Managing Employee Exit (2022)

Managing Employee Exit

Introduction

The management of entry of employees is the first stage. The vast majority of HR activities involve managing people’s stay in organisations. The last phase is what others call the release phase of exiIteis not extensive compared to the second part. An employment contract is not a lifelong affair. Employees have a choice to leave the organisation just like the employer, who also has the freedom to end an employee’s employment contract. However, some proper policies and procedures are followed. This article examines why there is a need for exit management; types of exit, reasons for entry and the processes involved.

Why exit management?

Employee exit management aims to have a process in place that managers will use when an employee is leaving employment. Armstrong emphasises that the exit of people from the organisation is as essential as their entry and stay; hence it should also be equally managed well. An employee works for an employer and gets paid for their work. The relationship between an employer and employee has a beginning and end. The beginning of the relationship is the recruitment process or talent acquisition that passes through the selection phase and is then followed by induction. Staying together in the ties comprises various activities such as performance management, career management, professional growth, and employee development to give the best of services to the organisation, among others.

Termination of employment is one of the essential and crucial functions of the human resource department in every organisation. If not handled effectively, this process can lead to various legal complications and loss of reputation of the organisation. Therefore, the human resources department should craft and advocate for the adoption and implementation of sound policies to minimise the distress and trauma created by poorly or wrongly handled separations. Under normal circumstances, termination of employment between employer and employee can be originated by each side.

Types of exit

Exit can be through retrenchment, resignation, dismissal, retirement and death.

Retrenchment

Unlike layoffs, which refer to the temporary termination of an employee, in the case of an employer’s redundancy, involuntary separation of the employee due to change of labour or closure of the department by machines. It is a form of dismissal due to an employee’s mistake. It is a process in which the employer reviews its business needs to maximize profits or limit losses, reducing its employees. Naturally, when making such a decision, the employer must give good reasons for dismissal and follow due process, or the removal would be considered unfair.

Conditions for employees retrenchment

The employer may, according to the employer’s economic, technical, structural, or similar needs, in other words, lay off employees for the employer’s “business needs.” Examples of financial markets would include a reduction in sales or services. There will be technology that can change some employees. On the other hand, an example of structural conditions would include restructuring the business.

When the court has to decide whether the employee’s dismissal is justified, it sees whether there is a valid reason; And whether it is inevitable. This means that reduction should be considered as a last resort.

According to Leza, what is considered to be a fair procedure for retrenchment involves the following:

  • The employer must consult with the employees who are likely to be affected by the reduction, or their workplace forum, registered trade union or elected representatives.
  • The employer must issue a written notice inviting the consulting employees to consult and disclose all the necessary information for such consultation.
  • The employer and consulting employees must engage in a consensus-seeking process on some issues contained in the notice.
  • The employer must allow the consulting employees to present the matters contained in the notice and other matters relating to the proposed decrease.
  • The employer must select the employees to be dismissed based on selection criteria agreed with the consulting employees or selection criteria that is fair and objective.
  • After the consultation process has been exhausted, the employer may decide to retrench and then issue a reduction notice to the affected employees.
  • The law provides additional procedures that the employer, employing more than 50 employees, must follow when deciding to retrench.
Managing Employee Exit

What must the notice to consult look like?

  • The employer must notify the affected employees of the need for the proposed reduction.
  • This instruction should be in writing and should contain the information required by the consulting staff to present at the time of the consultation.
  • Required information includes, but is not limited to:
    • The reasons for the proposed reduction
    • Options considered by the employer to avoid the proposed reduction and the reasons for rejecting these options
    • The number of employees likely to be affected and their positions;
    • The proposed selection criteria for selecting employees for retrenchment;
    • The time when the reduction is expected to take effect;
    • The proposed severance pay;
    • Any assistance that the employer proposes to offer the employees who are retrenched;
    • The possibility of future employment of the employees who may be retrenched;
    • The number of employees retrenched for the last 12 months.
  • If the information on the notice is not sufficient, the consulting staff may request the employer to disclose further details. For example, the employees may request the employer’s audited financial statements, where the reason for the proposed reduction is to cut costs

What does a consultant do?

This means that the consulting employees have to develop suggestions regarding the proposed reductions, and the employer has to respond.

What should be paid to a laid-off employee?

·    Severance pay

A retrenched employee must at least be paid one week for each completed year of ongoing service. 

If an employee refuses alternative employment with the employer or another employer, they will not be entitled to severance pay.

·    Leave

  • Notice pay instead of working the employee’s notice period :
    • If the employee was employed for less than six months, they must be paid one weeks’ notice pay;
    • If the employee was used for more than six months, but less than one year, they must be paid two weeks’ notice pay;
    • If the employee was employed for more than one year, they must be paid four weeks’ notice pay.

·    Other pay

Once an employee is retrenched in other countries, they can claim unemployment benefits.

What remedy does an employee get if unfairly retrenched?

