Can a Long-Serving Senior Manager Really Be Laid Off? Seeking Insights and Experiences

I would like to know whether a senior-level employee (Manager and above who has served for 10 plus years) can be retrenched.

If he is performing functions of a managerial nature, you can terminate his services as per the company's rules, procedures, and principles of natural justice. You need not follow any retrenchment procedure prescribed under the Industrial Disputes Act.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

You need to understand that the word 'retrenchment' will be used only with reference to a workman under sec. 2(s) of the Industrial Disputes Act. A manager is not a workman, and thus technically, you cannot retrench him. However, if by retrenchment you mean simple termination, then you can do so by following the rules of the company, such as issuing the required notice or paying in lieu of notice. If you are terminating him for any misconduct, you need to conduct a domestic enquiry, etc. You have to first go through your company policy in this regard.

Regards,
B. Saikumar
Mumbai

Can a Manager Be Retrenched?

Your question is whether a manager can be retrenched. The word "retrench" means "cut back" or "economize." For your simple question of whether a manager can be retrenched, the answer is "anyone in the organization can be retrenched" in its business sense.

Now, the word "retrenchment" in legal language in India refers to "retrenchment under the Industrial Disputes Act." This requires certain formalities to be complied with. These formalities are not required to be followed in the case of employees who do not fall under the definition of "workman" under the Industrial Disputes Act.

Having said this, I would like to emphasize what is known as "values and ethics" in running a business. A person who has worked for 10 years as a manager and is being retrenched due to business constraints requires careful examination and handling; separation must be very sympathetic. It must be ensured that he can manage his family at least for the next year.

Considerations for Retrenching Long-Serving Managers

I fully agree with both Mr. Saikumar and Mr. Sivasankaran. However, upon deep consideration, a manager who has worked for 10 years should not be simply terminated due to cost-cutting measures. His service should be valued, and as mentioned by Mr. Sivasankaran, his ability to support his family should also be taken into account.

Therefore, simply providing one month's notice or one month's pay in lieu of the notice period would not be sufficient. At least three months' notice would be necessary to allow him to transition his employment adequately, as finding a suitable job in a specific location can be very challenging.

Hence, every management team should consider this matter from the perspective of the employee who has devoted many years of reliable service before making cutbacks.

If I have misspoken in any way, seniors, please guide me.

Regards,
B. Saravanakumar

The word "retrenchment" cannot be applied to a single individual alone in the industry. What I mean is that a rule cannot be targeted at a single person. If a company decides to implement retrenchment, it should do so en masse. Normally, retrenchment is accompanied by the guideline of a "last come, first go" policy. However, every company has its own rules and regulations regarding this matter.

The only recourse for individuals affected by such actions is to seek justice through legal means.

Best wishes.

One important point: please see the definition of a worker before you decide he's not covered under the Industrial Dispute Act. Just because he is designated as a manager is not enough. He must actually be in a managerial or supervisory position, and his nature of work must be such.

If he is a worker, the rules of retrenchment under the act must be followed, including payment of retrenchment compensation. If not, then you can terminate his services with notice pay as required under the terms of employment or rules of your company. This is the legal requirement.

The other suggestions made by my fellow members are equally valid.

You have not given your position in the company or specified in what capacity you are functioning. As senior advisors have suggested, certain moral values rest on the shoulders of management. Juniors and employees of equal rank will undoubtedly observe the actions of those in higher positions. If there is an exodus or a sense of dissatisfaction among other employees, where does the concern for cost-cutting lie? Sincerity will not be present in the minds of employees if this issue is not addressed. It would be better for management to involve the individual in question, provide an understanding of the company's financial situation, offer time to search for another job, and then allow for a resignation. This approach will undoubtedly be a morale-boosting step in the eyes of other employees.