Employee Separation

Introduction
• Employee separation is a sensitive issue for any
organization. Usually, an employee leaves the
organization after several years of service. Thus,
the permanent separation of employees from an
organization requires discretion, empathy and a
great deal of planning. An employee may be
separated as consequence of resignation,
removal, death, permanent incapacity, discharge
or retirement. The employee may also be
separated due to the expiration of an
employment contract or as part of downsizing of
the workforce
 Meaning and definition
• Employee separations occur when employees
cease to be members of an organization. The
service agreement between the employee and
the employer comes to an end and the
employees decides to leave the organization.
• According to Yoder, Separation is a negative
recruitment. It may be In the form of
resignation, dismissal or discharge,
suspension, retrenchment or lay-off.
 Benefits of employee separations
• Reduced labour costs
• Replacements of poor performances
• Increased innovation
• The opportunity for greater diversity
 Causes of Employee Separation

Seperations

Voluntary Involuntary

Quits Retirements Discharges Layoffs Retrenchment VRS

• Voluntary Separation refers to the separation
of employees on their own request

• Involuntary separation means the separation

of employees for organizational reasons which
are beyond the control of the employees.
1. Voluntary Separations
• Quits:- An employee decides to quit when his or her level of
dissatisfaction with the present job is high or a more alternative job is
awaiting the individual. Organisations often encourage quits through
cash incentives. Popularly known as voluntary retirement scheme (VRS)
these schemes are offered by the organizations when they are
experiencing losses. They resort to cost saving and believe that the best
way of cost saving is to cut the wages of the employees.
• Retirements:-Retirements occur when employees reach the end of
their careers. The age for an employee’s superannuation differs.
Retirement differs from quits. When the employee superannuates and
leaves the organization, he or she carries several benefits with himself or
herself. Such a privilege is denied to the employee who quits. Second,
retirement occurs at the end of an employee’s career but the quit can
take place at any time. Third, superannuation shall not leave any bad
relationship behind the retiree but a quit is likely to result in hurt
feelings with the employer.
2. Involuntary Separations:-Employers resort to terminate
employment contract with employees for at least three reasons:
Organization is passing through lean period and is unable to maintain the
existing labour.
Initial faulty hiring resulting in mismatch between job and employee.
Employee exhibits unusual behavior making the environment ineffective.
Discharges, layoffs, retrenchment and VRS are the common methods of
employer sponsored separations.

• Discharge or Dismissal:- A discharge takes place when the employer

discovers that it is no more desirable to keep an employee any longer.
Discharge, also called termination, should be avoided as far as possible.
Termination is expensive as the firm must seek replacement, hire and
train the new hiree. A discharged individual is likely to badmouth about
the company
• Layoff:- A layoff is a temporary separation of the employee at the
instance of the employer. As the employees are laid off by the
employer they have to be paid compensation for the period they
are laid off. Section 25 of The Industrial Disputes Act, 1947 makes
it compulsory for the employer to pay compensation for all the
days of layoff. The compensation must be equal to half of the
normal wages the employee would have earned if he or she would
not have been laid off.
A layoff may be for one of the following reason:
Shortage of coal, power or raw materials
Accumulation of stocks
Breakdown of machinery etc.
• Retrenchment:- It refers to the termination of the employee
because of the replacement of labour by machines or the closure
of a department due to continuing lack of demand of the products
manufactured in that particular department of the organisation. If
the plant is itself closed then the management and the employees
have to leave for good.
Retrenchment however differs from layoff in the sense that in
layoff the employee continues to be in the employment of the
organization and is sure to be recalled after the end of the period
of layoff whereas, in retrenchment, the employee’s relation with
the company are detached immediately.
• Voluntary retirement scheme (VRS):- VRS also called the
“golden hand shake plan”. Handsome compensation is paid to the
leaving employees. VRS is thought to be painless and time saving
method of trimming the staff strength and getting rid of
unproductive older workers. Many organizations like Hindustan
Lever, Siemens, TISCO have successfully operated this scheme
and achieved great success.
• Resignation:- A resignation refers to the termination of
employment at the instance of the employee in that case it is
voluntary but if forced by the employer for not putting his duty
well ,or for some serious charge against him than it becomes
involuntary. An employee may resign when he or she gets a good
job elsewhere, or due to ill health, or may resign due to some
personal problems.
 Reasons for Separation of Employees
• Voluntary Separation :- Voluntary separation, which normally
begins after a request is placed in this regard by the employee, It
can happen due to two reasons: professional reason and personal
reason:-
1. Professional reasons:- Employees may seek separation
when they decide to seek better positions, responsibilities and
status outside the present organization. In their quest for greater
responsibility, power and status, they may seek separation from
the organization.
2. Personal reasons:- The important personal reasons for
voluntary separation are relocation for family reasons like
marriage of the employees and health crisis of family members,
maternity and child-rearing. For instance, when working women
get married, they often prefer to settle in the partners place of
occupation. Similarly, an employee may seek voluntary
separation to look after the child or parent.
• Involuntary Separation As mentioned earlier, an involuntary separation is
caused by the factors which remain beyond the purview of the employees.
It includes:-

