retirement or seperation

8/12/2019 Retirement or Seperation

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Chapter - VI

RETIREMENT / SEPARATION

PGDPM – MMM – I, SEM- I

HUMAN RESOURCE

MANAGEMENT



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6.1 Introduction

• The function of separation can be as complexand challenging as any of the preceding fivefunctions, which served to select and merge theemployee with the organization.

• Now we shall review three processes ofseparation: the retirement of older employees;the layoff or release of qualified younger

employees no longer needed by theorganization; and the discharge of employeeswho do not meet the organization’s expectations.




1. RESIGNATION:

• When an employee himself leave the

organization or initiates a separationfrom the organization it is termed asresignation.

• Although some resignation may permitan organization to rectify mistakes inprocurement of personnel.

• Resignation may be put in voluntarilyby the employees on grounds ofpersonal problem, health, family etc.




2. Discharge: • It is the process of terminating the service of an employee

due to any serious misconduct

• It is a permanent separation of an employee from the pay-roll for violation of company rules or for inadequateperformance.

• The most stressful and distasteful separation method ofemployee is discharge.

• The employee is deemed to be fundamentally unsatisfactoryin terms of performance and / or attitude.

• Discharge for cause makes the ex-employee ineligible forunemployment compensation

• For non-unionized personnel, only laws and courts can

serve to restrict the power of the private employer indischarging the personnel

• Discharges because of union activity, sex, age, color,religion, race, and nationality are legally prohibited

• Discharge because of disloyalty, and the like are still legal

until challenged in court in specific case.




• CAUSES OF DISCHARGE:• a) FREQUENT CAUSES:

• Inefficiency, dishonesty, drunkenness, carelessness.

• b) INFREQUENT CAUSES: • Accidents, insubordination, personal conduct,

• un-cleanliness, infraction of rules, negligence.

• c) OTHERS:

• Laziness, lack of cooperation.• PROCEDURE OF DISCHARGE:• Permanent records of all merit ratings made by

supervisors.

• A memorandum bearing on the efforts made by foreman tohelp the defendants to overcome his weakness.

• A copy of warning that had been sent him.

• A letter of discharge, especially if letter states cause ofdischarge.


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3. Dismissal:

• Similar to discharge, it is also process ofterminating the service of an employee due toany serious misconduct but its action is moresevere than discharge

• Dismissal is the termination of the services ofan employee by way of punishment for somemisconduct and prolonged absence fromduty.

• Misconduct refers to willful violation oforganization rules and norms.

• The main causes of dismissal are:indiscipline; insubordination and dishonesty



The following reasons lead to the dismissal of an

employee-

• Excessive absenteeism

• Serious misconduct

• False statement of qualification

• Theft of company’s property



Layoff: P.Subba Rao , p. 732

• It is the temporary reduction in the workforce due to theinability of the employer to provide work as a result of theshortage of coal, power, raw material, machinery breakdown

or a natural calamity.• Employer has to pay 50% of the basic wage to the employeesduring the layoff period

• Section 25-C of Industrial Disputes Act (IDA) 1947, does notconfer the right on employers to layoff workers for whatever

reasons they deem fit• According to section 25-M of IDA , unless the layoff is due toshortage of power or natural calamity ,no work men can belaid off without the prior permission of the labourcommissioner

• Maximum period of layoff is 45 days• If employer offers alternative employment , it will not beconsider a layoff even if the worker does not opt for it

• The penalty stipulated for not complying with the provisions ofthe IDA : imprisonment for period of up to one month or a fine

up to Rs. 1000 or both•

V l t R ti t / S ti S h



Voluntary Retirement / Separation Schemes,

Golden handshake: • One of the techniques of trimming the workforce is Voluntary Retirement

Scheme (VRS).

• This is generous, tax-free severance payment to persuade the employeesto voluntarily retire from the company.

• The scheme has its origin during early 1990s in USA .

• this scheme is also known as ‘Golden hand Shake’ as it is the goldenroute to retrenchment.

• The VRS is most Human technique for downsizing the workforce

• Benefits under this scheme:- – the minimum benefits under this scheme include-

• The employee opted for VRS entitles for 45 days emolument for eachcompleted year of service or monthly emoluments at the time of retirement multiplied by the remaining months of service before normal date ofretirement whichever is less.

• In addition to these emoluments, the employee will get the provident fundand gratuity dues.

• The VRS originally granted tax-exemption for amount up to Rs. 5 lakhs received by public sector employee as his severance pay- package.



• Eligibility for VRS:

• It varies from company to company. Incase public sectorcompany, employees who have attained 40 years of age or

completed 10 years of service are eligible for VRS • Merits:

• It offers best and human route to retrenching excess ofemployee

• Lucrative settlement prevents resentment

• Voluntary nature preludes the need for enforcement• It allows for lowering the overall wage bill and enables for

increase in salary

• Demerits:

• It creates a sense of fear and uncertainty among theemployees who stay with the organization

• Operation of the scheme creates bad reputation of thecompany

retirement or seperation

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