Methods of employee separation include; Retirement
This can be defined as the exit from an organization, position or career path at mid age with an intention of reducing psychological commitment to work. It is an action initiated by the employer or the employee.
Types of retirement
a) Mandatory retirement – this is a compulsory retirement initiated by the employer after the employee has attained the maximum retirement age fixed by the organization e.g. 60 years.
Benefits of mandatory retirement
1) It enables the organization to replace those whose productivity has declined due to advancement in age
2) It enables the organization to acquire young and potential employees
3) It facilitates human resource planning / succession planning
4) It encourages employees to make plans for retirement in advance.
Demerits of mandatory retirement
1) It may lead to less commitment to work a few years before retirement. Employees may develop short timer attitude and may ‘retire psychologically’ before official retirement date. This may lower performance and productivity.
2) Loss of experienced employees – this may affect performance during the transition period.
3) It is expensive in terms of cost regarding retirement benefits particularly when so many employees retire at the same time
b) Voluntary retirement
This is initiated by the employee voluntarily before the attainment of the mandatory retirement age. An employee for example may opt for early retirement on medical grounds. The employer may also induce the employee by payment of early retirement / retrenchment benefits
2. Discharge / Dismissal
Dismissal takes place when an employer terminates the employee’s contract with or without notice. Termination of employment contract with notice requires that the employer must give one month’s notice to the employee as per the Kenya employment Act cap 226. The employer may alternatively discharge an employee without notice by paying one month salary in lieu of notice. The practice of employment contract termination may however vary from one organization to the other. In certain organizations employers may be required to give 2 or 3 months notice and the same applies to the employees.
Causes of dismissal (summary dismissal.)
1) Persistent unsatisfactory performance
2) Insubordination – being disobedient to the employer
3) Gross misconduct
4) Theft or colluding to defraud or steal the company’s property
5) Drunkardness or being intoxicated at the place of work by drugs or alcohol which may affect performance
6) Deserting work without employer’s knowledge
7) Being convicted in a court of law
8) Gross negligence of duty leading to heavy loss or destruction of company’s property
9) Non observance of health and safety rules leading to loss of life or major break down of the company’s machinery
10) Participating in illegal strikes or other forms of industrial action.
The employer should dismiss an employee by acting in a reasonable manner at the time of dismissal. Unfair dismissal occurs when:-
1) The employee is not informed on the nature of complaint against him
2) The employee is not given time to explain
3) The employee is not given an opportunity to improve
4) The employee is not allowed to appeal
5) The employee is not warned of the consequences in the shape of dismissal if specified improvement does not take place
6) The employer’s decision to dismiss is not based on sufficient evidence
7) The offence or misbehaviour does not warrant the penalty of dismissal rather it deserves some lesser penalty
8) The employer has not acted in good faith
3. Layoffs / Redundancy / Retrenchment
LAY OFFS: Employees may be laid off under the following circumstances:
i. Temporary close down e.g. due to major repairs of machinery
ii. Plant relocation
iii. Poor economic conditions e.g. during economic recession pending economy recovery
iv. Shortage of essential raw materials and other resources e.g. energy resources
v. Introduction of new technology e.g. capital intensive technology or computers requiring employment of few people.
REDUNDANCY: Employees may be declared redundant and laid off if their positions are no longer needed by the organization as a result of ending or intending to end business operations. This may also be due to major restructuring which may see the closure of certain divisions or departments in a bid to reduce operational costs. Redundancy may also be due to other factors as in the case of layoff. Under redundancy employees are paid terminal dues in accordance with statutory requirements
RETRENCHMENT: This is a humane way of carrying out redundancy. It does not always result after ending business operations but may be as a result of trying to improve business. Under retrenchment employees are paid enhanced retirement packages and pension or provident funds provided they have attained the minimum years of qualifying service. Retrenchment is also known as downsizing.
Causes of retrenchment in modern organizations
1) Poor economic conditions leading to business down turn
2) Poor management and inadequate planning leading to poor business performance
3) Increased competition and declining profits therefore the need to review production and work methods used in order to improve competitiveness by reducing operational costs
4) Business mergers takeovers and divestments
5) Introduction of capital intensive technology e.g. robots or computers
6) Changes in operational structures / business process re-engineering (BPR) designed to enable quick decision making, fast responses and to empower employees
7) Need to hire multi skilled personnel capable of increasing capacity and responding to change e.g. a culture change for customer focused performance