1. Health problems:- Major health problems crippling the employees may

make them invalid or unfit to continue in the profession. For instance,
accidents causing permanent disabilities and illness of the employees like
brain stroke and other terminal illnesses can lead to their involuntary
separation. Death of employees is another factor which results in
their involuntary separation.
2. Behavioral problems:- An employee's objectionable and unruly
behaviour within the organization may also lead to his involuntary
separation from the organization. When the employees behavior is
unethical or violates the code of conduct in force, the organization may
initiate disciplinary actions, which may eventually result in his termination.
3. Organizational problems:-The poor financial performance of an
organization may cause it to terminate the services of some of its
employees as part of cost control measure. Such terminations are also
classified as involuntary separation. Similarly, automation, organizational
restructuring and rationalization can also result in employee termination,
discharge or layoff, broadly called involuntary separation.
 Retirement
• Retirement Termination of service on reaching
the age of superannuation is called retirement.
To avoid problems, organisations normally
plan replacements to retiring employees
beforehand.
 Voluntary Retirement
• The employer may encourage the employee to retire
voluntarily- with a view to reduce surplus staff and cut
down labour costs.
• The normal retirement benefits are calculated and paid to
all such employees who put in a min. qualifying service.
• Attractive compensation benefits are generally in-built in
all such plans (Golden Handshake Scheme).
• To reduce post-retirement anxieties, companies these days
organise counselling sessions, and offer investment
related services.
• Some companies extended medical and insurance benefits
to the retirees.
 VRS
• Voluntary separation of an employee completing
criteria
1. Employee age – 40 + yrs.
2. Employee Service – minimum 10 yrs.
• Company has to take prior permission of Govt. before
offering VRS
• Management has right to accept or reject the
application for VRS
• Reasons for VRS
1. Reduce burden of un productive employees
2. Downsizing
3. Change in technology
4. Recession
5. Takeover, Merger, Joint Venture
 Turnover
• Voluntary turnover:- in which the employee makes
the decision to leave.
• Involuntary turnover:- in which the organization
terminates the employment relationship.
• Dysfunctional turnover:- occurs when an employee
whose performance is at least adequate voluntarily
quits.
• Beneficial turnover:- when low performing employees
depart and/or when new higher performing employees
are promoted or hired as replacements
 Types of Employee Turnover and
Leave Voluntary Retention
No Intention to

Desierable employees Undesierable

remain with the employees remain with
Employee Choice

organization:- the organization:-

Functional Retention Dysfunctional Retention
Intention to Leave

Desirable Employees Undesirable Employees

Quit:- Quit:-
Voluntary

Dysfunctional Turnover Functional Turnover

High Performance Low Performance

Employee Contribution
 Practices That Reduce Turnover
 Another method for retaining employees is through
socialization, this is the process of acquiring the
knowledge and behaviors needed to be a member of an
organization.
 Effective socialization occurs when employees are
given critical information that helps them understand
the organization. Such as the new employee orientation
session.
 As employees acquire information during the
socialization process, their feelings of fit with the
organization increase, and employees who perceive that
they fit are more likely to stay with an organization.
 HR Practices that Reduce Turnover
• Use realistic job previews
• Provide growth and promotion opportunities
Staffing • Select employees who fit with the organization.

• Offer educational Programmes

Training & • Provide various learning opportunities
Development

Career • Specify clear career paths

Planning
 • Maintain Competitive Pay
• Develop fair pay practices
Compensation • Pay for learning new skills

• Establish quick and fair grievance

procedures.
Labor-Mgt • Facilitate conflict resolution among
relations employees