Retrenchment or layoff of the workers without any reason. If anz terminates your employment because no suitable position exists for you, you will be entitled to a severance payment equal to 12 months tec. Some take the opportunity for a long awaited career change, others do something they always wanted to do but never had the spare cash or the balls to to like start a business. New technologies can cause the need for company reorganization. Thus, the us population wished to curtail their involvement on the international scene to avoid human losses and the hig moneytary costs of.
Retrenchment means the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than by way of punishment inflicted as a measure of disciplinary action. The short and long term effects of retrenchment announcements on. Lack of administrative support and attention towards labour leads to industrial disputes. The study will also try to focus on maintaining strong organization employee relationship after retrenchment to promote morale high for employees. The present study aims to discover the socialeconomic impact of an unanticipated and involuntary loss of employment retrenchment of workers, evaluating the efficacy of the law in this regard and tries to assess as to how persons who have lost their employment owing to retrenchment. Many employers, particularly in smaller retrenchments, are prepared to make an additional ex gratia payment to an employee in full and final settlement of all claims relating to the employees termination of employment in order to obtain finality and to avoid the costs and time involved in litigation. The employer follows a fair procedure aimed at an attempt to find alternatives to retrenchment. A study on socioeconomic impact of retrenchment on. In one of the first major labour appeal court cases dealing with the issue of economic reasons for retrenchment, kotze v rebel discount liquor group pty ltd 2000. Causes of labour turnover personal causes, unavoidable causes and avoidable causes labour turnover is the rate of change in the labour force of a concern during a specified period of time.
Updated legislation combined with case law decisions continually make it harder and harder for employers to retrench employees. As with all dismissals, the retrenchment process must be both substantively and procedurally fair. The paper identifies basic causes and challenges of staff retrenchment, which includes poor management practice, fraudulent activities, staff. Advantages of retrenchment include reduced costs, improved efficiency, improved competitiveness and reduced reliance on the markets.
Downsizing caused by increased financial costs can take the form of. Retrenchment can also be viewed as a channel of changes in organizational culture. Retrenchment can cause a company to decrease the quantity. In a recent investigation of the turnaround attempts of 32 u. The most common reason people are retrenched in south africa and how companies decide who goes. Retrenchment is the process by which staff is reduced to cull redundant employees and reduce the wage bill. Retrenchments your guide to labour law in south africa. These are defined as requirements based oneconomic, technological, structural or. The purpose of this paper is to look into the causes, effects and solutions to youth unemployment problems in nigeria. Retrenchment under the industrial disputes act, 1947 presented by. Being a necessary factor, retrenchment moves the organization from its current situation and is. Effects of retrenchment on the motivation and loyalty of.
Retrenchment and severance benefits act rsba trade disputes arising out of retrenchment 231 a dispute arising out of a retrenchment issue including a a dispute which alleges unfair dismissal. For example, employees now have the choice of going to court or of going on strike in order to challenge retrenchments, but the effect of a strike could further weaken the employer. General observations made after the two phases of the reform programme and especially after the retrenchment exercise, revealed that there s overloading of work to the remaining ing remunerations, which led to low morale, stress. The purpose of the study was to investigate the effects of retrenchment on the morale and job security of surviving employees of telkom kenya limited. Retrenchment means termination of the contract of service of the employees in a redundancy situation, which.
First there was the entrance of mobile telephony in the year 1999 2000, also the telecommunication service provider business was a. One of the ways to do so is through the retrenchment of employees, where employees deemed to be not productive enough lose their jobs. Provided that the employer follows that procedure even if it may seem a bit onerous or time consuming to do so the employer would not be found lacking on procedural fairness. These are defined as requirements based oneconomic, technological, structural or similar needs of the employer.
In the context of strategic planning, retrenchment may include the shrink selectively strategy. The retrenchment provisions in the lra require an employer to consult with a person that it is required to consult with in a collective agreement and only if there is no such a agreement must the employer consult according to the hierarchy of consulting parties set out in the lra. Redundancy this is the dismissalseparation of employees for reasons not dated to the individual employees skills, competence and performance. Research about the effects of retrenchment in relation to other factors affecting survivors have been. In the latter case the management can do nothing but remains a helpless onlooker. The retrenchment strategies mainly acts on two factors, they are. Economic reasons include reducing cost, increasing profits and changing business requirements. These appear to be the most common approaches adopted by businesses to deal. As profit equals to revenue minus cost, firms would want to cut as much cost as possible. What are the advantages and disadvantages of retrenchment. There are no hidden agenda reasons for the retrenchments. According to section 2 oo of the industrial disputes act, 1947 ida, retrenchment is the termination of service of a worker for any reason whatsoever, but excludes termination by way of punishment inflicted pursuant to disciplinary action, voluntary retirement. Retrenchment in india, industrial dispute act, 1947.
