for such weekly holidays as may intervene the period of lay-off.

  6. The lay-off compensation is equal to 50% of the total of the basic wages and dearness allowance that would have been payable to him, if he had not been so laid off.

Explanation: "Badli workman" means a workman who is employed in an industrial establishment in the place of another workman whose name is borne on the muster rolls of the establishment, but shall cease to be regarded as such for the purposes of this. section, if he has completed one year of continuous service in the establishment.

In Vijay Kumar Mills v. Labour Court, the Madras High Court held that the badli workman is one whose name is not borne on muster rolls of the establishment. If his name is found on the muster roll, even if he is a badli workman, he is entitled to lay-off compensation.

Maximum days allowed to Layoff of employee by employer

According to section 25C of Industry and dispute Act 1947, maximum days allowed to Layoff of employee by employer is 45 days, for those days, employee who is laid-off is entitled for compensation equal to 50% of the total of the basic wages and dearness allowance that would have been payable to him, had he not been so laid off.

However, if this contingency is prolonging beyond a reasonable time, say 45 days, it would be matter of serious concern. both to the employer and to the workmen because both of them are put to a loss of 50% wages i.e. The employer is required to pay lay-off compensation without extracting work from workmen and workmen too, would be losing 50% wages which he would have earned had he not been so laid-off. Therefore the parties can enter into an agreement not to continue lay-off after a period of 45 days in a year.

Compulsory permission from competent authority by employer to lay off of workmen

Section 25M of Industrial Dispute act 1947 (Amendment in 1984)

For Industrial establishments in which not less than 100 workmen are employed, on an average per working day and are of not being seasonal character and in which work is performed only intermittently, have to seek prior permission from competent authority by the employer to layoff workman. if the employer does not apply to seek prior permission or where such permission is refused by the competent authority specified above, to effect lay-off, such lay-off shall be considered as illegal and the workmen laid-off shall be entitled to all benefits as if they have not been laid-off.

Can an employer avoid the lay-off compensation?

Section 25A of Industrial Dispute act 1947

Following establishments can avoid lay off compensation according to the Section 25E

• 1. Industrial establishments in which less than 50 workmen are employed, on an average per working day, but not to industrial establishments in which more than 100 workmen are employed.

  2. Industrial establishments which are of a seasonal character and in which work is performed only intermittently.

Workmen not entitled to compensation in certain cases [Section 25E] of Industrial Dispute act 1947

(i) if he refuses to accept any alternative employment in the same establishment from which he has been laid off, or in any other establishment belonging to the same employer situate in the same town or village or situate within a radius of five miles from the establishment to which he belongs, if, in the opinion of. the employer, such alternative employment does not call. for any special skill or previous experience and can be done by the workman, provided that the wages which would normally have been paid to the workman are offered for the alternative employment also;(ii) if he does not present himself for work at the establishment at the appointed time during normal working hours at least once a day;

(iii) if such laying-off is due to a strike or slowing-down of production on the part of workmen in another part of the establishment.

Retrenchment

Definition of retrenchment of employee

[Section 2(oo)]

"retrenchments" means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action but does not include-

(a) voluntary retirement of the workman; or

(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or

43[(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation on that behalf contained therein; or]

(c) termination of the service of a workman on the ground of continued ill-health;]

In Duryodhan Naik v. Union of lndia, the Court held that the discharge of surplus labour by the employer· for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action is called retrenchment, but where the services of all workmen have been terminated by the employer on a real and bona fide closure of business or the undertaking is taken over by another employer, it has no application of retrenchment.

In Santosh Gupta v. State Bank of India, a female employee was discharged on the grounds that she failed to qualify herself in the prescribed test for confirmation of services. The Tribunal held that the termination does not amount to retrenchment. But the Supreme Court reversed the decision of the Tribunal and ordered reinstatement of the employee with full back wages. The Supreme Court further held that the expression “termination of service for any reason whatsoever” is wide enough to include every kind of termination of service except those which are expressly excluded by the proviso to the definition of retrenchment as given in Section 2(oo)|.

