Last Update: January 21, 2023, 17:06 IST
Retrenchment and retrenchment are two different concepts in the corporate world.
Dismissal occurs as a result of employee error, retrenchment is a decision made by the employer under certain circumstances.
Alphabet Inc, the parent company of tech giant Google, announced on Friday that it is laying off 12,000 employees, which is about 6 per cent of its global workforce. According to CEO Sundar Pichai, Google saw “dramatic growth” over the past two years and therefore hired many employees for the “different economic reality” that Google faces today.
As the world economy moves towards normalcy after the recent disruptions caused by the pandemic, large multinational companies such as Amazon, Meta and Microsoft are laying off their employees. But, do you think layoff and firing are the same? If yes, then you need to read further.
Retrenchment and dismissal are two different concepts in the corporate world and layoff does not always mean the employee’s fault or poor performance.
The main difference between layoff and being fired is that retrenchment occurs as a result of the fault of the employees while retrenchment is the responsibility of the company. Most layoffs result from cost-cutting efforts by companies. Sometimes mergers and acquisitions can also be a reason for layoffs. For example, suppose new management acquires a company, the new owner may choose to lay off employees in order to reduce unnecessary jobs. Such decisions are taken to rearrange the company’s structure and increase cost or operational efficiency.
Being laid off is different from being fired from a job. Poor performance, failure to meet company standards, workplace theft or misconduct, and violation of company policy, among others, are some of the possible reasons for firing an employee. It is important for employees to understand whether they were fired or laid off at the time they were fired. The reasoning behind this is that it affects a person’s prospects when they look for employment in the future.
If an employee loses his job as a result of cost-cutting measures by a company, he can describe the circumstances to potential new employers. On the other hand, prospective employers may not be as eager to offer a position to someone who lost their job due to poor performance in a previous organization.
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