Understanding Retrenchment vs. Layoff: Can You Explain the Differences?

Dear Seniors,

Can anybody please tell me the difference between retrenchment and layoff? I shall be obliged if I can get the proper definition for termination as well.

Regards,

Dear Sujal,

Technical definition can be obtained from the Industrial Disputes Act. Grossly, retrenchment means any termination that is not a disciplinary action imposed on a worker, voluntary retirement scheme (VRS), retirement, superannuation, ending of a fixed-term contract, or termination of service due to continued ill health.

Lay off means failure, refusal, or inability of the employer due to a shortage of raw material, coal, power, breakdown of machinery, etc., to provide employment. It is of a temporary nature.

Termination means dismissal, retrenchment, completion of a contract, non-renewal of a contract, etc. Termination is not always negative. All these activities are termed as termination.

Dear,

As the difference between retrenchment and layoff is concerned, I would like to add in the remarks of the professionals. Employers use these methods (retrenchment and layoff) to reduce their workforce due to heavy expenses, company default, downturns in business, etc. In both techniques, employees are terminated using the "last come, first go and first come, last go" method. The difference between these two lies in the fact that retrenched employees are legally promised that they will be rehired (using the last go, first come method) when business conditions improve. However, in a layoff, employees are terminated without such a promise after receiving all their legal entitlements.

I have worked on this assignment at Saga Sports Sialkot, Pakistan (the largest hand-stitched soccer producer in Asia).

Regards,
Sagheer Ahmed

Dear Sagheer,

Can you please elaborate on the fact that retrenched employees may be called back after the company's conditions improve? Is it that retrenchment is temporary and layoff permanent?

Thanks and Regards,
Vidisha