Termination of employment
Termination of employment or separation of employment is an employee's departure from a job and the end of an employee's duration with an employer. Termination may be voluntary on the employee's part (resignation), or it may be at the hands of the employer, often in the form of dismissal (firing) or a layoff. Dismissal or firing is usually thought to be the employee's fault, whereas a layoff is generally done for business reasons (for instance, a business slowdown or an economic downturn) outside the employee's performance.
Firing carries a stigma in many cultures and may hinder the jobseeker's chances of finding new employment, particularly if they have been terminated from a previous job. Jobseekers sometimes do not mention jobs from which they were fired on their resumes. Accordingly, unexplained gaps in employment, and refusal or failure to contact previous employers are often regarded as "red flags".[1]
Unfair Termination of Employment[edit]
General overview[edit]
Unfair termination of employment refers to the dismissal of an employee without a valid legal reason, usually not applicable in cases of redundancy, incompetence, or misconduct.[12] According to Michael Salamon, author of Industrial Relations: Theory and Practice (2000), employers hold the legal authority to enforce workplace rules and expect employees to follow societal and job-related norms, avoiding from misconduct.[12] However, some workplaces unjustly apply these rules, leading to excessive legal control over employees.[12]
The Law of Unfair Termination[edit]
There is not a single worldwide legal framework that governs unfair termination across all countries.[13] Employment laws, including those related to unfair termination, vary significantly from one country to another.[13] Each country has its legal framework and regulations concerning employment relationships, which may include provisions about dismissal and termination.[13]
For example, The Employment Rights Act 1996 (ERA 1996) is the United Kingdom (UK) employment legislation that governs the rights and responsibilities of employers and employees in the context of employment relationships within the UK.[14] The ERA 1996 outlines various aspects of employment law, including unfair termination, redundancy, employment contracts, and minimum notice periods, among other matters.[14] These regulations and protections apply to individuals working in the UK or to UK-based employers.[14]
However, international labor standards and guidelines are set forth by organizations such as ILO, known as "ILO Convention No. 158 - Termination of Employment Convention, 1982."[15] These international standards provide overarching principles and recommendations for labor rights and practices but do not constitute binding laws for individual countries.[15]
The example of unfair termination: Tanzania[edit]
In Tanzania, around 700 ex-mineworkers from the Bulyanhulu underground gold mining site won an unfair dismissal case in July 2010.[16] They were terminated because of participating in a strike in 2007 following failed wage negotiations. The mine temporarily halted production and fired 1,300 striking employees, claiming they had left illegally. Some were rehired, while others sought legal assistance.[16]
Another example of unfair termination in Tanzania involved the Sun Flag Textile Factory. The company employs 2,100 workers who work 24/7. In February 2008, around 350 workers were unfairly terminated for protesting lower wages from the factory, against government recommendations. Subsequently, about a hundred workers were reemployed at different production sites.[17]
Rehire following termination[edit]
In certain situations, an individual who has been terminated or left from their job may have the opportunity to be reemployed by the same employer. In some cases, when an employee departs on good terms, such as pursuing a specific career goal, going to graduate school or pregnancy, they might be given special priority by the employer when seeking to rehire.[28] Conversely, an employer will not rehire the former employees who were terminated with prejudice, with reasons such as, workplace violation, discriminatory, misconduct (such as dishonesty or "zero tolerance" violations), insubordination, and ethics violations.[29]
"Boomerang" is the term for workers who depart from an organization but are subsequently rehired by the same organization.[30] Reemployment could be a good option because boomerangs tend to have longer tenure and lower absenteeism rates than other recruitment sources.[31] Breaugh (2008) added that rehiring former employees, categorized as "targeted recruitment", usually produces candidates with a higher likelihood of receiving and accepting job offers, better job performance, and longer organizational retention compared to candidates from "untargeted recruitment".[32] In terms of loyalty, boomerangs may have better loyalty as they voluntarily choose to return, having experience with their former and subsequent employers and making an informed decision to return.[33]
There are three main types of employee rehiring; rehiring retirees,[34] rehiring female employees who left voluntarily due to having children or caring for other family members,[35] and rehiring as a natural outcome of the evolving concept of multi-faceted careers.[33]
A notable example of a successful "rehire following termination" is Steve Jobs, a co-founded Apple Computers Inc. He initially left the company after being removed as CEO, spending eleven years building successful ventures outside of Apple. He returned to Apple in 1996 when the company was facing financial challenges. His comeback is considered one of the top ten most successful corporate turnarounds, leading to the introduction of innovative products and profitability.[36]
Final pay after Termination - Practices in New Zealand[edit]
1. Definition[edit]
Final pay, which is also refers to termination pay, is a financial package provided by employers to employees when their employment is terminated under specific circumstances.