In Tatanagar Foundry Co. v. Their Workmen, it was held that employer cannot lay-off the workmen with mala fide intention or by way of victimisation.

Procedure for retrenchment [Section 25G]

The principle of 'last come; First go':-

Where any workman in an industrial establishment who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman.

Case Laws

In K.C. Joshi v. Union of India [(1985) 3 SCC 153 : 1985 SCC (L&S) 656 : (1985) 3 SCR 869

It is observed that: (SCC p. 158, para 8) “If it is discharge simpliciter, it would be violative of Article 16 because a number of store-keepers junior to the appellant are shown to have been retained in the service”.

Jarnail Singh case [(1986) 3 SCC 277 :1986 SCC (L&S) 524 : (1986) 1 ATC 208 : (1986) 2 SCR 1022]

it was observed as under: (SCC p. 292, para 35)

“In the instant case, ad hoc services of the appellants have been arbitrarily terminated as no longer required while the respondents have retained

other Surveyors who are junior to the appellants. Therefore, on this ground also, the impugned order of termination of the services of the appellants are illegal and bad being in contravention of the fundamental rights guaranteed under Articles 14 and 16 of the Constitution of India.”

After a careful perusal of the record, court satisfied that the juniors to the petitioner are retained. Therefore on this ground also the termination order is liable to be quashed.”

Re-employment of retrenched workmen [Section 25H]

Where any workmen are retrenched, and the employer proposes to take into his employ any persons, he shall, in such manner as may be prescribed, give an opportunity [to the retrenched workmen who are citizens of India to offer themselves for re-employment, and such retrenched workmen] who offer themselves for re-employment shall have preference over other persons.

Retrenchment conditions

To an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than [50 but not more than 100] workmen were employed on an, average per working day for the preceding twelve months.[Section 25A]

According to the Section 25F [Conditions precedent to retrenchment of workmen]

• 1. Employee should have continuous service for not less than one year under an employer

  2. One month’s notice in writing indicating the reasons for retrenchment or payment for the period of the notice

  3. Compensation which shall be equivalent to fifteen days’ average pay[for every completed year of continuous service] or any part thereof in excess of six months.

  4. Notice in the prescribed manner is served on the appropriate government

To an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than [one hundred] workmen were employed on an, average per working day for the preceding twelve months.[Section 25K]

According to the Section 25N [Conditions precedent to retrenchment of workmen]

• • Employee should have continuous service for not less than one year under an employer

  • Three months notice in writing indicating the reasons for retrenchment or payment for the period of the notice

  • Compensation which shall be equivalent to fifteen days’ average pay[for every completed year of continuous service] or any part thereof in excess of six months.

  • An application for permission to specified authority for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner.

  • Compulsory permission from competent authority by employer retrenchment of workmen

  • For Industrial establishments in which not less than 100 workmen are employed, on an average per working day and are of not being seasonal character and in which work is performed only intermittently, have to seek prior permission from competent authority by the employer to layoff workman.

If no application seeking permission to retrench workmen is made by the employer or where such permission is refused, such retrenchment shall be deemed to be illegal and the workmen shall be entitled to all benefits as if they have not been given any notice. (sub-Section 7).

Aircel goes for big job cut with compensation package

Aircel told TOI that people who have been given around a week's time, agree with the company's compensation package, which includes full month's salary in February,2017 and just the basic pay of the following six months.

http://economictimes.indiatimes.com/articleshow/57179208.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

HSBC axes 200 employees from city offices

April 2012, HYDERABAD: HSBC India did a massive layoff exercise showing the door to as many as 200 employees ranging from assistant manager to vice presidents from its centres in Hyderabad alone.The axe had fallen on over 350 employees at HSBC's Pune centres. It is estimated that a total of 750 employees were asked to leave across locations and designations. So from assistant managers to vice presidents were summoned to the meeting room, asked to choose between termination or resignation, pack their bags and leave.

