hrm03_exit rights and procedures_11 april 2015

HUMAN RESOURCE MANAGEMENT

Course Book 1 Chapter 4

EXIT RIGHTS AND PROCEDURES Md. Rifat Amin Ryhan

Assistant Professor, BiMS

[email protected]

(Mar-May, 2015)

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mailto:[email protected]

EXIT RIGHTS AND PROCEDURES

IntroductionThe exit of employees from the organisation requires careful management

because of:(a) The need for compliance with the legal framework on employment protection

(particularly in regard to dismissal and redundancy)(b) The need for sensitivity to the human issues involved (since the employment

relationship, work and competence are so central to people's sense of their role and value in life)

(c) The need for the organisation to gather feedback from voluntarily departing employees (resigners or early retirers) in order to identify retention problems.

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1.1 Termination of the employment contractContracts of employment can be 'terminated' in the following ways.(a) By performanceThe employee does what (s)he was hired to do, and the employer gives the agreed payment or consideration: the contract is fulfilled. (It may also be said to apply in the case of retirement, where there is an agreed age at which employment ends.)(b) By mutual agreementBoth parties can agree that they are entitled to terminate the contract at any time, say in the event of 'irreconcilable differences'.( c ) By noticeOne party can terminate the contract, but must give adequate notice or warning to the other. This happens in the case of: (i) Resignation by the employee and (ii) Dismissal of the employee.

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1.1 Termination of the employment contract(d) Breach of contractIf one party 'breaks' or fails to fulfil key terms of the contract, the other party has the option of considering the contract to have been terminated. (In addition, (s)he may seek legal remedies to compensate for, or minimise the effects of, the breach.) Failure by the employer to pay the agreed wage, say, or gross misconduct by the employee, would constitute breach of contract.(e) FrustrationA contract is 'frustrated' when it is prevented from being fulfilled – for example, because of the death, illness or imprisonment of one of the parties

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1.3 ResignationResignation is the process by which an employee gives notice of his or her intention to terminate the employment contract.Management should attempt to find the real reasons why an employee is leaving in an exit interview, which may provide helpful feedback on its policies and practices: note, however, that there is no legal requirement for the employee to give reasons for leaving.Various arrangements will have to be made when an employee decides to leave.(a) If attempts to encourage the employee to stay have been unsuccessful, the exit interview will have to be arranged.

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1.3 Resignation

(b) The period of notice required for the employee to leave should be set out in the contract of employment, but some leeway may be negotiated on this, for example if the employee wishes to take up another position immediately.(c) Details of the departure have to be notified to the wages clerk, pension fund officer, security officer and so on, so that the appropriate paperwork and other procedures can be completed by the date of leaving. The organisation may have a departure checklist to ensure that all procedures are completed.(d) The department head should complete a leaving report form: an overall assessment of the employee's performance in the organisation. This can then be used to provide references to his/her future employer(s).

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2 EMPLOYMENT TRIBUNALSEmployment tribunals are independent judicial bodies which arbitrate in employment matters including unfair dismissal, employment protection and claims in relation to sexual/racial discrimination and equal pay. 2.1 The composition of tribunalsThe composition of an employment tribunal is governed by the Employment

Tribunals Act (ETA) 1996. A tribunal usually has three members.• A legally-qualified chairperson (solicitor or barrister)• An employer representative• An employee representative (usually from a trade union)

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3.1 Dismissal Dismissal without noticeIn most cases, the statutory and/or contractual minimum notice of dismissal must be given to the employee. However, rare circumstances may justify 'summary' dismissal without notice. The law protecting employees from unfair dismissal (discussed below) requires that summary dismissal be limited to cases of serious breach of contract, such as:(a) Gross misconduct by the employee: theft, violence, serious refusal to obey reasonable instruction, endangerment of other staff(b) Serious neglect of duties, or absence from work without permission or good cause(c) Serious breaches of trust or conflicts of interest affecting the organisation's business.

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3.2 Wrongful dismissalA claim for wrongful dismissal is open to employees at common law, if they can show they were dismissed in breach of contract (for example, with less than the required notice) and that they thereby suffered loss. They may then be able to claim damages compensating for the amount lost: accrued wages, payment for an entitlement to notice, or the balance of wages due under a fixed-term contract.3.4 Unfair dismissalDismissal is justified where related to:(a) Redundancy (provided that the selection for redundancy was fair)(b) Legal impediment – eg loss of driving licence or lack of work permit(c) Incapability (including ill health) or lack of qualifications(d) Misconduct, provided that minimum disciplinary procedures have been followed (Employment Act 2002)(e) Some other 'substantial' reason: for example, the employee marries a competitor, or refuses to accept a reorganisation made in the interests of the business and with the agreement of other employees

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Dismissal is unfair where related to(a) Redundancy, where the selection is deemed unfair(b) Trade union membership (actual or proposed) and activities, or refusal to join a trade

union.(c) Pregnancy, maternity, dependant care or parental leave(h) Refusal to work on a Sunday (for shop or betting workers)(i) Whistle blowing: disclosure of information believed to expose malpractice, injustice or health and safety dangers (Public Interest Disclosure Act 1998)(j) Carrying out duties as a safety representative or pension fund trustee(k) Discrimination (on grounds of sex, marital status, sex change, sexual orientation, race,

religious belief, disability or part-time status)

