Human Resource HR Retrenchment or Downsizing

Human Resource HR Retrenchment or downsizing greentick

Retrenchment also sometimes known as downsizing could be found unfair if an organization fails to show a genuine need. The organization retrench employees for their operational requirements to get it right. And these requirements are based upon economic needs, which arise due to drop in sales/services; technological needs that include a development of new technology, which replaces some employees; and structural needs that would include organizational / business restructuring. Human Resource HR Retrenchment or downsizing is essential sometimes for providing new shape to organizational goals.

Why Retrenchment is needed?

They must be careful and ensure to undertake compliance with it. An unethical retrenchment process could lead to more harm than good for the organization. They may be liable for illegal dismissal of the employees, unnoticing the fourth coming losses. To avoid further losses, employers can set standards to follow before termination. Similarly, retrenchment must be fair enough and reasonable undertaking certain criteria such as efficiency, seniority, age, etc. Generally, LIFO (Last In First Out) principle is use. However, employees with key skills should be retain back ;and the employees with unsatisfactory performance record should be taken into consideration. The employer must also have a provision of the retrenchment benefits.

Due process in retrenchment, the organization must provide written notice to the employees. Or the concern parties with the proper reason and the alternative solution before the retrenchment process execute. They might require engaging in the further consensus-seeking process. The employer must allow the concerned members to make representations. They can make or conduct the consultation process through either written communication or direct face-to-face communication. However, the outcome of retrenchment could be stressful and provoking anxiety to anyone. Employees must seek a better outcome by managing their reaction and considering all offered assistance. They should proactively seek support for financial advice, personal counseling, and an increasing network focusing on the future.


Hence, the retrenchment process is the business decision with preview and reasonable exercise of management required by law. The risks involved in conducting the retrenchment process is always at a higher side. Thus, it is imperative for employers to consider receiving professional expertise before commencing and conduct it in the right way.