Retrenchment Worries: Is It Fair to Let Go of Long-Serving Staff Without Proper Notice?

Retrenchment Concerns and Queries

I wanted your valuable feedback. The company retrenched its staff members without giving any prior notice. Notice of retrenchment was issued one week prior to the last working day. The company pays one month's salary in lieu of a one-month notice period, which is as per the appointment letter. The staff retrenched have put in more than 10 years of service, and all are in the management cadre. The reason for retrenchment is the global recession for the past two years, with the recession expected to continue for some time, and unhealthy competition causing serious revenue losses to the company.

I would like to know:

- Can a company retrench its old staff on these grounds while keeping the new recruits in the company? Moreover, when the new recruits cost more than the old staff and the new recruitments have been done in the past four years.

- Can a company retrench its old staff without giving a sufficient prior notice period, keeping in mind the long years of service put in by the concerned staff member?

- Is there any retrenchment compensation applicable in the present scenario?

Regards

Since the staff whose services were terminated by you are in the management cadre, you need not pay retrenchment compensation. However, keeping in view the principles of justice and equity, if you want to downsize your managerial staff, you could have followed the principle of "last come, first go," i.e., the junior-most to go first, as a prudent principle of administration. It would have saved a lot of heartburn for those who served the organization for ten long years.

Regards,
B. Saikumar
Mumbai