Layoffs and Plant closing Law

Non disciplinary separations are a fact of corporate life. For the employer, reduced sales or profits may require layoffs or downsizing. Employees may terminate their employment to retire or to seek better jobs.

Ironically, today’s emphasis on ‘human capital’ notwithstanding, layoffs and downsizing rose in the early 2000s. For example annual layoffs reached a 10 year high of over 1.5 million in 2001. This prompted experts to suggest considering alternatives to reducing employees head counts/. Suggestions include finding volunteers who are interested in reducing hours or part-time work; using attrition; opting for voluntary early retirement packages; and networking with local employers concerning temporary or permanent redeployment. As the economy improved, employment rose after 2003.

The Plant Closing Law: Until 1989, there were no federal laws requiring notification of employees when an employer decides to close a facility. However, in that year the Worker Adjustment and Retraining Notification Act (popularly known as the plant closing law) because it requires employers of 100 or more employees to give 60 days’ notice before closing a facility or starting a layoff of 50 people or more. The law does not prevent the employer from closing down, or does it require saving jobs. It simply gives employee time to seek other work or retraining by giving them advance notice of the shutdown.

Employers are responsible for giving notice to employees who will (or who reasonably may be expected to) experience a covered ‘employment loss’. Covered employment losses include termination (other than discharges for cause; voluntary departures, or retirement); layoffs exceeding six months, and reduction. Generally, the firm needn’t notify workers it reassigns or transfers to certain employer – sponsored programs or who get an opportunity to transfer or relocate to another company location within a reasonable commuting distance. While there are exceptions to the law, the penalty for failing to give notice is fairly severe one day’s pay and benefits to each employee for each day’s notice that should have been given, up to 60 days.

The law is not entirely clear about how to notify employees. However, if you write a letter to individual employees, a paragraph that might suit the purpose would be as follows:

Please consider this letter to be your official notice, as required by the federal plant closing law, that your current position with the company will end 60 days from today because of a [layoff or closing] that is now projected to take place on [date] . After that day your employment with the company will be terminated, and you will no longer be carried on our payroll records or be covered by any company benefit programs. Any questions concerning the plant closing law or this notice will be answered in the HR office.

A layoff, in which workers are sent home or a time is a situation in which three conditions are present: (1) there is no work available for these employees, (2) management expects the no-work situation to be temporary and probably short term, and (3) management intends to recall the employees when work is again available. A layoff is therefore not a termination, which is a permanent severing of the employment relationship. After the World trade Center attack, most US airlines laid off (furloughed) about 20% of their employees, but expected eventually to (and did) bring them back. Some employers, however, use the term layoff as a euphemism for discharge or termination.

Bumping/Layoff Procedures: Employers who encounter frequent business slowdowns and layoffs may have procedures that let employees use their seniority to remain in the job. Most such bumping/layoff procedures have these features in common:

1. Seniority is usually the ultimate determinant of who will work.
2. Seniority can give way to merit or ability, but usually only when no senior employee is qualified for a particular job.
3. Seniority is usually based on the date the employee joined the organization, not the date he or she took a particular job.
4. Because seniority is usually companywide, an employee in one job can usually bump or displace an employee in another job, provided the more senior person can do the job without further training. When the New York Stock Exchange recently eliminated all reporter jobs on the exchange, many of these people applied for and bumped lower seniority employees, for instance, from messenger jobs.

The above may pertain to U.S Federal laws. In India also may not be the same but identical laws are applicable under various acts.

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