Present a Ion Personnel Law

8/2/2019 Present a Ion Personnel Law

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RETRENCHMENT,LAYOFF &VRS

ROLE OF HR IN MANAGING THESE ISSUES


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DOWNSIZING


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What is downsizing?

a company strategy to reduce the scale ( size ) andscope of its businessimprove the companysfinancial performance

a reduction in a companys workforce improveits bottom line

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Reasons behind Downsizing

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Economic downturns 25%

Mergers and acquisition 25%

Making better utilization of staff 17%

New technology 15%

Tranfer work to other plants orabroad

15%

others 3%


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Common outcomes ofdownsizing

Positive:

- increase in stock value

- Reduced the total labor costs

- Simplification of organization structure

- Improved decision making

- Improved performance of system

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Negative: Effects after downsizing

Invent the cost in the economic long-term

Negative attitude from investors

Legal Risks in Downsizing

Low Morale andInsecurity

Less Productivity

-

About 68% of all downsizing,

restructuring, & reengineeringefforts are not successful


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RETRENCHMENT Section 2of the Industrial Dispute Act,1947,defines

Retrenchment as:

The termination by the employer of the service of a workman for

any reason whatsoever, otherwise than as a punishment inflictedby way of disciplinary action, but does not include-

Voluntary retirement of the workman

Retirement of the workman on reaching the age ofsuperannuation

Termination of the service of the workman as a result of the non-renewal of the contract of employment between the employerand the workman concerned on its expiry.

Termination of the service of workman on the ground ofcontinued ill- health.


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Causes of RETRENCHMENT

Changing market conditions

Growth beyond an entrepreneur's vision

Merging of two or more firms

Economic crisis Change in management

Outsourcing practice

Increase in efficient work flow and

computerized services Owners ill health


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Selection Criteria for Retrenchment Length of service

Performance record

Disciplinary record Absence record

Skills

Knowledge


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Non-DiscriminationSelection criteria for retrenchment must be based on the principle

of non-discrimination. Such as

Gender

Trade union membership Race or color

National origin or ethnicity

Religion

age


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Some Prestigious Companys

Retrenchment Rate

s.no Company Name Rate Of Retrenchment

1 City groups 52000

2 Ford 2600

3 DHL 9500

4 Google.com 10000

5 H.P 24600


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LAY-OFFS


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LAY-OFFS According to Section 2(kkk) of Industrial Dispute Act

Lay-off means refusal,failure,inability of the employeron account of shortage of coal,power,raw materials oraccumulation of stocks,breakdown of machinery or forany other reason to give employment to workman

whose name is borne on the muster roll of anindustrial establishment & who is not beenretrenched.


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CAUSES OF LAYOFFS Merger and acquisition-primary factor

Global competition

Reduction in product demand

Changing technologies

If layoffs is temporary, employee is likely to called back to jointhe ranks once again.

Employer-employee relationship temporarily suspended


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Right of Workmen for Layoff

Compensation, Section 25C Name in Muster Roll

Not be Casual Worker

Continuous Service if (1yr )

195 Days in a mine

240 Days any other case


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Circumstances disentitling a

WorkmanAlternative Employment

Same employer,same establishment

Location of alternative employment Same skill & qualification

Same amount of wages/standard

Lay-off due to strike,go slow


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VOLUNTARY RETIREMENT SCHEME.


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VOLUNTARY RETIREMENT SCHEME

VRS is a scheme whereby the employeeis offered to voluntarily retire from his

services before his retirement date.

Subject to certain conditions thecompany offers VRS to its employees It is

the golden route to cut the excess flab.

The latest mantra of many a corporateand Public sector units.


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CONTD As the name suggests the VRS is strictly voluntary i.e. one can neither compelthe workers to accept it nor apply it selectively to certain individuals.

One can however choose the levels, units and age groups among whom one

wants to offer VRS.

The company can always accept or reject the application for the VRS.

But usually this is not done in practical circumstances as it sends wrong signalsto the employees. It might imply that the VRS is not actually voluntary but a

selective procedure of downsizing.


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ELIGIBILITY

Minimum 45 years of age

Served the company for at least 10 years

Early separation- not counted as VRS legally

Early separation- no benefit of tax exemption


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THE GOLDEN HANDSHAKE The Voluntary Retirement Scheme is given tax exemption

as per the following limits:

Three months salary per completed year of service

Remaining salary

Rs. 5,00,000

Whichever is least


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BENEFITS ProvidentFund

Gratuity

Cost ofTransfer

Salary forNotice Period

EncashedLeave

MedicalInsurance

HousingLoans

Subsidies


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Hurdles in execution

Non- acceptance of the VRS

Over-acceptance of the VRS

Operational problems

Post-VRS blues


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HRS ROLE IN MANAGING

THESES ISSUES


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Role of Hr in managing these issuesConsultation

Determine whetherRetrenchmentIs necessary

Look foralternatives

Decide how tocarry out dismissals

Check nodiscrimination

Implementdismissals

Seek to reduce impact of retrenchment


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MEASURE1. Plan in Advance2. Senior leaders must become involved early and remain visible

throughout the downsizing initiative.

3. Establish Procedure

4. Be strategic about your cuts

5. Use multiple techniques for downsizing

6. Communication is very very important during downsizing hencemake sure to communicate

Trade unions and worker representatives

Government authorities

Community leaders.


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CONTD6. Offer retrenchment/voluntary retirement scheme with the best possiblecompensation.

7. Terminate the foreign workers first before terminating the local workers in thesame category.

When the retrenchment involves local workers, the LIFO principle(last-in-first-out) must be practiced for the same category of work.

However, employers may carry out retrenchments in accordance withcertain criteria's after consultation and the approval of the workers andtrade unions representing them.

8. Survivors are keyDont neglect them


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CONSEQUENCES OF RETRENCHMENT,LAYOFF &VRS

Positive effects on the organization:

Reduction in the labour cost

Enhanced corporate image

Negative effects on the organization:

Decrease in the employee morale

Excessive pressure to perform

An organization in such cases requires stimulus in the followng form:

Offer workplace challenges

Build team spirit Bring process innovation


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CONSEQUENCES ON EMPLOYEES

Existing employees will feel insecure about their job

Terminated employees might spread wrong information about company inmarket.

WHAT HAPPENS AFTER RETRENCHMENT?

Loss of dignity

Entrepreneurial skills

Poverty


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OUTPLACEMENT: It is the in-house help provided by the organization itself in order to

help the employees during the transition phase from retrenchmentto the resettlement.

The company can play an important role by providing counseling,

training, and all the other help required by the employees. It not only helps organization to convince employees to accept VRS

but also helps in maintaining the morale of the retained employees.

Moreover this exercise also helps in creating good corporate imageof the organization that can help organization in the long term like

future recruitment.


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Placement agency: Besides having outplacement facility a company can also take the

help of placement agency.

This agency can appraise, counsel and place the retrenchedemployees on deserving jobs.

Also there have been practices where company purposefully asksthe agency to tell nice things about the retrenched employees sothat they will have the " feel good " factor to keep theirmotivation even after the retrenchment.


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COUNSELING: This is an effective tool to reduce the effect of the VRS.

The retained as well as retrenched employees could becounseled to good effect to keep up their motivationlevel.


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Q&A


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THANK YOU

Present a Ion Personnel Law

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