Downsizing Staff Strength - Precautions To Be Followed

Dear Seniors
Many of us at some point of time of our career come across situations where we need to reduce the staff strength of organisation due to various factors. Can some one brief me generally on the points that needs to be taken care from an employer's point of view so that the entire process of down sizing is smooth. There may be various factors that needs to be taken care from the labour laws that are applicable.
Thank You
MK

HAI MEMBER,
RETRENCHMENT PROCEDURE IS THERE IT CAN BE FOLLOWED AS PER FACTORY ACT. LAST COME FIRST SERVE BASIS YOU CAN DOWNSIZE THE MANPOWER. RETRENCHMENT BENEFITS TO BE GIVEN AS PER APPOINTMENT ORDER OR AS IN PRACTICE IN THE ORGANISATION.

Dear friend,

Down-sizing, right-sizing, retrenchment - these are all commonly used terms to indicate the jettisioning of excess or surplus labour from employment unilaterally by the employer before the normal termination of the contract of service agreed upon. So the inevitable presence of monetary, emotional and/or legal constraints always makes the process painful and cumbersome howsoever genuine the reasons are from the employer's perspective. The age and employability of the workers likely to be affected, opportunities of alternative employment in the region, the compensation package are the factors capable of creating bonafide understanding in the minds of the workmen. If the honest intention behind the move is reorganization in the long-term interests,meticulous attention should be paid to the funding of the exercise, phased retrieval of the entire cost by raising the productivity of the remaining workforce, diversification of the business operations of the establishment in tune with market changes and the like. If it is a distress move necessitated by recurring losses and salvaging the industry from abrupt extinction frugal cost of separation and its means of mobilisation should be planned and arranged well. Legal constraints are in the forms of total no of workmen on rolls, the length of service of the labour to be sent out, the extent of unionisation, the attitude of the union towards the move etc.

Hi, the general practice as I know is that the company that is downsizing/retrenching will have to have first and foremost counsel the outgoing staff and arrange for an HR recruitment firm to outplace those you are retrenching especially if they have served the company for more than 2 years

First of all distinction is required to be made as to whether an employee is a workman under Industrial disputes Act, which solely depends upon the actual working of the employee.
The answer to the above is the ground-norm for all applicability of labour laws on severance of an employee.

Thank You all for your valuable inputs.
So as I understand from the inputs that I have from you all, first it is important to identify whether the employee being retrenched is a "workman" as defined by IDA. I would appreciate if anyone could give me a feedback on the following queries.
1. In case the employee is a workman, then what kind of compensations are to be given to him at the time of retrenchment?
2. In case the employee is NOT a workman, what are the kind of compensation to be paid?
Size of the establisment (PAN India) is about 150. There are about 9 branch offices with various employee strength.
Length of Service would be a maximum of 9 Years.
Type of Industry is Shipping Agency Business.
Thank You