SEPARATION

Separation of an employee takes place when his service agreement with the organization comes to an end & the employee leaves the organization. Thus separation refers to the termination of professional relationship between the employer and the employee. It can be initiated from the both sides.

Types of Employee Separation

Resignation Retirement Retrenchment Death Dismissal Lay off

RESIGNATION

Resignation or quit is a voluntary separation initiated by the employee himself. An employee may resigned on grounds of ill health, marriage, better opportunities etc. Sometimes, an employer may initiate the Compulsory Resignation.

In case of voluntary resignation, Exit Interview is conducted to find out the real cause of resignation so that the actions may be taken to prevent avoidable resignations.

Main requirements of successful Exit Interview:

Win the employees confidence by assuring him that whatever he says will be kept strictly confidential. Explain to the employee that the purpose of the interview is to improve the organization's climate. It should be conducted by a responsible officer from the HR department

Main requirements of successful Exit Interview

It should show a great deal of patience & listen sympathetically. Try to find out the real cause of resignation .

It should be ensure that the employee has fully handed over the charge to somebody else.

Main requirements of successful Exit Interview

Assure the employee of the companys continuing interest in his welfare. Present the employee his final pay cheque & wish him good luck

RETIREMENT

After specified age, every employee has to retire. Employees who have rendered services to the organisation for a no. of years expect the organisation to provide for their future, when they have retired.

Types of Retirement
Compulsory Retirement

An employee must retire after attaining the specified age. In Govt sector the retirement age is 60 Years In Pvt sector the retirement age is __ Years

Types
Premature Retirement

An employee may retire before attaining the specified age due to bad health, physical disability etc. He gets the full benefit of retirement provided the management allows premature retirement

Types

Voluntary Retirement / Golden hand Shake When an organization wants to cut down its operations or to close forever, it may give an option to its employees with a certain min service for voluntary retirement in return for a lump sum payment or it may be done to reduce its wage bill.

VRS
This is applied as a downsizing strategy to cut the size of wage bill by offering one time compensation. This one time compensation can give long term profit and medium term investment. It amounts equivalent to 1.5 to 2.5 years of pay. ie. if a company pays 500 crore in VRS, it saves 200 crore annually in its wage bill.(40% saving)

Staff cost before and after VRS

Total amt Staff cost as Of VRS % of sales Rs. In Cr. before VRS 8.73 3.23 3.49 4.75 15.31 19.01 Staff cost as % of sales after VRS 3.57 13.08 6.87

Company

CASTROL TATA KSB PUMPS

LAY OFF
Under Sec2(KKK) of the Industrial Dispute act,1947 lay off is defined as The failure, refusal or inability of an employer, on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery or by any other reason, to give employment to a workman whose name appears on the muster rolls of his industrial establishment & who has not been retrenched.

PURPOSE OF LAY OFF

Its a temporary removal from the payroll of the people with surplus skills.

The Purpose is to reduce the financial burden on the organization when the HR cant be utilized profitably. It is resorted in cyclical & seasonal industries.

Compensation to laid off employees

Acc to Sec 25(c) of the ID act,1947 a laid off worker is entitled to compensation equal to 50 % of the basic wages & Dearness Allowance that would have been payable to him had he not been laid off.

In order to claim compensation, the laid off workman must satisfy to the Following conditions:

He should not be a casual worker. His name must appear on the pay roll of the industrial establishment. He must have completed not less than one year of continuous service. When lay off is due to strike or slowing down of production on the part of workers.

Right to compensation is lost in foll cases:

He must present himself for work at the appointed time during normal working hours at least once a day When employees are employed in the industrial establishment of a seasonal character. When industrial establishment employs less than 20 workers.

RETRENCHMENT

It means permanent termination of an employees services for economic reasons in a going concern. It is termination due to redundancy of workforce. It creates a sense of insecurity among the staff

The ID Act,1947 lays down the following conditions for retrenchment:

The employee must be given one months notice in writing indicating the reasons for retrenchment. The employee must be paid compensation equal to 15 days wages for every completed year of service.

Acc to ID Act:

Notice in the prescribed manner must be served. In the absence of any agreement to the contrary, the worker employed last must be terminated first.

Acc to ID Act:

Retrenched workers must be given preference in future employment. Establishments employing 100 or more workers are required to give 3 months notice.

DISMISSAL / DISCHARGE

It refers to terminating the service of an employee by way of punishment for misconduct or unsatisfactory performance. It is a Drastic step and should, therefore, be resorted to with great care.

DISMISSAL / DISCHARGE

Before an employee is discharged, he must be given the opportunity to explain his conduct & to show cause why he should not be dismissed.