The employer follows a fair procedure aimed at an attempt to find alternatives to retrenchment. Retrenchment laws do not favour employers skills portal. The most common reason people are retrenched in south. The data for this paper was collected from secondary sources using. These are defined as requirements based oneconomic, technological, structural or similar needs of the employer.
Economic recession is one of the main causes of unemployment. How to terminate an employee on the ground of retrenchment. The effects of retrenchment journal of human resources. Retrenchment in india, industrial dispute act, 1947. Research about the effects of retrenchment in relation to other factors affecting survivors have been. Causes, effects and solutions to youth unemployment.
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. In the latter case the management can do nothing but remains a helpless onlooker. Updated legislation combined with case law decisions continually make it harder and harder for employers to retrench employees. There are no hidden agenda reasons for the retrenchments. If a severance payment is made to you under this clause 12. The retrenchment insurance should, for the most part at least, provide you coverage with regards to your income. 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. Retrenchment insurance the general idea of retrenchment insurance is that it will provide you coverage in the event that you are made completely redundant. 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. 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.
Being a necessary factor, retrenchment moves the organization from its current situation and is. Retrenchment strategy advantages and disadvantages wisestep. Retrenchment or layoff of the workers without any reason. Retrenchment means termination of the contract of service of the employees in a redundancy situation, which. Procedurally, retrenchments are not a problem the procedure is clearly laid down stepbystep in section 189 and 189a of the labour relations act. The most common reason people are retrenched in south africa and how companies decide who goes. Ordinarily, retrenchment is discharge of surplus labour by 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. 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 is a no fault dismissal, as the employee did nothing wrong and dismissal is due to operational requirements. These are defined as requirements based oneconomic, technological, structural or. That all possible alternatives to retrenchment have been fairly discarded. During a recession, firms experience a decrease in revenue. Retrenchment increases profits for shareholders and creates a strategy to survive economic downturn.
Pdf rate of retrenchments is directly proportional to unemployment. New technologies can cause the need for company reorganization. To determine how retrenchment in telkom kenya has affected the morale of employees. Advantages of retrenchment include reduced costs, improved efficiency, improved competitiveness and reduced reliance on the markets. Pearce 1992 concluded that retrenchment is an integral component of. The study will also try to focus on maintaining strong organization employee relationship after retrenchment to promote morale high for employees. In this note we critique, replicate and provide an alternative explanation for their findings using data from the same sample of firms attempting. Effects of retrenchment on the morale and job security of. Retrenchment can be caused by a variety of factors. 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. It causes low morale, poor performance and job insecurity to the retained staff. 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. As profit equals to revenue minus cost, firms would want to cut as much cost as possible. This strategy can also be used to get a good stand in this competitive market.
This is one of the authorized causes of termination of employment. 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. By ivan israelstam the number of retrenchments occurring in south africa has been alarmingly high over the past five years and shows no sign of reducing. Economic reasons include reducing cost, increasing profits and changing business requirements. Following are the various managerial causes of industrial disputes. Retrenchments your guide to labour law in south africa. 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 is the process by which staff is reduced to cull redundant employees and reduce the wage bill.
Lack of administrative support and attention towards labour leads to industrial disputes. The disadvantages of retrenchment include growth decline, reduced profits, smaller workforce, reduced. 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 paper identifies basic causes and challenges of staff retrenchment, which includes poor management practice, fraudulent activities, staff. The purpose of this paper is to look into the causes, effects and solutions to youth unemployment problems in nigeria. 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. Retrenchment, as commonly understood is termination of an employee on the grounds of surplus labour or incapacity of employees due to some economic grounds. Effect of retrenchment practices on performance of surviving. Retrenchment strategies are also used to cut down operating expenses and reduce the size of the company for the betterment of the organization. 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.
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. 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. Thus, the us population wished to curtail their involvement on the international scene to avoid human losses and the hig moneytary costs of. The short and long term effects of retrenchment announcements on. 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. As with all dismissals, the retrenchment process must be both substantively and procedurally fair. 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.
Downsizing caused by increased financial costs can take the form 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. 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. First there was the entrance of mobile telephony in the year 1999 2000, also the telecommunication service provider business was a. Pdf labour law and staff retrenchment in commercial banks in. In the context of strategic planning, retrenchment may include the shrink selectively strategy.
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. What were the reasons for retrenching the employees at national foods bulawayo. 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. Which methods of retrenchment were used in identifying employees for retrenchment at.
Retrenchment under the industrial disputes act, 1947 presented by. What are the advantages and disadvantages of retrenchment. Retrenchment can also be viewed as a channel of changes in organizational culture. Retrenchment and restructuring labour and community. Effects of retrenchment on the motivation and loyalty of. 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. 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. 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. In every organisation some workers leave and new ones are recruited causing labour turnover. The rate at which unemployed graduates roam the street after the national youth service constitutes social malice to the country as a whole.
A study on socioeconomic impact of retrenchment on. Firstly, the losses expected should be substantial. One of the ways to do so is through the retrenchment of employees, where employees deemed to be not productive enough lose their jobs. The table in annex b shows typical coverage for larger and smaller collective redundancies. What are the means of communication that were used to communicate the. However, the term refers to much more than just this. The retrenchment strategies mainly acts on two factors, they are. Retrenchment also occupies its place and has been one of the causes of strikes. The main purpose of this study was to find out the reactions of employees towards. In a recent investigation of the turnaround attempts of 32 u. 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. 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.
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