Separation

PIBM

Types of separation
Retirement Superannuation Voluntary retirement Dismissal and Discharge Lay off Retrenchment Suspension

Retirement
Compulsory retirement after attaining a specific age Forced retirement: due to violation of conditions of service agreement or found guilty of any charges Premature: due to accident, disability, personal problems etc.

Superannuation
Way of providing employee with an income after he retires Employer makes superannuation contributions for employees @ 9% of wages excluding overtime and leave encashment There are tax benefits applicable to the funds Superannuation can be taken as a lump sum or as a monthly periodic payment

Voluntary retirement Scheme

Strategy to reduce excess manpower by offering Golden Handshakes Management can get rid of extra workforce and lower overhead costs of the organisation Result of restructuring of organisations due to modernization, new technology and new operational methods

Aspects of VRS
Information needs to be given about VRS to employees through a circular Information should include reasons for offering the scheme and details on the scheme Applications for VRS should be invited Employer has the right to reject or accept applications Employees above 40 years of age and who have completed minimum 10 years of service in the organisation can apply Employees who avail of VRS cannot be re-employed by the organisation Benefits under VRS include PF, Gratuity, leave encashment etc. tax free till a cap of Rs. 5 lacs.

Discharge
Discharge is permanent separation of an employee from the payrolls due to violation of company rules or any other reason. Causes:
Inefficiency, dishonesty, carelessness, violation of rules, destructive negligence, lack of cooperation

Procedure:
Adequate notice Information to individual about reason for discharge

Dismissal
Termination of employment, usually as a punishment
With or without notice Failure to renew contract

Reasons:
Serious neglect of duties Prolonged absence from work without permission Violence Dishonesty Activities harming professional life

Lay Off
Defined under Section 2 (kkk) of Industrial Disputes Act 1947 as failure, refusal or inability of employer to provide employment to a workman on account of: Shortage of coal, power, raw material. Accumulation of stock Breakdown of machinery

Important aspects of lay off

A workman needs to be present in the company during lay off if he is not given work for 2 hours, then he is deemed to be laid off for that day He is entitled to lay off compensation @ 50% of basic wages and DA for every working day on which he reports for work, for a maximum of 45 days

Contd..
A worker is not entitled to lay off compensation, if he is given suitable alternate employment within a radius of 5 miles of the factory, and he refuses the same. It is usually temporary in nature

Retrenchment
Retrenchment means termination by the employer of service of a workman for any reason, other than as a punishment inflicted by a disciplinary action. It does not include voluntary retirement, superannuation or termination on account of non-renewal of contract or continued ill-health of a workman. [section 2(oo)]. Usually is on a Last In First Out basis Retrenched employees can be re-hired Notice of a month needs to be given, along with retrenchment compensation @ 15 days average wages for every completed year of service

Suspension
Temporary separation from work due to charges against a workman Usually done when enquiry is going on Employee gets subsistence allowance @ 50% of basic wages, DA and other allowances for the first 90 days If employee is found guilty, he is dismissed If suspension extends beyond 180 days, a workman is entitled to full wages, subject to him not taking up alternative employment elsewhere