HRM Chap. 9

All Rights ReservedHRM Principles & Practices (Second Edition)© Oxford Fajar Sdn. Bhd. (008974-T), 2011 Chapter 9 – 1


HRM Principles & Practices (Second Edition)© Oxford Fajar Sdn. Bhd. (008974-T), 2011 Chapter 9 – 2

All Rights Reserved

TERMINATION OF SERVICE

9CHAPTER


PREVIEW

Effective systems for taking disciplinary action. The problems relating to transfer of workers. The criteria to be used in promoting workers. Methods for handling employee grievances. Dealing with absenteeism. The role of the Industrial Court in termination of an

employee’s contract.


PREVIEW (cont.)

Expiry of a fixed-term contract.

Resignation and retirement.

Causes of redundancy and recommended procedures for retrenching workers.

Appropriate dismissal procedures to be used in cases of misconduct and poor performance.


DISCIPLINARY SYSTEMS

A disciplinary system must be fair and just. In a fair disciplinary system, employees know

the rules, and know what they can do and what they cannot do.

When employees behave in an unacceptable manner, they are punished.

The purpose of punishment is to change the employee’s behaviour and to send a warning to other employees that unacceptable behaviour will not be tolerated.


PENALTIES

Oral warning Written warning(s) Suspension without pay Demotion or downgrading Dismissal

When employees commit misconduct, they may be penalized. Penalties that may be imposed include:


POTENTIALLY PROBLEMATIC ISSUES

Transfer

Transfer is a lateral move of an employee from one job to another, or from one department to another,

or from one site to another.


TRANSFERS (cont.)

Employers transfer employees: To fill vacancies for experienced workers To solve people problems To provide training to employees

Employees may request transfers: For personal, non-work related reasons To have an opportunity to learn To overcome boredom


TRANSFERS (cont.)

Any express clause in the contract of employment. The reason for the transfer must be a legitimate

business reason. The reason for the transfer must not be for the

purpose of harassing or victimizing the employee. The transfer must not be to the detriment of the

employee’s terms and conditions of employment.

Transfer is a managerial prerogative.

Employers have the right to transfer an employee, but the right is subject to:


PROMOTION OF EMPLOYEES

Promotion is reassignment of an employee to a job at a higher level in

the organization.

Promotion opportunities motivate employees, providing the promotion

system is perceived as being fair and transparent.


PROMOTION OF EMPLOYEES (cont.)

Criteria for Promotion

Seniority

Merit

An effective performance appraisal system is required to identify which

employees are suitable for promotion.


GRIEVANCE HANDLING

Effects of Unresolved Grievances Resignation of employees Depression amongst employees Poor quality and quantity of work High accident rate High rate of illness Complaints from customers Complaints to the Department of Labour and other bodies Aggressive unionism Reduced output Lowered productivity Lowered profitability


GRIEVANCE PROCEDURES

A grievance procedure is a formal process for hearing and resolving employees’ complaints.

A grievance procedure will establish deadlines for each stage at which a grievance is heard.

Grievances should be settled at the lowest level possible.


GRIEVANCE PROCEDURES (cont.)

Grievance handling requires: Listening skills Understanding of rights of employees and

employers Counselling skills Problem-solving skills

Managers must be trained on how to handle grievances.


ABSENTEEISM

Keep records Have clear procedures Take disciplinary action, when necessary

Workers who are regularly absent from work without permission granted in advance cause problems.

Employers must have systems in place to reduce unauthorized absences.


ABSENTEEISM (cont.)

Employers may encourage full attendance by offering

incentives.


PENALTIES FOR ABSENCE

Absence without leave for more than 2 consecutive days is a breach of contract for which the employee may be dismissed.

Prior to any dismissal, proper procedures must be followed.

Employees may be punished for absence.

Employees within the scope of the Employment Act or Sabah/Sarawak Labour Ordinances:


THE INDUSTRIAL RELATIONS ACT AND TERMINATION OF EMPLOYMENT

1. File request for reinstatement at the nearest Department of Industrial Relations (IR).

2. Attend a conciliation meeting with the ex-employer, called for by the Department of IR.

All employees in the private sector have the right to challenge the termination of their contract of employment by taking the following steps:


THE INDUSTRIAL RELATIONS ACT AND TERMINATION OF EMPLOYMENT (cont.)