Which methods of retrenchment were used in identifying employees for retrenchment at. Retrenchment is an economic ground to reduce the number of employees. Lac operational need to change the way in which drivers worked in the past drivers had worked hours in excess of statutory limits and of what was permitted in terms of safety practices by afroxs parent company. Retrenchment can be caused by a variety of factors. Pdf rate of retrenchments is directly proportional to unemployment. Pdf labour law and staff retrenchment in commercial banks in. It is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages resorted to by an employer because of losses in operation of. The right of management to dismiss workers on the ground of retrenchment to prevent serious losses is governed by article 283 of the labor code. Effects of retrenchment on the morale and job security of. Firstly, the losses expected should be substantial. How to terminate an employee on the ground of retrenchment. What are the means of communication that were used to communicate the.
What were the reasons for retrenching the employees at national foods bulawayo. However, before one can dismiss employees on the ground of retrenchment, four elements must be proven. For instance, if there is a new machine that digs a ditch, you would hire a person to run the machine, but let go the ten man shovel crew. Retrenchment strategies are also used to cut down operating expenses and reduce the size of the company for the betterment of the organization. Retrenchment strategy advantages and disadvantages wisestep. In every organisation some workers leave and new ones are recruited causing labour turnover. However, the industrial dispute act, 1947 the id act is the governing legislation for retrenchment, which takes the wider view of termination of employee as against the. In this note we critique, replicate and provide an alternative explanation for their findings using data from the same sample of firms attempting. Effect of retrenchment practices on performance of surviving.
Retrenchment and restructuring labour and community. Effects of retrenchment on organizational performance at. So, unavoidable causes may be administrative or personal. The scope and level of detail of the retrenchment plan will vary from case to case, depending among others on the number anticipated of job losses and associated socio. The retrenchment insurance should, for the most part at least, provide you coverage with regards to your income. The main purpose of this study was to find out the reactions of employees towards. The disadvantages of retrenchment include growth decline, reduced profits, smaller workforce, reduced. Retrenchment is a no fault dismissal, as the employee did nothing wrong and dismissal is due to operational requirements. Following are the various managerial causes of industrial disputes.
In the military arena, the usa attitude after the end of ww1 was perceived as one of retrenchment following the high casualties and the horror of that war. Retrenchment also known as downsizing is a reduction of costs, spending, or manpower. Ordinarily, retrenchment is discharge of surplus labour by the employer. If a severance payment is made to you under this clause 12. Causes, effects and solutions to youth unemployment. The most common reason people are retrenched in south. This is one of the authorized causes of termination of employment. The main cause or source of poor industrial relations resulting in inefficiency and labour unrest is mental laziness on the part of both management and labour.
The table in annex b shows typical coverage for larger and smaller collective redundancies. This strategy can also be used to get a good stand in this competitive market. That all possible alternatives to retrenchment have been fairly discarded. Pearce 1992 concluded that retrenchment is an integral component of.
The strategy of retrenchment and its consequences by colin dueck colin dueck is a senior fellow of the fpri and an associate professor in the school of policy, government, and international affairs at george mason university. The employer could misuse the provision contained in section 25g of the industrial disputes act in order to weed out active trade union workers 3 act no. The main objective of the paper to understand the reasons of retrenchment and the impact of retrenchment on the individuals moral and how company negotiate with the retrenched staff. Procedurally, retrenchments are not a problem the procedure is clearly laid down stepbystep in section 189 and 189a of the labour relations act. Retrenchment laws do not favour employers skills portal. The effects of retrenchment journal of human resources. Section 2 of the lra indicates that the reasons for retrenchment may be based on the economic, technological, structural or similar needs of the employer. Retrenchment, as commonly understood is termination of an employee on the grounds of surplus labour or incapacity of employees due to some economic grounds. To determine how retrenchment in telkom kenya has affected the morale of employees.
However, the term refers to much more than just this. Retrenchment increases profits for shareholders and creates a strategy to survive economic downturn. Management is not sufficiently concerned to ascertain the causes of inefficiency and unrest following the laissezfaire policy, until it is faced with strikes and more serious unrest. General observations made after the two phases of the reform programme and especially after the retrenchment exercise, revealed that there s overloading of work to the remaining ing. Economic recession is one of the main causes of unemployment. Retrenchment also occupies its place and has been one of the causes of strikes. It causes low morale, poor performance and job insecurity to the retained staff. Retrenchment insurance the general idea of retrenchment insurance is that it will provide you coverage in the event that you are made completely redundant. During a recession, firms experience a decrease in revenue. Retrenchment is the process where an employees position becomes redundant and is therefore dismissed. The data for this paper was collected from secondary sources using.
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