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Termination of employment
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Termination of employment or separation of employment is an employee's departure from a job and the end of an employee's duration with an employer. Termination may be voluntary on the employee's part, or it may be at the hands of the employer, often in the form of dismissal (firing) or a layoff. Dismissal or firing is usually thought to be the employee's fault, whereas a layoff is generally done for business reasons (for instance, a business slowdown or an economic downturn) outside the employee's performance.
Firing carries a stigma in many cultures and may hinder the jobseeker's chances of finding new employment, particularly if they have been terminated from a previous job. Jobseekers sometimes do not mention jobs from which they were fired on their resumes. Accordingly, unexplained gaps in employment, and refusal or failure to contact previous employers are often regarded as "red flags".[1]
Dismissal[edit]
Dismissal is when the employer chooses to require the employee to leave, usually for the reason that is the employee's fault. The most common colloquial terms for dismissal in the United States are "getting fired" or "getting canned" whereas in the United Kingdom the terms "getting the sack" or "getting sacked" are also used.[2][3][4]
Layoff[edit]
A less severe form of involuntary termination is often referred to as a layoff (also redundancy or being made redundant in British English). A layoff is usually not strictly related to personal performance but instead due to economic cycles or the company's need to restructure itself, the firm itself going out of business, or a change in the function of the employer (for example, a certain type of product or service is no longer offered by the company, and therefore jobs related to that product or service are no longer needed). One type of layoff is the aggressive layoff[citation needed]; in such a situation, the employee is laid off but not replaced as the job is eliminated.
In an economy based on at-will employment, such as that of the United States, a large proportion of workers may be laid off at some time in their life, and often for reasons unrelated to performance or ethics.[citation needed] Employment termination can also result from a probational period, in which both the employee and the employer agree that the employer is allowed to lay off the employee if the probational period is not satisfied.
Often,[citation needed] layoffs occur as a result of "downsizing", "reduction in force" or "redundancy". These are not technically classified as firings; laid-off employees' positions are terminated and not refilled because either the company wishes to reduce its size or operations or lacks the economic stability to retain the position. In some cases, a laid-off employee may eventually be offered their old position again by their respective company, though by this time, they may have found a new job.
Some companies resort to attrition (voluntary redundancy) as a means to reduce their workforce.[5] Under such a plan, no employees are forced to leave their jobs. However, those who do depart voluntarily are not replaced. Additionally, employees may resign in exchange for a fixed amount of money, frequently a few years of their salary. Such plans have been carried out by the United States Federal Government under President Bill Clinton during the 1990s,[6] and by the Ford Motor Company in 2005.[7]
However, "layoff" may be specifically addressed and defined differently in the contract articles in the case of unionised work.
Unfair Termination of Employment[edit]
General overview[edit]
Unfair termination of employment refers to the dismissal of an employee without a valid legal reason, usually not applicable in cases of redundancy, incompetence, or misconduct.[8] According to Michael Salamon, author of Industrial Relations: Theory and Practice (2000), employers hold the legal authority to enforce workplace rules and expect employees to follow societal and job-related norms, avoiding from misconduct.[9] However, some workplaces unjustly apply these rules, leading to excessive legal control over employees.[9]
The Law of Unfair Termination[edit]
There is not a single worldwide law or act that governs unfair termination across all countries.[10] Employment laws, including those related to unfair termination, vary significantly from one country to another.[10] Each country has its legal framework and regulations concerning employment relationships, which may include provisions about dismissal and termination.[10]
For example, The Employment Rights Act 1996 (ERA 1996) is the United Kingdom (UK) employment legislation that governs the rights and responsibilities of employers and employees in the context of employment relationships within the UK.[11] The ERA 1996 outlines various aspects of employment law, including unfair termination, redundancy, employment contracts, and minimum notice periods, among other matters.[11] These regulations and protections apply to individuals working in the UK or to UK-based employers.[11]
However, international labor standards and guidelines are set forth by organizations such as ILO, known as "ILO Convention No. 158 - Termination of Employment Convention, 1982."[12] These international standards provide overarching principles and recommendations for labor rights and practices but do not constitute binding laws for individual countries.[12]
The example of unfair termination: Tanzania[edit]
In Tanzania, around 700 ex-mineworkers from the Bulyanhulu underground gold mining site won an unfair dismissal case in July 2010.[13] They were terminated because of participating in a strike in 2007 following failed wage negotiations. The mine temporarily halted production and fired 1,300 striking employees, claiming they had left illegally. Some were rehired, while others sought legal assistance.[13]
Another example of unfair termination in Tanzania involved the Sun Flag Textile Factory. The company employs 2,100 workers who work 24/7. In February 2008, around 350 workers were unfairly terminated for protesting lower wages from the factory, against government recommendations. Subsequently, about a hundred workers were reemployed at different production sites.[8]
Terminating in a safe, legal, and humane manner[edit]
An inadequately handled termination of employment can lead to legal conflicts or accusations of wrongful termination.[14] Some experts suggest organizations should have a well-defined termination policy and a direct and brief termination meeting to minimize undesired outcomes, such as departing employees displaying aggression[15] and causing disturbances within workgroups.[16] Most employees anticipate receiving the reason for their termination, although it is usually not mandated by law.[17] Therefore, managers must communicate the rationale of the termination to the employee without repeating prior issues, using clichés, or trying to present termination in a favorable light that can offend.[16]
There are four effective and efficient steps for terminating employee in a safe, legal, and humane manner:[16][17][18][19]
- Pre-termination decision-making:
- Document the reasons for termination promptly: Create a memo or report detailing the decision rationale and attaching relevant documents like performance reviews, witness statements, and disciplinary notices. This record is not shared with the employee but ensures a credible, comprehensive, and immediate account of the termination's grounds for potential legal use.