3. As a result of conciliation: the employer may agree to reinstate the

employee, or the employee may agree to withdraw their claim,

or the employer and employee may agree on a

compensation package to settle the claim, or the employer and employee may not reach any

agreement.



4. Where no agreement is reached, the Director-General of Industrial Relations will inform the Minister of Human Resources who will decide whether or not to refer the dispute to the Industrial Court.

5. If the dispute is referred to the Industrial Court, an arbitration hearing will be held.



6. The Industrial Court will decide whether the employee was dismissed with or without just cause or excuse.

7. If the dismissal was without just cause or excuse, the court will either:

order the employer to reinstate the employee, or

order the employer to pay compensation to the employee for loss of his employment.


COMPENSATION FORMULA FOR DISMISSAL WITHOUT JUST CAUSE OR EXCUSE

Typically, the formula followed is: back wages from the date of dismissal up to the

date of the court decision, with a maximum of 24 months, and

one month’s wages for every year of the employee’s service.

The Industrial Court has the power to decide on how much compensation should be paid to the employee by the employer.


COMPENSATION FORMULA FOR DISMISSAL WITHOUT JUST CAUSE OR EXCUSE (cont.)

The formula is frequentlyvaried depending upon the

circumstances of each case.


FIXED-TERM CONTRACTS

Fixed-term contracts expire at the end of the agreed time period.

Fixed-term contracts are acceptable to the Industrial Court if they are for genuine business reasons.

An employee on fixed-term contract may file a claim under the Industrial Relations Act if his contract is not renewed.


FIXED-TERM CONTRACTS (cont.)

The Industrial Court will notinterfere with an employer’s decisionnot to renew a fixed-term contract if

the employer has an acceptable reason for the decision.


RESIGNATION

Employees have the right to resign without assigning any reason.

Prior to resigning, an employee must give notice to the employer as required by his contract of employment.


RETIREMENT

What should the retirement age be for employees?

How can an employer help employees prepare for retirement?


REDUNDANCY AND RETRENCHMENT

Redundancy may be caused by: Mergers and acquisitions Restructuring Financial problems Changes in technology

Redundancy occurs when an employer has excess employees.


REDUNDANCY AND RETRENCHMENT (cont.)

Redundant employees may be retrenched.

Because of the negative consequences of retrenchment to employees and society,

employers are expected to avoid retrenching employees,

if possible.



To avoid retrenchment, employers could:

Freeze external recruitment and redeploy employees into any vacancies which arise.

Conduct a voluntary separation scheme (VSS).

Reduce costs.

Reduce wages if employees agree.



Procedures for Retrenchment

Consult the trade union and inform the workforce

Choose who to retrench

Provide outplacement services

Inform the Labour Department

Pay termination or retrenchment benefits


DISMISSAL FOR MISCONDUCT

Misconduct is any behaviour which is in conflict with the employer’s interests.

Employers have the right to punish an employee for misconduct.

Major misconduct may be punished by dismissal.


DISMISSAL FOR MISCONDUCT (cont.)

Carefully record any complaint of alleged wrongdoing.

Investigate the complaint thoroughly. Charge the employee. Hold a domestic inquiry.

Before dismissing an employee on grounds of misconduct, an employer must:


DISMISSAL FOR POOR PERFORMANCE

Warn the employee. Assist him to improve his performance. Give him adequate time to improve.

Before dismissing an employee on grounds of poor performance, an employer must:


FRUSTRATION OF CONTRACT

For example: Detention by the authorities for a lengthy period

of time Serious illness or medical incapacity Withdrawal of license required for the job

Frustration of contract occurs when an employee is unable to perform the work for which he was employed because of reasons beyond his control.


CONSTRUCTIVE DISMISSAL

Tests for Constructive Dismissal

The employer must have breached the employee’s contract of employment.

The breach of contract must be a breach of a major or key element in the contract.

The employee must leave his employment in a timely manner.

The employee must leave his employment as a result of the breach, and not for any other reason.


REVIEW

Effective systems for taking disciplinary action.

The problems relating to transfer of workers.

The criteria to be used in promoting workers.

Methods for handling employee grievances.

Dealing with absenteeism.

The role of the Industrial Court in termination of an employee’s contract.

Expiry of fixed-term contracts.


REVIEW (cont.)

Resignation and retirement.

Causes of redundancy and recommended procedures for retrenching workers.

Appropriate dismissal procedures to be used in cases of misconduct and poor performance.

Documents

HRM Chap. 9