  • An employee who feels that they have been unfairly retrenched may refer their dispute to the Commission for Conciliation, Mediation and Arbitration or a bargaining council, industrial court or any third part mechanism available
  • The dispute must be referred to the CCMA or bargaining council within 30 days from the date of reduction.
  • An employee may claim that the employer:
    • Reinstates them with or without back pay;
    • Re-employs them, either in the work they were employed before the reduction or in another reasonably suitable work without back pay or
    • Pays compensation to them.

Again the Commissioner will dismiss the employee’s claim or grant it in whole or part.

Resignation

This is the most common way of separation. Hasan defines resignation as an act that withdraws an employee formally from a position or office they bear. The employee leaves his job and employment with their employer to pursue better opportunities, a better place, a better compensation package in the same city and country or different city or different country.

Hasan argues that managers’ capacity to handle resignations is critical because better concessions management avoids that misconception among the existing employees and relaxes the work environment by retaining the organisational trust in the remaining staff.

Reasons for resigning

Employees resign from an organisation for different reasons, for example, pull or push factors. Pull factors are external factors that attract or pull the employee to leave their employment to find another job in another organisation that pays better or gives better conditions or further career development. Other reasons include family problems or health problems. Push factors are internal factors that originate from the organisation and force the employee to leave the organisation. For example, unfair and inequity reward system, poor conditions of service, job dissatisfaction due to work ambiguity or overload and frustrations caused by managers and supervisors.

According to Hasan, family problems, poor salaries, inefficient leadership, and lack of attachment from the organisation may cause one to resign. However, Hurliman concluded that amongst all factors contributing to employee resignation, like high positions, challenging roles, moving to a reputable organisation, and salary issues are the highest contributors.

Involuntary resignation caused by job dissatisfaction and constructive dismissal

Involuntary resignation can occur when an employee’s reason for leaving the organisation originates, such as job dissatisfaction caused by unsafe working conditions, ambiguous job tasks and roles, and frustration by supervisors and co-workers (Noe et al., 2008). Job dissatisfaction creates high worker demotivation and organisational disengagement; hence workers see no joy in continued employment.

However, continuous measuring and monitoring of job satisfaction help managers to identify satisfiers, maintain them, identify dissatisfiers, and remove them. Failure of an organisation to improve on the nature of the job itself and failure to manage the manager-employee relationships can be constructive dismissal that brings with it litigation that organisations face. Constructive dismissal occurs when an employee resigns because the employment relationship had become intolerable as a result of the employer’s conduct (Jordaan (2012), However, according to Jordaan (2012), whenever faced with a disgruntled employee who threatens to resign, it is a good practice to find out what is bothering them and try and resolve the problem as soon as possible. In the case of resignation, three issues are important to note: process notice period and exit interview.

Procedure for resigning

In standard cases, an employee writes to the Human Resource Department stating their intention to resign. The letter spells out the last date of service and indicates whether the employee will serve the notice or not. If the employee will help with the information, the employer responds in writing, acknowledging the employee’s resignation and the notice period. Suppose the employee cannot help the notice according to the contract. In that case, if necessary, the employer spells out the penalty, as it is not always that employees who fail to serve the notice period are penalised. The employer may give a waiver on the notice period considering the cause of resignation, the length of service, the employee’s record, the effect of the short notice to the organisation or the results of the employee’s continued presence in the organisation.

Notice period

Jordaan argued that resignation is legally a unilateral decision, and provided the employee gives proper notice, the employer has no right to veto or reject it. An employee is required by law to notify the employer when intending to resign from work. The notice periods vary with types of contracts, and the contracts always spell out the notice period. According to the law, failure to give adequate notice of resignation attracts a penalty of money equivalent to the salary of the period equal to the prescribed information. If one was supposed to provide three months’ notice, a penalty of three months’ salary is applicable instead of news.

Exit interviews

The organisation must know why employees leave, and the information can be collected using exit interviews. Exit interviews help the Company identify negative influences of turnover, including job factors, company practices, policies, programmes, and relationships. Amstrong argues that exit interviews provide data for use in supply forecasting to make calculations on the number of people lost who may have to be replaced.

However, Noted that there is sometimes no correlation between the reasons given for leaving in an exit interview and a follow-up exit interview. They suggested that an employee may not want to ‘burn the bridge’ when transiting to the new employer. Because of this, therefore, they may be unwilling to share their actual reasons for leaving. Sometimes employees do not tell the truth in exit interviews just for impression management such that they would not be given cold shoulders when following up for their terminal benefits. In other instances, where employees are frustrated by their supervisors, they may even refuse the exit interviews. At a more human level, exit interviews do not necessarily benefit the exiting employee, rather the remaining employees and the organisation in general—hence employee reluctance to exit interviews and the unreliability of the reasons to be given for the exit.