An "adequate" compensation (one month's salary for each year spent in the company plus three months salary) was part of the layoff deal. While the new entrants into the international bank are crying hoarse, the senior ones are taking solace in the cash with some having made Rs 8-15 lakh.

https://timesofindia.indiatimes.com/city/hyderabad/hsbc-axes-200-employees-from-hyderabad-offices-350-in-pune/articleshow/12874894.cms

Penalty for lay-off and retrenchment without previous permission [Section5Q]

This section applies to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than [one hundred] workmen were employed on an, average per working day for the preceding twelve months.[Section 25K]

• • Compulsory permission from competent authority by employer to lay off of Workmen [Section 25M] of Industrial Dispute act 1947

  • Section 25N [Conditions precedent to retrenchment of workmen]

Any employer who contravenes the provisions of section 25M or section 25N shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to one thousand rupees, or with both.

Facts [+]

India. Aug 2012:Uninor one of the telecom service providers laid off its 2000 employees in different states like Karnataka, Tamil Nadu, Kerala and Orissa. company searched to find for alternative employment in its competitor companies for its retrenched employees, to get it done Uninor appointed a outsourcing agency to help them and arrange to help desks to assist to clinch the employees in finding jobs.

Indeed this is a procedure according to the Industrial Dispute Act 1947, which should be followed, otherwise company has to pay compensation to laid off employees according to the procedure mentioned below, but company claimed that it has adopted a unique human resource model.

Companies like Bharti Airtel, GE and Citigroup are searching suitable placement opportunities' for its employees who are going to laid-off. especially Citigroup helping its employees with coaching on job search skills, interview techniques, placement support and even basic application letter-writing skills. Because these companies believe that managing layoffs well is important for the sustainability of the 'employer brand'.

USA

The method of separation may have an effect on a former employee's ability to collect whatever form of unemployment compensation might be available in their jurisdiction. In many U.S. states, workers who are laid off can file an unemployment claim and receive compensation. Depending on local or state laws, workers who leave voluntarily are generally ineligible to collect unemployment benefits, as are those who are fired for gross misconduct. Also, lay-offs due to a firm's moving production overseas may entitle one to increased re-training benefits. Some companies in the United States utilize Supplemental Unemployment Benefits.

The Worker Adjustment and Retraining Notification Act (WARN) became effective on February 4, 1989. WARN offers protection to workers, their families and communities by requiring employers to provide notice sixty-days in advance of plant closings or mass layoffs. This notice must be provided to either affected workers or their representatives, and to the appropriate unit of local government.

The Worker Adjustment and Retraining Notification Act of 1988 (WARN Act) is a United States labour law which protects employees, their families, and communities by requiring most employers with 100 or more employees to provide sixty- (60) calendar-day advance notification of plant closings and mass layoffs of employees. In 2001, there were about 2,000 mass layoffs and plant closures which were subject to WARN advance notice requirements and which affected about 660,000 employees.

Facts[+]

layoffs in the United States by the large corporations such as Hewlett Packard (hp) lead to the availability of experience and talent, made hiring easier for Indian Information Technology companies such as India's top IT services company TATA, HCL Technologies, Infosys and Wipro.

If an employer wants to retrench employee without laying-off, such employer has to follow the procedure contemplated under section 25F ( conditions precedent to retrenchment of workmen) of the Industrial dispute Act 1947. According to the said provision;

• 1. Employer should give one month's notice in writing indicating the reasons for this retrenchment, or

  2. Employer an pay to his employee salary or wages in lieu of such notice period. (one month notice, if not one month salary is compulsory)

  3. Employees should be paid retrenchment compensation equivalent to 15 days' average pay for every completed your office continuous service.

Industrial establishment employs more than 100 workmen and should not be of seasonal character;

If an employer wants to retrench employee without laying-off, such employer has to follow the procedure contemplated under section 25N ( conditions precedent to retrenchment of workmen) of the Industrial dispute Act 1947. According to the said provision;

• 1. Employer should give three month's notice in writing indicating the reasons for this retrenchment, or

  2. Employer an pay to his employee salary or wages in lieu of such notice period. (three months' notice, if not three months' salary is compulsory)

  3. Employees should be paid retrenchment compensation equivalent to 15 days' average pay for every completed your office continuous service.