- Investigate before terminating: Employers should diligently investigate potential job separations. Engage with all parties involved impartially and document their accounts
- Consider alternatives (e.g., performance improvement plans, gradual disciplinary measures, final chance arrangements, voluntary resignations).
- Subject the decision to scrutiny by higher-level management and/or HR professionals.
- Contemplate the possibility of extending a severance package in return for a release of liability.
- Preparing the termination meeting or exit interview:
- Schedule the meeting: While there is some debate in the literature, many experts recommend scheduling terminations for early in the day and early in the week.
- Coordinate with the IT department to deactivate network access at the time of the termination.
- Prepare a meeting place by booking a room that private and separated from other employees.
- Conducting the meeting:
- Keep the meeting duration in 15 minutes or less.
- Using clear and straightforward language, such as "We have decided to terminate your employment, and today will be your final day" Is recommended. Formulating the statement in the past tense helps to prevent disputes, negotiations, or requests for reconsideration.
- Articulate the termination reason in concise and using general terms, refraining from delving into specifics or revisiting past issues that could lead in potential termination-related disputes.
- Avoid debate: If the employee did not accept the reason of termination, it is advisable to decline further discussion during the meeting to avoid debate but offer solution by scheduling other discussion.
- Demonstrate comfort with emotional expressions but avoid excessive responses and using clichés.
- Finalizing the process:
- Offer a concise explanation of post-termination compensation and available services (e.g., continued benefits, severance pay, job placement assistance).
- Retrieve company assets (e.g., keys, laptops, corporate credit cards) from the departing employee.
- Maintain discretion regarding the specifics of the termination meeting.
Termination by mutual agreement[edit]
Some terminations result from a mutual agreement between the employer and the employee. When this happens, it is sometimes debatable if the termination was indeed mutual. In many of these cases, it was initially the employer's wish for the employee to depart, but the employer offered the mutual termination agreement to soften the firing (as in a forced resignation). But there are also times when a termination date is agreed upon before the employment starts (as in an employment contract).
Some types of termination by the mutual agreement include:
- The end of an employment contract for a specified period (such as an internship)
- Mandatory retirement. Some occupations, such as commercial airline pilots, face mandatory retirement at a certain age.
- Forced resignation
Changes of conditions[edit]
Firms that wish for an employee to exit of their own accord but do not wish to pursue firing or forced resignation may degrade the employee's working conditions, hoping that they will leave "voluntarily".
The employee may be moved to a different geographical location, assigned to an undesirable shift, given too few hours if part-time, demoted (or relegated to a menial task), or assigned to work in uncomfortable conditions. Other forms of manipulation may be used, such as being unfairly hostile to the employee and punishing them for things other employees deliberately overlook.
Often, these tactics are done so the employer will not have to fill out termination papers in jurisdictions without at-will employment. In addition, with a few exceptions, employees who voluntarily leave generally cannot collect unemployment benefits.
Such tactics may amount to constructive dismissal, which is illegal in some jurisdictions.
Pink slip[edit]
Pink slip refers to the American practice, by a human resources department, of including a discharge notice in an employee's pay envelope to notify the worker of their involuntary termination of employment or layoff.[20]
The "pink slip" has become a metonym for the termination of employment in general. According to an article in The New York Times, the editors of the Random House Dictionary have dated the term to at least as early as 1910.[20]
The phrase may have originated in vaudeville. When the United Booking Office (established in 1906) would issue a cancellation notice to an act, the notice was on a pink slip.[21] Another possible etymology is that many applications (including termination papers) are done in triplicate form, with each copy on a different color of paper, one of which is typically pink.[22]
In the UK and, until 1 January 2019 in Ireland, the equivalent of a pink slip is a P45; in Belgium the equivalent is known as a C4.[23]
Rehire following termination[edit]
In certain situations, an individual who has been terminated or left from their job may have the opportunity to be reemployed by the same employer. In some cases, when an employee departs on good terms, such as pursuing a specific career goal, going to graduate school or pregnancy, they might be given special priority by the employer when seeking to rehire.[24] Conversely, an employer will not rehire the former employees who were terminated with prejudice, with reasons such as, workplace violation, discriminatory, misconduct (such as dishonesty or "zero tolerance" violations), insubordination, and ethics violations.[25]
"Boomerang" is the term for workers who depart from an organization but are subsequently rehired by the same organization.[26] Reemployment could be a good option because boomerangs tend to have longer tenure and lower absenteeism rates than other recruitment sources.[27] Breaugh (2008) added that rehiring former employees, categorized as "targeted recruitment", usually produces candidates with a higher likelihood of receiving and accepting job offers, better job performance, and longer organizational retention compared to candidates from "untargeted recruitment".[28] In terms of loyalty, boomerangs may have better loyalty as they voluntarily choose to return, having experience with their former and subsequent employers and making an informed decision to return.[29]
There are three main types of employee rehiring; rehiring retirees,[30] rehiring female employees who left voluntarily due to having children or caring for other family members[31], and rehiring as a natural outcome of the evolving concept of multi-faceted careers.[29]
A notable example of a successful "rehire following termination" is Steve Jobs, a co-founded Apple Computers Inc. He initially left the company after being removed as CEO, spending eleven years building successful ventures outside of Apple. He returned to Apple in 1996 when the company was facing financial challenges. His comeback is considered one of the top ten most successful corporate turnarounds, leading to the introduction of innovative products and profitability.[32]
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