Dismissals

As a form of exit, dismissal is initiated by the employer for various reasons such as:

  • Non-Performance
  • Indiscipline and or misconduct that is gross or serious
  • Bringing in new technologies which make the other employees redundant
  • Economic hardships, global pressures or Government legislation
  • Right-sizing due to challenges facing the organisation

Dismissal can also come because of abscondment by an employee. Amendment can be viewed as a situation whereby an employee decides not to work indefinitely without caring to inform the employer and handing over their staff. If an employee chooses to abscond, it becomes essential to understand their motives and intentions. At times, employees can bolt due to any of the following situations:

  • After stealing the confidential information or documents or database from the Company.
  • If an individual intends to commit a crime.
  • If there is work pressure and stress and the individual cannot cope with it. This is common in high-stress industries.
  • If the employee has committed any crime outside the office and after working hours, such as theft or other civil crime.
  • If they have got some perfect opportunity that requires them to join immediately and feel that the exit process in his Company is a bit too complicated.
  • Personality issues can be another cause. Employees who abscond may have low confidence and are too weak to face reality and challenges of life head-on, and that they feel that running away from the problem is as good as solving the problem.

Businesses in other countries are free to adopt “at-will” employment policies. 

However, the reason for dismissal cannot be illegal, such as the many forms of discrimination. At-will policies give you more flexibility than you would have if your employees were retained with employment contracts.

Unacceptable reasons for dismissal

All employment decisions, big and small, are governed by employment laws. Unacceptable reasons for dismissal include discrimination, race, colour, religion, sex, national origin, age, and disability.

A separate section could describe expectations for professional behaviour, absenteeism, dress code (if any), respect for co-workers and managers, or direct reports. This section should conclude with a description of behaviours that constitute grounds for dismissal. The employee handbook should describe the termination process and state how the distribution of final compensation and any benefits, such as medical insurance or accrued paid time off, will be handled.

Documentation: At a minimum, there should be some formal meeting between the employee and their manager, possibly with a neutral third party in attendance. Here, the performance or behaviour issues should be presented clearly and unemotionally, followed by a description of the steps the employee is expected to take to continue in your employment.

If the situation does not improve, some companies may require employees to attend professional counsellors’ sessions.

The termination process

Before notifying an employee of termination, it is advisable to hold a final internal meeting that includes the employee’s manager and staff members whose perspective is relevant to a sensitive personnel decision. This includes staff members such as an HR director, internal counsel, or a department head.

Retirement

Retirement is when an employee permanently leaves the organisation upon reaching a determined age, say 60 or 70 years. The retiree then would rely on the pension that they would be getting from the employer every month. Notwithstanding, retirement is not always a smooth process for others as it is associated with psychological, physical, social and financial challenges.

Psychological effects of retirement

In managing retirements, Osborne (Emphasises that Human Resource Managers should never forget that complete disengagement from work life and the transition to retirement have psychological effects on retirees, hence the need for counselling. However, Osborne discovered that most organisations focus more on the financial planning for their retirees and ignorantly neglect the psychological concerns that need to be addressed to ensure that they optimise their life satisfaction.

In line with the above, Osborne realises that retirees often suffer depression due to a reduction in the number of social interactions, loss of a job, loss of friends and connections, various fringe benefits and loss of a sense of purpose that people often get from their careers. Osborne noted that some retirees often face increased health problems and less mobility, which can be stressful.

Teuscher revealed that sometimes retirees face identity challenges because their self-description often involves mentioning their former profession or job. Whitbourne support that the impact upon a retiree’s identity can be traumatic if employment was the primary source of their identity. However, Whitbourne provided a therapy that counselling could help identify various personality traits, behavioural patterns and values from past and present that current circumstances have activated.

In addition, Osborne suggests that retirees can reduce depression by engaging in meaningful activities, especially the formation of networks of relationships to replace that left at work and acknowledge their mortality as motivation to complete tasks that may have lain dormant, such as visiting and talking with family members and friends or allow themselves to help future generations (Erikson).

Osborne further suggests that Humana Resources Managers should be organising retirement workshops for staff members before retirement. Such workshops set a life review before retirement and provide them with information on pre-existing aspects of preretirement life that can play a significant role in adjusting to retirement transition.

Death as a form of exit from employment

The death of an employee is also one of the ways employees exit the work organisation. This is a sad state of affairs. The standard expectation is that an employee will work in an organisation until the employee retires or moves to another organisation for greener pastures. The death of an employee brings shock to both the employer and the employee. It is a situation that needs proper management. Human resource managers in some organisations have had bad experiences where relatives of the employee have dumped a coffin in the office of the human resource manager out of anger for mismanaging the funeral process of their relation. Either the organisation has refused to provide transport to carry the body home or some general misunderstanding due to the organisation’s policies, which are felt to be punitive or create excess hardship on the relatives. In most organisations, employees expect that the employer shall notify the relations of the deceased employee, arrange transport and buy a coffin, then transport the remains, the family and fellow employees to the employee’s home for a decent burial. These processes are part of the human resource policy about managing funerals, and the conditions of service stipulate these processes as well.

Conclusion

This article has examined employee exit in redundancy, resignation, retirement, dismissal and death. The primary argument is that an employment contract is not a lifelong process. Both parties to the employment contract (employer and employee) can end the contract at any point in time. However, the process needs to be appropriately managed. That is why human resource managers need to ensure a proper exit management policy in the organisation to prevent lawsuits or bad reputations.

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