• • Foxconn, the world’s largest contract manufacturer and poster boy of the government’s Make in India project, has asked nearly 1700 factory workers to go on paid leave for two weeks but the number of days would be cut from their earned leaves.

  • Intex and Lava planned to lay off about 5000 workforce from its manufacturing plant in Noida. All those workers have been asked not to come for a week because of complicated turn off collection of smart phone.

  • Karbon which has a factor in Noida and Bawal,Haryna planned to lay off 1200 to 2000 workforce,which accounts for 40% of total workforce from its manufacturing plant.

  • Micromax has already decreased its production in its manufacturing plant and information on layoff of its employees is not yet known but there could be impact on workforce.

High competition in its segment:

Between 2002 and 2006 years many private players entered into insurance sector as there was good market growth rate led to higher number of recruitment offered with high package due to competition in the market by other insurance companies. Later insurance sector faced stagnation and market growth rate and affected overall performance of the sector which forced them to lay off large number of employees in various insurance companies.

Automation and Digitisation leading to redundancies of jobs:

Infosys 'released' 9,000 employees due to automation

Infosys has "released" 8,000-9,000 employees in the past one year because of automation of lower-end jobs. It has actually come down already, though all of it may not be a reflection of automation and is likely also to be the result of the company not doing as well as it expected. Company has also trained them in special courses that will help them in their new assignments. So far it has trained about 490 people in a first batch of machine learning and the use of artificial intelligence (AI). ET | Updated: Jan 20, 2017, 11.40 AM IST

In one of India's biggest-ever layoffs, L&T sheds 14,000 employees from its workforce

Larsen & Toubro, India’s biggest engineering firm, has shed 14,000 employees, or 11.2% of its total workforce, in one of the biggest corporate retrenchment exercises in recent times. The step was an attempt to “right size” its strength in the face of business slowdown. Digitisation of operations also caused redundancies that led to downsizing.

L&T has been facing challenges with customers deferring orders and falling oil prices contributing to a sharp slowdown in the Middle-east, one of its biggest bets. Competition has increased in domestic market as companies fight for a shrinking order book pie. It also incurred losses due to inability to pass on cost escalation and other issues.

In April, ET was the first to report that L&T Finance Holding, the nonbanking finance company of the engineering major Larsen & Toubro, had asked over 550 employees to quit due to high costs and a muted business environment. In July, ET followed it up with another story detailing L&T Infotech’s high attrition rate of 18%. Details of the number of people sacked in different businesses were not given.

http://economictimes.indiatimes.com/articleshow/55570052.cmsutm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

To cut down the cost to company

Mobile handset makers lay off sales staff to save costs

India: Several mobile handset makers have laid off thousands of in-shop promoters, or sales people, in multi-brand shops and slashed salaries of many others to cut costs in a bitterly-competitive market, industry insiders said. Many notable brands including Lava, Intex, Micromax, Karbonn and even Chinese brands Oppo and Vivo have reduced the number of in-shop promoters — in some cases to nearly a third — over the past couple of month.

Experts said the development came at a time of the year when demand is typically low, some also pointed to increasing competition and pressure on margins. Xiaomi and Samsung have emerged as the clear top two smartphone makers over the last couple of quarters, with the Chinese company outdoing the Korean major in the October-December quarter, leaving rivals such as Vivo, Oppo and the Indian brands behind. Lava International, blamed the direct and indirect discounting by ecommerce players for leading to the closure of several retail shops, which has affected jobs. The company has let go some 4,000 out of 11,000 employees for underperformance.

U.S, Fisker Automotive, an electric car maker has laid off workers in Delaware and California, because it has received a half-billion-dollar loan from the federal government instead of full loan amount for the purpose of manufacturing new model electric car. To cut down the cost of employees due to stoppage of production company decided to layoff its some of employees.

The layoffs include 26 workers at a former General Motors plant in Wilmington that Fisker is retooling to manufacture its Nina plug-in hybrid sedan. Another 40 contractors and employees who were working in design and development of Fisker's Karma luxury car in Anaheim, Calif., also have been cut.

