The word retrenchment is derived from an old French word and basically means to reduce or cut something down. It also happens to be a word that can strike fear into the hearts of millions of workers who often are the sole bread winner in their family.
Another word for retrenchment is called downsizing. The most simple explanation or definition of downsizing is when a business or organization finds that it has become necessary to reduce the amount of money that it is spending in order to avoid becoming insolvent.
More About Retrenchment Or Downsizing
The act of retrenchment or downsizing is actually a very complex issue. There are two main ways that a business or organization can downsize. The first way that a company or organization can downsize or retrench is to reduce its work force, the reasons for this are numerous but fundamentally reduction in its workforce is necessary to reduce unnecessary expenditure to maintain a workforce that is either too big to maintain or certain aspect are no longer profitable or have in fact become redundant.
In addition to, or as an alternative to retrenchments, a company can also close certain offices or branches that are not working. Offering severance packages is another way that a company can reduce its staff compliment. The second way that a company can use retrenchment as a tool is to reduce or downsize a particular given department, once this has been done the company will have enough money to then reinvest in another department that is more relative to the market.
Laws And Procedures Governing Retrenchments
There are very specific laws and procedures that govern how a company can retrench its employees. This is in order to prevent companies from unfair business practices or from acting punitively or unfairly. Once a business or organization has decided to take the step towards retrenchment they must let the affected staff know what will be implemented.
Generally meetings with affected employees are held on an individual basis unless of course the employees are part of a union; in that case meetings are held with a committee or representative such as a shop steward. In addition to this, once an employer has decided on a retrenchment course the company must inform those affected by letter.
A very vital part of the process is for the company to create adequate severance packages for those affected by the proposed retrenchment plans. The way that a standard severance package can be calculated is one week for each unbroken year of service.
Another obligation that the employer needs to undertake when instituting retrenchments is to also ensure that those employees that will be affected by the proposed retrenchment plans are allowed certain concessions. Among these concessions employees must be allowed time off and assistance so that the employees affected by retrenchment plans are allowed time off to attend other interviews and in addition if an employee manages to find another job they should be afforded early release in order to take advantage of the new job offer.