While termination of employees is not something employers want to think about, with significant disruption in the global markets and increased uncertainty for many businesses, employers may have to consider drastic measures, such as layoffs and downsizing. It is crucial that when an employer decides to terminate employees, all the correct substantive and procedural requirements have been met. As an experienced HR specialist company, INS Global is able to assist your enterprise and ensure that you remain compliant with all relevant regulations when dismissing employees.
Termination vs Layoff
A termination can be defined as when an employer breaks a contract of employment with an employee irrevocably. The termination can occur due to a just cause, in which case it can occur summarily; alternatively, if there is no just cause for the dismissal, the employer will be required to provide advanced notice to the employee or provide the employee with payment in lieu.
A layoff is where a cessation of work occurs and an employer stops an employee’s work, temporarily or permanently, without the employment contract being terminated. There may be various reasons for the occurrence of a layoff, such as a shortage in work, economic uncertainty or seasonal employment.
What is Wrongful Termination?
Wrongful termination is where an employee’s employment contract has been terminated on grounds that are not lawful and may infringe an employee’s employment rights. Wrongful termination can occur where:
- An employer lacks a valid reason or terminates an employee on improper grounds;
- An employer terminates an employee’s contract without complying with the notice period as stated on the employment contract; and
- The employee has not been given a chance to justify himself.
It is important for enterprises to follow all the correct procedures and act in accordance with regulation in order to avoid wrongful termination claims when dismissing employees. Therefore, INS Global is able to assist your company in determining important factors that should be considered, such as:
- Which relevant laws apply in this situation?
- What does the employee’s contract say about termination?
- Why is termination of this employee appropriate in the circumstances?
Important Considerations When Dismissing Employees
There are various considerations that need to be made when an enterprise dismisses employees, such as:
- Valid reasons for termination
- Notice periods
- Severance pay
- Post termination obligations
Valid Reasons for Termination
The decision to terminate an employee may lead to various legal issues arising. In order to avoid any issues or litigation arising, it is important for employers to ensure that the dismissal is reasonable and justifiable. Therefore, an employer should have valid grounds for terminating an employee, either in terms of company policy or regulation. A distinction is generally drawn between circumstances where an employer can terminate an employee without advanced notice and where advanced notice is not required.
Here are some examples of valid reasons for terminating an employee’s employment contract without advanced notice:
- Gross misconduct;
- Breach of Contract;
- Absenteeism; and
On the contrary, here are some examples of valid reasons for terminating an employee’s contract with advanced notice:
- Where an employer’s business has been suspended;
- Where an employer suffers operating losses; and
- Where an employee is unable to fulfil his/her duties effectively.
Although rules differ in each jurisdiction, generally employers are able to terminate the employment relationship by giving advanced notice or by making payment in lieu of notice. The amount of required time for notice to be given may differ according to the nature of the work, employment contract terms and local regulations. In certain limited circumstances an employer may summarily dismiss an employee, however the threshold for such dismissals are generally high (e.g. gross misconduct).
Severance pay can be defined as the compensation an employer provides to an employee if the employment contract has come to an end before the period stated on the employment contract. Severance pay is paid to prevent an employee from bringing a wrongful termination claim against the employer. The amount of severance pay varies based on the employment contract and local regulation.
The dismissal of an employee does not necessarily conclude the employer’s relationship with the employee. There are various employer obligations which remain on-going for a defined period of time, such as:
- Severance pay
- Cancellation or release letters (where necessary)
- Cancellation of visa or work permit (if necessary)
It is the responsibility of the employer to ensure all post-termination obligations are fulfilled, in order to prevent any claims made by an employee from arising.
How INS Global can help
INS Global has an efficient process that can assist your company with labor restructuring. Our 4 step process is flexible according to the needs of your company.
Step 1 – Evaluation Interview
Step 2 – Budget and Scope of Work Agreement
Step 3 – Execution of work
Step 4 – Conclusion report and recommendations INS Global has a dedicated team of HR professionals who are able to effectively respond to the needs of our clients. Our experts are able to provide labor restructuring services, no matter where your enterprise is located. Contact us today and let INS Global assist you with any HR queries you may have.