Feb 2012, MUMBAI: When, in end-January, Robert McDonald, CEO of the Cincinnati-headquartered Procter & Gamble, announced plans to lay off 1,600 non-manufacturing workers, chief marketing officers (CMOs) worldwide took notice. After all, many of those 'overhead' jobs at the owner of billion-dollar brands such as Ariel, Tide, Pampers and Duracell, will be marketing ones.

Honda Motorcycle lays off 700 contract workers at its manufacturing plant in Manesar, Haryana.

August 6, 2019

company has been cutting production since December last year and as a result workers have been asked to leave. Over 700 contractual staff are out of work currently. People aware of the development said the layoffs followed a cut in production due to the continued slowdown in sales and high inventory with the dealers. Among the workers laid off were some who have worked with the manufacturer for 7-10 years.

“Ahead of the festive season production should increase and some of the retrenched workers may be called back,” HMSI said.

Contract workers are usually hired for jobs like loading and unloading, transferring goods from one place to another, deploying material on the assembly lines and driving service vehicles. People aware of the development said the layoffs followed a cut in production due to the continued slowdown in sales and high inventory with the dealers. The auto industry has been in the slow lane since October-November 2018, due to hike in insurance premium and costlier finance post the NBFC crisis triggered by defaults by IL&FS and DHFL.

HMSI has a total of around 4,200 workers at its Manesar plant; of these 1,900 are permanent and the rest work on a contract. Before the layoffs that started early February, the plant had around 5,000 workers. While contract workers are paid anywhere between `18,000 to `22,000, permanent staff earn a salary of between `50,000 and `65,000 per month.

The union is understood to be in discussions with the management to get it to agree to allow the sacked workers to work by rotation. “In this case, a few workers will work for two months, and then they are removed while the other lot will get work for the next two months,” one of the person said, adding the management has not agreed to the proposal yet.

https://www.financialexpress.com/industry/honda-motorcycle-lays-off-700-contract-workers/1667167/lite/

Redundancy of jobs:

Vodafone, Idea may let go of over 5000 employees

The merger process of Vodafone India and Idea Cellular could see about a fourth of the telcos’ combined 21,000-strong workforce lose jobs. The nodal team handling the merger to shed at least 5,000 employees with duplication of jobs. Aditya Birla Group, which owns Idea Cellular, declined to comment, the diversified conglomerate with operations across cement, retail, textiles and financial services among others has in the past accommodated some of its retrenched employees in other group companies. ET Bureau| Updated: Apr 16, 2018.

Cognizant

2017-Cognizant appears set to layoff at least 6,000 jobs, which represents 2.3% of its total workforce, as the IT MNC struggles with growth in an IT environment that is fast shifting towards new digital services. The company is said to be looking to layoff roles which have become redundant due to the impact of automation on lower-end IT jobs.

Yahoo lays off 2,000 workers in latest purge

SAN FRANCISCO: Yahoo layoff 2,000 employees jobs that don't fit into his plans for turning around the beleaguered Internet company. The cuts announced represent about 14 percent of the 14,100 workers employed by Yahoo.

The company estimated it will save about $375 million annually after the layoffs are completed later this year. Yahoo will absorb a pre-tax charge of $125 million to $145 million to account for severance payments. The charge will reduce Yahoo's earnings in the current quarter. Workers losing their jobs will be notified .

Economic slowdown or recession

Royal Bank of Scotland at London had cut approximately 35000 jobs since year 2008 as the bank has been facing recession in its business consequently lead to lay off its staff. For year 2012, Royal Bank of Scotland had cut approximately 618 jobs. Similarly, in December- 2012, Tata Communications a well-known and reputed Indian company , layoffs 300 of its employees across the globe due to economic slowdown and for restructuring of the company.

When determining the appropriate time to conduct layoffs, you need to honestly ask yourself the following questions.