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3.5 Remedies for unfair dismissalThe Conciliation Officer or Employment Tribunal to whom a complaint of unfair dismissal is made may

order various remedies.(a) Re-instatement – giving the employee his old job back(b) Re-engagement – giving him a job comparable to his old one(c) Compensation – which may consist of:(i) A basic award based on age and length of service. (If the employee is also entitled to redundancy pay, the lesser is set off against the greater amount.)(ii) A compensatory award (taking account of the basic award) for any additional loss (earnings, expenses, benefits) on common law principles of damages for breach of contract(iii) A punitive additional award if the employer does not comply with an order for re-instatement or re-engagement, and in cases of sex and race discrimination(iv) A special award in the case of health and safety, and trade union membership or activity



3.6 Dismissal procedures

Procedures for dismissal should include the following.(a) Ensuring that standards of performance and conduct are set, clearly defined and communicated to all employees.(b) Warning employees where a gap is perceived between standard and performance, or where other legal impediments or 'substantial reasons' are foreseen to arise.(c) Giving a clearly defined and reasonable period for improvement or adjustment – with help and training where necessary, and clear improvement targets.



3.6 Dismissal procedures

(d) Ensuring that the company's disciplinary procedures (including appeal procedures, rights to representation and so on) are made clear and meticulously followed.

(e) Implementing fair and transparent procedures for redundancy, particularly in regard to selection (as discussed below).

(f) Evaluating all decisions and actions in the light of policy, legislation and the requirement to 'act reasonably' at all times.



4.1 Causes of redundancyIn simple terms, 'redundancy occurs when the employer closes down completely, moves premises, requires fewer people for particular jobs or requires no people for particular jobs' (Gennard & Judge, 2003).(a) Adverse trading conditions, especially in recessionary phases of the economy.(b) Increased global competition across business sectors. Many organisations have 'delayered' (eliminated excess layers of management and supervision), or 'downsized' (reduced their labour force) in order to reduce labour costs.(c) The introduction of information and communications (and manufacturing) technology has reduced labour in unskilled and semiskilled jobs.



4.4 Selection for compulsory redundancyThere are two basic approaches to selection for redundancy, which have proved acceptable to tribunals and trade unions.(a) The least contentious and easiest method may be 'Last in, first out' (LIFO): newcomers are dismissed before long-serving employees. This may be deemed 'reasonable' by tribunals, but it may also mean that the organisation loses its youngest employees, those with the most up-to-date skills, or employees of particular merit.(b) Point score systems are an alternative favourably viewed by tribunals. These allow retention by merit – retaining good performers and dismissing less effective ones – while supporting the objectivity of the process.(i) Clear criteria should be chosen, and ideally agreed in advance with trade unions. They may be based on aspects such as attendance records, disciplinary records, competence assessments, range of work experience and other objectively measurable factors.(ii) Each employee is scored on each criteria to build up a points score.



4.4 Selection for compulsory redundancy(iii) Managers implementing the system should have clear definitions of criteria; points available for different degrees of fulfilment of each criterion; and weighting of criteria to reflect their relative importance and value to the organisation.(iv) Once all scores have been calculated, employees with the lowest scores are selected for redundancy.Redundancy payRedundant employees are entitled to compensation, in the form of redundancy pay:(a) For loss of security(b) To encourage them to accept redundancy without damage to employee relations.The employee may not be entitled to redundancy pay if the employer has made an offer of 'suitable' alternative employment and the employee has 'unreasonably' rejected it.



4.6 Compassionate exit managementA number of measures may be taken to alleviate the consequences of redundancy foremployees.(a) Informing employees who are to be dismissed of their selection should be managed with as much sensitivity as possible. This is generally done by what is called a 'release interview'. The interview is generally conducted by a line manager, but an HR specialist may also be present, in order to explain the basis of selection, the employee's entitlements and organisational support services thatwill be offered.(b) Counselling may be offered to employees, to aid their readjustment and job search.(c) Outplacement services may be offered, often through external consultancies, to help redundant employees to find alternative work. HR department or consultancy may offer services such as:(i) Seeking specific job opportunities in the local area(ii) Training employees in CV preparation, selection interview techniques and application filling(iii) Helping employees to draw up skill or competence inventories, personal success/attainment inventories and other aids to applications



4.6 Compassionate exit management(iv) Carrying out psychometric assessments and helping employees to set career and job

objectives(v) Matching of employee details to advertised vacancies or network opportunities(vi) Helping the employee to plan a focused job-search campaign(d) Information on job, self-employment and retraining opportunities and funding should be made available. Individuals should be made aware of the role and accessibility of the Department of Employment's facilities, and private sector services for careers counselling, recruitment, CV preparation and so on


hrm03_exit rights and procedures_11 april 2015

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