Global Exit and Retrenchment Strategies Different strategies are as follows – 1. Resignations 2. Discharge 3. Dismissal 4. Suspension 5. Lay-off 6. Retrenchment 7. Voluntary retirement/ Golden handshake scheme

Global Exit and Retrenchment Strategies 1. Resignations – Employee takes initiative in leaving the job. The reasons for employees decision can be – Better prospects, dissatisfaction about pay or working conditions, dislike for job, not been able to adjust with others, problems with climate, health, start of new activity, marriage of female employees etc. - before attaining the age of retirement. It can be voluntary or involuntary.

Global Exit and Retrenchment Strategies 2. Discharge – Management takes initiative. It is permanent separation. Cause can be violation of organizations’ rules or inadequate performance. Labeled as a punishment. Indicates seriously harmful behavioral consequences. Frequent causes include – in-efficiency, dishonesty, carelessness, drunkenness, violation of rules etc. Incompetency or constant disciplinary actions required leads to discharge decision.

Global Exit and Retrenchment Strategies 3. Dismissal – Result of punishment o employee for misconduct for unauthorized and prolonged absence from duty; insubordination etc,. Initiated by management or employer, and influenced by employer’s choice process. It has to be on the justified grounds in the eyes of prevalent law. Concerned employee is given an opportunity to defend. As a rule natural justice and proper proportion to offence committed is ensured. Any irregularity in completion of procedure of dismissal can be challenged and dismissal may become invalid.

Global Exit and Retrenchment Strategies 4. Suspension – Is a serious punishment and done only after a proper enquiry. Employee is suspended during investigation period of any major or serious charge. The intension is to prevent the employee form changing or influencing the documents or witnesses or other matters. Employee gets some subsistence allowance. If found guilty he is discharged or dismissed, otherwise he is reinstated, remains in the employment and gets difference of salary arrears.

Global Exit and Retrenchment Strategies 5. Lay-off – As per provisions of Industrial Disputes Act 1947, an employee is separated from the pay-roll for indefinite period due to factors beyond the control employer, and can be called back when the circumstances become normal. Purpose of lay-off is to reduce the financial burden when the employees can not be utilized profitably and it can be temporary or permanent. Lay- off can mean failure, refusal, or inability on the part of an employer to provide employment to an employee on muster role,. The cause may be – 1.Accumulation of stocks. 2. Shortages of fuel, raw-material. 3.Break down of machinery. 4. Natural calamity. 5.Production delays or;5. Any other connected reason.

Global Exit and Retrenchment Strategies 6. Retrenchment – It is a permanent termination for the economic reasons. Employee is required to be given 3 months notice or remuneration for the notice period in lieu of it. He is entitled for the gratuity. Notice to the appropriate govt. authority and its permission is required. ‘last come first go’ principle is followed for the employee selection decision. As per Section 2 of Industrial Disputes Act 1947 retrenchment is – “termination by the employer of the services of a workman for any reason whatsoever, otherwise than as punishment inflicted by way of disciplinary act”.

Global Exit and Retrenchment Strategies 7. Voluntary retirement. Golden handshake scheme – The most honorable way of separation. Golden handshake is said to be a golden route to the retrenchment, by offering the tempting lucrative package to the employees; which can provide them opportunity to utilize leisure time. Employee can opt for it after a service of 15 to 20 years if there is provision for it. Retirement calls for years of preparation on employees part, to be ‘role-less‘ after many years of service. It has become basic component of labor adjustment strategies adopted by the public and private sector maangemnt.