EMPLOYEE SEPARATION Meaning, Benefits, Types

Table of Contents:-

• Meaning of Employee Separation
• Benefits of Employee Separation 
• Types of Employee Separation

Meaning of Employee Separation

Employee Separation involves ending the employment relationship of an employee with an organization. The termination of an employee’s employment relationship with a company is known as employee separation. It is simply known as “Termination of employment.” It is also known as employee turnover. An employee’s employment is terminated when an employee even after getting the notice is not able to improve his/her performance or when an employee behaves in an unethical manner or is involved in any type of misconduct.

Employees are separated from their jobs due to some reasons such as lay-off, resignation and dismissal. In sick industries and loss-making business ventures, separations are generally seen. When the market demands are not adequate then it leads to a decrease in activities of production, thereby leading to the separation of employment. Both the parties (employer and employee) feel the pain of separation. Therefore, separation should be managed carefully.

Benefits of Employee Separation 

The benefits of employee separation to the organisation include the following points: 

1) Minimises Cost of Labour

By separating the employees, a business organisation can reduce its cost of labour. However, the cost of layoffs is considerable, but the money that is saved by separating the employees from an organisation can be used for layoffs to compensate for the expenses occurring from layoffs.

2) Helps in Replacing Low Performers

An organisation needs to identify the poor performers of the organisation and thereafter help them by providing training or by engaging them in skill development to make their performance satisfactory. But, if the feedback is still negative even after providing training, then it is better to terminate the poor performer and replace him with a skilled employee. Hence, the benefit of separating a poor performer is to create job opportunities for fresh and skilled employees. 

3) Promotes Innovation

Advancement opportunities are created for high-performing individuals from separation. As the employees are promoted within an organisation, entry-level jobs are created thereby allowing the new employees to enter the organisation. These new employees may include fresh graduates who may become a source of innovation to an organisation as they have knowledge about the latest research and technologies or are expert engineers or experienced managers from different renowned research laboratories.

4) Facilitates Workforce Diversity

Another benefit of separation is to create job prospects for employees from different cultural and gender compositions. The benefit of employing a diverse workforce in an organisation is to extract the advantages of workforce diversity.

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Types of Employee Separation

There may be voluntary or involuntary reasons for the separation of the employees, which are as follows:

Types of Employee Separation are as follows:

1. Voluntary
2. Resignation 
3. Retirement
4. Separation
5. Involuntary
6. Lay-Off
7. Dismissal or Discharge 
8. Retrenchment
9. Voluntary Retirement Scheme
10. Rightsizing/Downsizing

1) Voluntary Separation

When an employee decides to end his relationship with the organisation, it is called voluntary separation. Employees who resign from a company voluntarily do so for their reasons, not as a result of a decision made by the organisation. The separation can be reduced by providing fair wages, offering benefits, and strengthening the bonds between the employee and the company. (e.g., the change in family dynamics or size or relocation of a spouse). 

Resignation and Retirement are the two types of voluntary separation.

2) Involuntary Separation

When the employer asks the employee to leave the organisation, it is called involuntary separation. In such a case, the employee feels that he has been treated unfairly and he looks for legal protection to tackle it.

Resignation

Resignation is a particular situation when an employee decides to leave his job or is forced by the organisation to quit his job. In case of voluntary resignation, the employee decides to quit or leave his job on his own. On the other hand, resignation is involuntary when the employer asks the employee to leave his job through the disciplinary procedure.

However, in the case of disciplinary action, the domestic enquiry process should be followed instead of for the employee to resign from the job. The main reason for this is that if the domestic enquiry process is not followed then the employee can seek union help or can approach the court and claim that resignation was obtained from him. If the organisation is facing a high frequency of resignations, then it must conduct exit interviews to know the actual causes of such frequent resignations.

Reasons for Resignation 

The basic reasons for resignation are as follows:

1) Dissatisfaction: Employees resign from the job due to dissatisfaction with the job. The dissatisfaction is due to the nature of work, compensation, benefits, discrimination, welfare facilities, working hours, work environment, etc.

2) Domestic Problems: Employees resign due to problems in their personal lives which include weddings, pregnancy, family responsibilities, transfer, etc. 

3) Personal Situations: Problems related to health, conveyance, cash gain, injury, early retirement, etc. Some of the personal situations due to which an employee resigns from his job.

4) Promotional Gains: A person may resign from his job due to a lack of growth opportunities in the organisation or if he finds a more attractive job offer in some other organisation.

Lay-Off

Temporary termination of an employee from his job for a certain period is known as lay-off. After the fixed time duration, employees can rejoin work by being called by the employer. Section 2 of the Industrial Disputes Act, of 1947, defines “lay-off as the failure, refusal or inability of an employer to give employment to a worker whose name is present on the rolls but who has not been retrenched”.

