Lawful Retrenchment

LAWFUL RETRENCHMENT

In one point or another, be it in the pursuit of acquiring new markets or the improvement of performance and productivity, companies may have to revise or make some adjustments to their business plans and processes. Reorganization or restructuring within an organization may occur due to injection of new capital, changes in business ownership, or changing economic circumstances. As a result of these processes, some employees may lose their jobs. This is common in business practices, for some companies, it may be the only way for them to move forward and continue to thrive in the market.

The terms normally used to define the phenomenon of job losses may include retrenchment, redundancy, downsizing or lay-off. For the purpose of this study, we will be using the term ‘retrenchment’, where it covers a wide range of dismissal that is not necessarily related to the conduct or capability of the employee. To be specific, we will be discussing the issue of retrenchment due to business mergers or acquisition.

Mergers and acquisition are one of the common phenomenons in corporate world. Many separate companies are joining forces to form larger companies. When this happens, they are often forced to retrench some of their employees in order for them to save money. Regardless of who the employee is, or what position he or she is handling, retrenchment is by far the worst thing that can happen to the employee. It does not only affect the life of an individual employee but it may also affect the local economy.