What is the difference between retrenchment and redundancy?

What is the difference between retrenchment and redundancy?

The biggest difference between the two is that retrenchment targets people, whilst redundancy targets positions. A person cannot be declared redundant but a position which a person is holding can be declared vacant. It is possible to declare one position redundant and therefore only one employee loses his or her job.

How is retrenchment package calculated?

Severance pay – a retrenched employee must at least be paid 1 week’s pay for each completed year of ongoing service. if the employee was employed for more than 6 months but less than 1 year, s/he must be paid 2 weeks’ notice pay; if the employee was employed for more than 1 year, s/he must be paid 4 weeks’ notice pay.

What is staff retrenchment?

Retrenchment is the termination of an employee by an employer for reasons other than a punishment meted out by disciplinary action. Employees terminated in such a manner are financially compensated by the employer.

What is the minimum notice period for redundancy?

12 weeks
According to redundancy law, you’re entitled to a minimum notice period of: 12 weeks’ notice if you’ve been employed for 12 years or more. at least one week’s notice if you’ve been employed between one month and two years. one week’s notice for each year if you’ve been employed between two and 12 years.

That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half month pay for every year of service, whichever is higher

How is the amount of redundancy pay worked out?

The amount of redundancy pay under the NES equals the total amount payable to the employee for the redundancy pay period. This is worked out using the table below, at the employee’s ‘base rate of pay’ for his or her ordinary hours of work.

What does it mean when an employee is retrenched?

At the same time, as a result of reorganization, scaling down operation or closure of business, an employee’s services may become redundant and thus, his service may be terminated. Thus, in our context, retrenchment means a discharge of surplus of workers.

How often does a company pay a retrenchment benefit?

The prevailing norm is to pay a retrenchment benefit varying between 2 weeks to 1 month salary per year of service, depending on the financial position of the company and taking into consideration the industry norm.

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