• 1. What is the worst case scenario? If production continues at the recent pace and does not improve, how many months can your company survive? How long can you survive and is your job secure? You need to always expect the best however a complete manager needs to plan for the worst case scenario.

  2. Can production and revenue be fixed immediately? Are there training issues that are preventing you from success? Have you had an honest conversation with your employees letting them know the consequences should business not improve immediately? Perhaps recruiting a top producer from a competitor will immediately boost productivity.

  3. Have you trimmed the fat already? Before turning to your human resources to cut costs, have you effectively cut your other organizational costs? Take a look at every line, no matter how minimal it may seem.

  4. Can you cut salaries instead of cutting jobs? Most employees will understand a pay cut for a period of time until productivity improves. It is a much better alternative than losing their positions.

  5. Have you solicited the help of a business consultant? Often a new pair of eyes from someone who specializes in this can offer suggestions and alternatives for your organization.

Laying off staff is incredibly difficult, both emotionally for you and how it affects the culture of the organization, however it may be what you need to do to continue your business and protect the jobs and careers of others around you.

Layoff Business Risks

There are many negative consequences when management fails to properly manage the business risks associated with a reorganization including but not limited to reduced or vanished shareholder value, lost productivity, lost employee and customer loyalty, ruined business image, lawsuits, non-compliance with regulations or even business death.

A chaotic reorganization of massive magnetite presents many negative consequences and risks:

• 1. Theft of physical and information assets by disgruntled employees,

  2. Higher turnover rate than expected potentially leading to the loss of the most talented employees as they can easily find other jobs or start their own businesses,

  3. Morale and productivity may decrease over time due to extended planning and execution of the plan unnecessarily leaving employees in the dark for too long allowing false rumors to spread which in turn create more problems for management to solve internally as well as externally such as flooded internet message boards feeding customers and investors false or confidential information,

  4. Computer network costs may increase due to increased time spent by employees on the Internet to surf and look for jobs,

  5. Less employee cooperation may lead to a series of business issues such as bad customer service, and lower productivity for others within the company and external partners,

  6. For self preservation reasons, groups and individuals may take on projects that rest within the jurisdiction of another group which they might consider a surviving or even a thriving group within the end-state,

  7. Prolonged layoff process may lead to plan manipulation, backroom deals, and favoritism,

What Not to Do ?

The manager doing the firing should never express anger, express too much disappointment, or threaten to imperil the fired employee's chances. Depending on circumstances, you may want to tell terminated employees that they might work as outside consultants, as part-time employees without benefits, or that they may be hired back at a later date, when economic and financial conditions warrant it. That said, employers are urged neither to make promises of any kind, nor to make statements that can be interpreted as promises.

Ways to deal with a sudden layoff

Managing a sudden layoff is anyone's worst nightmare. It doesn't have to be. Steer clear of the guilt trip, accept the challenge head on and take swift action.

Accept the reality

The emotional turmoil of what's next, why me, is bound to disturb you, but acceptance is critical for moving on. "Allow yourself to grieve, but move on without wasting too much emotional energy. Be realistic, accept the facts and get on with it," says Raman Munjal chair professor of leadership studies at MDI, Gurgaon Asha Bhandarkar.

"Just as employees move on for better options, they should be prepared for layoffs. Once this basic expectation is set, preparing for such eventualities becomes easier," she adds.

Do not badmouth

Restraining from expressing your displeasure towards colleagues and bosses can be hard but remember you may need their assistance in reference checks and recommendations.

"One must control the tendency to express these emotions. Negative emotions possibly get disseminated across the grapevine faster than positive emotions and result in loss of social capital," says Bhandarkar.

Tap your resources

Leverage your contacts: trustworthy seniors and colleagues, to the best of your ability. For all you know, they might be the ones pointing you to the new job. Founder and CEO of networking portal Apna Circle Yogesh Bansal feels job portals and networking sites provide an excellent opportunity for building one's brand and networking.

Educate and update yourself

An exit is a good time to take stock of things you might have missed out on- spending time with family, enrolling for a specialised course or a degree. "Explore the fields that you have always been interested in but never got the chance to try," says Bansal.