2. When to pay[edit]
If an employee terminates on notice, their final pay should be given on the agree-upon pay day mentioned in their employment contract. If there is no agreed date, the final pay should be available after the last working day.[37]
If the employer and employee mutually decide to end the employment immediately with a payment in lieu notice, they can set a different date for the final pay. However, it is advisable for this payment to align with the actual last day of employment.[37]
If an employee does not receive all the components of their final pay which are owing, they may have a claim for unpaid wages or holiday pay or other breach of their employment agreement.[38]
3. Purpose of Final pay[edit]
In general, final pay package is typical meant to pay employees for any remaining wages and benefits happen since the last pay day to their last working day. It serves to provide financial support to employees during the transition period, ensure compliance with legal requirements, and in some cases, protect both parties from potential legal disputes.[37] [39]
4. Components of Final pay[edit]
Final pay packages usually come in a lump sum and consist of various components based on company policies and employment agreements, but typically must include:
4.1 Wages and salary for all the hours worked since the last pay until the last working day of employment.[37] [38] [39] [40] [41] [42] [43]
4.2 Any leave entitlements owed to employee, including:[37] [38] [40] [41] [43]
4.3 Non-reimbursed expenses or allowance from employee’s work travel or working overtime before end of employment.[37]
4.4 Any deductions or forfeiture related to financial loss or damage that employer had to suffer due to employee’s failure to fulfill their duty. Deductions or forfeiture from employee’s final pay require written consent or a specific clause in the employment agreement. Employers should notice employee beforehand about any deductions or forfeiture if applicable.[37]
4.5 Any other allowances, bonuses that stated in the employment agreement.
Final pay package may or may not include:
4.6 Sick leave and bereavement leave: There is no legal requirement to provide payment for unused sick or bereavement leave when an employee leaves their job. It is on hand of employer to pay entirety, a portion or not to pay.[37] [40]
4.7 Severance pay: is a special allowance/bonus, which is offered to terminated employees in special contexts, such as redundancy, downsizing, or lay off. Severance pay is not mandatory; however, employers usually offer severance package as a gesture of goodwill and competitive advantage. Severance pay is paid, if any, based on employee’s years of service and contribution to the company. It may also include continuation of benefits and other perks (health insurance, outplacement assistant, etc.).[37] [39]
The primary purpose of severance pay is to provide financial support to employees during the transition period following their termination. It helps employees bridge the gap until they secure new employment and helps employers comply with employment laws and regulations and to mitigate potential legal disputes and claims.[39]
In some special situations, employers and employees may decide to end the employment relationship through mutual agreement as a best solution to resolve their differences. In this case, severance pay is understood as an exchange for the employee giving up the right to take legal actions against the employer. This financial settlement is referred to as “exit packages” or “golden handshakes” and is legalized in a “record of settlement” signed by both parties and endorsed by a mediator. It helps ensuring a smooth transition while protecting the interests of both parties.[37]
Death is also considered as a special type of termination and should be also entitled to severance package. It is provided to family or beneficiaries of employee who passed away while employed to help them overcome the difficult time of losing the breadwinner.[37]