Reasons for Lay-Off 

The lay-off may be because of the following given reasons:

1) Decreased sales.

2) Scarcity of raw materials.

3) Technological advancements

4) Production delay

5) Excessive gods accumulation in godown 

6) Machinery breakdown

Factors Determining Lay-Off

Based on the following factors the policy of lay-off must be decided:

1) Lay-off policy should be sold to employees at the time of their employment in the organisation so that they are aware of the terms and conditions of the lay-off.

2) If the employer is going to lay off its employees for a long duration of time, then employees must be notified earlier.

3) During lay-off, employees must be sold so that the employer will make his best effort to recall them. 

4) Employers should help employees in their re-deployment.

Dismissal or Discharge 

Dismissal is a punishment given to an employee, in which the service given to him is terminated due to serious misconduct. This ultimate punishment is given by the employer to his employee to correct his indisciplined behaviour. Dismissal is a permanent separation and a dismissed person is not able to get a job somewhere as it carries a stigma.

Both dismissal and discharge result in the termination of the employee’s service. Due to this reason, both the terms dismissal and discharge are used without any discrimination by employees and employers and even sometimes by the Labour Courts. However, there is a difference between dismissal and discharge and it should be understood clearly.

Reasons for Dismissal

The following reasons lead to the dismissal of an employee:

1) Poor Performance

When an employee constantly fails to perform the given duties and responsibilities or he fails to achieve the standards which are prescribed in the job then it can be said that the performance of the employee is poor. Some of the reasons for poor performance are frequent absenteeism from the job, slowness, putting less effort into meeting the normal job requirements or showing a negative attitude towards the organisation, superiors or colleagues.

2) Indiscipline

When an employee wilfully violates the rules of the employer which may include stealing, unethical behaviour and misbehaviour with colleagues, then the employee is said to be involved in misconduct.

3) Lack of Qualification

When an employee is unable to do the assigned work even though he/she is active and attentive, then it denotes that the employee has having lack of qualification. Therefore, it is important to train and develop such employees.

4) Changed Job Requirements

Due to the changing nature of the job, it could be possible that employees are not able to perform their jobs.

When an organisation reduces its work, then it often dismisses its employees. Although the employees may be skilled and hardworking, therefore, the firm should make an effort to transfer and train those employees.

5) Insubordination

Insubordination means indiscipline which sometimes forms the basis for the dismissal of employees; however, it may be difficult to prove insubordination. Some grounds for dismissal are stealing unpunctuality and poor work quality.

Irrespective of where and when they occur, insubordinate acts include:

i) Violating organisational policies, procedures, rules, and regulations.

ii) Disrespect to the boss’ like disobedience of order or refusal to obey the order, particularly in front of others.

iii) Not following a proper channel of filing complaints and grievance redressal.

iv) Arguing with a boss or criticising the boss publicly.

v) Showing feelings of disrespect, using abusive comments and displaying these feelings while working on the job.

Retrenchment

Retrenchment is a process whereby an organization reduces its workforce by terminating the services of employees due to a surplus of labour. This can occur for a variety of reasons, such as changes in market conditions, a decline in business activity, or the implementation of new technologies. The goal of retrenchment is to streamline operations and reduce costs while ensuring that the organization remains competitive and sustainable in the long duration. While it can be a challenging process for both employers and employees, retrenchment is sometimes essential to ensure the continued success of an organization.

VRS

The Voluntary Retirement Scheme (VRS) is a strategic approach that companies use to reduce their workforce. This method is used to decrease the current workforce of the company. This method allows employees to voluntarily retire from their jobs, which in turn, helps the company to cut down on costs and streamline its operations. By offering attractive retirement packages, companies can encourage employees to opt for the VRS method, which can be a win-win situation for both employees and the organisation. The VRS method is a popular choice for companies looking to restructure and optimize their workforce.

Rightsizing/Downsizing 

When there is a surplus of employees in an organisation, then the organisation plans to eliminate some of the job positions that are no longer required in the organisation. This method of removing the job positions, thereby reducing the size of the organisation is known as rightsizing/downsizing. Due to the process of rightsizing/downsizing, the employees who are not required anymore are removed from the organisation. The main purpose behind rightsizing is to enhance the efficiency of work.

Reasons for Rightsizing

It becomes necessary to implement rightsizing due to the following reasons: 

1) Employee Surplus: When the human resource planning is not appropriate or correct then there may be a surplus of labour in an organisation.

2) Technological Upgradations: It is because of technology that the ratio between the number of men to the number of machines changes. To improve productivity in an organization, it is necessary to adopt new and innovative technologies. If the organisation does not downsize to increase productivity then it may lag behind its competitors in the race for success.

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