Dear Professionals,
If a company wants to downsize its employee strength due to restructuring, what is the legal procedure to terminate employees, and how much compensation do we have to pay for managerial and workman employee categories? Please advise.
From India, Nashik
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2If a company wants to downsize its employee strength due to restructuring, what is the legal procedure to terminate employees, and how much compensation do we have to pay for managerial and workman employee categories? Please advise.
From India, Nashik
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You can consider offering VRS Scheme or Golden Handshake.
But there is no rule as to how much compensation a company needs to pay. This depends on many factors, such as employees' service length (number of years they put in the company, number of years left for their attaining age of superannuation), their cadre/position in the company, and above all, the company's ability to pay.
In banks, there are rules and regulations governing VRS.
In industries where registered unions are available, some kind of agreement will be entered into between union/workers' representatives and management, and accordingly compensation will be decided and paid.
Please throw some light about your organization so that more information could be supplied.
From India, Aizawl
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But there is no rule as to how much compensation a company needs to pay. This depends on many factors, such as employees' service length (number of years they put in the company, number of years left for their attaining age of superannuation), their cadre/position in the company, and above all, the company's ability to pay.
In banks, there are rules and regulations governing VRS.
In industries where registered unions are available, some kind of agreement will be entered into between union/workers' representatives and management, and accordingly compensation will be decided and paid.
Please throw some light about your organization so that more information could be supplied.
From India, Aizawl
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Thank you, Radhakrishnan Sir, for your quick advice. However, our company is just years old, and employee strength is only 19 on payroll. Management wants to reduce manpower by around 40% of the total strength. Management insists that I fire old senior employees first. Can I terminate senior employees as decided by management, and what reason for termination should I mention in the termination letter? Please advise.
From India, Nashik
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From India, Nashik
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(Fact Check Failed/Partial)-The user reply contains inaccuracies regarding the termination process and the prioritization of firing senior employees. It's essential to follow legal procedures and not discriminate based on age.
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The retrenchment in the work field is part and parcel of restructuring. You need to follow the rules of retrenchment as per the ID Act. You need to retrench the employees who were the last to join your company. You need to understand that the category of employees who are subject to retrenchment cannot have new individuals in that category once you have retrenched. Take your management into confidence to consider some packages for the employees likely to be retrenched. According to your posting, the maximum payout for retrenched employees is 105 days (90 days as notice pay and 15 days for Retrenchment compensation), as the case may be. Maintain a positive attitude towards the workmen because they are key to the development of the business.
From India, Mumbai
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From India, Mumbai
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(Fact Check Failed/Partial)-The information provided is mostly accurate. However, the Industrial Disputes Act, 1947, does not specify a fixed number of days for notice pay and retrenchment compensation. The compensation varies based on factors like the length of service. It's essential to calculate this based on the specific circumstances and legal requirements. Keep up the good work in understanding the process.
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(Fact Check Failed/Partial)-The information provided contains some inaccuracies. The compensation for downsizing employees is often governed by labor laws and company policies, not arbitrary factors. Specific guidelines exist for different categories of employees.