Types of Separation in HRM- Resignation, Retirement, Layoff, Retrenchment

Posted on Nov 4 2021 - 5:44pm by simplinotesadmin

Types of Separation in HRM

 

Resignation

It is a voluntary separation initiated by the employee himself. An employee may resign on grounds of ill-health, marriage, pregnancy, better opportunities in other organization etc.

Retirement

This is the common form of separation of employees form the organization. There are three kinds of Retirement:

i. Compulsory Retirement
An employee must retire after attaining the specified age. The current retirement age for most government workers in India is 60.

ii. Premature Retirement
An employee may retire before attaining the specified age due to bad health, physical disability, family problem etc. he gets the full benefit of retirement provided the management allows premature retirement.

iii. Voluntary Retirement
When an organization wants to cut down its operations or to close forever, it may give an option to its employees with a certain minimum service for voluntary retirement in return for a lumpsum payment. This type of retirement is also called Golden Hand Shake.

Layoff

Layoff implies temporary removal of an employee from the payroll of the organization due to circumstances beyond the control of the employer. It may last for an indefinite period. But the employee is not terminated and is expected to be called back in future. The employer employee relationship does not come to an end but is merely suspended during the period of layoff. It is temporary denial of employment. The purpose of layoff is to reduce the financial burden on the organisation when the human resources cannot be utilized profitably. Under Section 2 (KKK) lay off is defined as

“the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.

Layoff is resorted in seasonal and cyclic industries. In mines workers are laid off due to excess inflammable gas, flood, fire and explosion.

Retrenchment

Retrenchment means permanent termination of an employee’s services for economic reasons in a going concern. Termination of services on account of disciplinary action, or prolonged illness or retirement and superannuation, or expiry of agreement or on closure of the establishment does not constitute retrenchment. It is termination due to redundancy of workforce.
The Industrial Dispute Act, 1947 lays down the following conditions for retrenchment:
i. The employee must be given one month’s notice in writing indicating the reasons for retrenchment or wages in lieu of such notice.
ii. The employee must be paid compensation equal to 15 days wages for every completed year of service. Notice in the prescribed manner must be served on the appropriate government authority.
iii. In the absence of any agreement to the contrary, the worker employed last must be terminated first.
iv. Retrenched workers must be given preference in future employment.
Establishments employing 100 or more workers are required to give 3 month’s notice and to seek prior approval of the Government.

Dismissal

Dismissal refers to terminating the service of an employee by way of punishment for misconduct or unsatisfactory performance. Unsatisfactory performance implies persistent failure of the employee to perform his job to th specified standards. Dismissal is a drastic step and should be used as a last step after all attempts to salvage the employee have failed. Before an employee is discharged he must be given the opportunity to explain his conduct and to show cause why he should not be dismissed. The principle of natural justice should be followed i.e. the punishment should not be out of proportion to the offence.

Procedure
i. Conduct preliminary inquiry
ii. Issue charge sheet
iii. Appointment of disciplinary/inquiry authority
iv. Conduct detail inquiry
v. Passing order of termination as dismissal
vi. Hearing and disposal of appeals.

The biggest difference between layoff and retrenchment is that layoff is volatile in nature, i.e. employees are recalled, once the period of layoff is over while retrenchment is non-volatile i.e. that involves full and final termination of services.

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