Termination of Employees for Economic Essay

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(Berkowitz; Muller-Bonanni; American Bar Association; Section of International Law, 2007) Employers must ensure that payments and other benefits that are due are given to the dismissed employees. In countries like France, these payments and benefits may include severance indemnities which differ according to the positions and seniority of the employee, and any paid vacation that is due to the employee but has not been availed of. Some payments may also have to be made in cases of "contractual non-competition clauses." The total payment amount depends upon the individual job contract and the relevant collective agreement, the minimum being set by appropriate legislation. (American Bar Association; Committee on Negotiated Acquisitions, 2006)

The severance indemnity paid to the dismissed employee is calculated on the basis of a certain percentage of the employee's monthly income multiplied by the number of years worked by the employee in that company. In some countries like France, it is necessary to inform and consult with the works council and administrative authorities before dismissing an employee for economic reasons. Finally, the employer must provide the dismissed employee rehiring priority in any suitable post for which a vacancy may arise for a year after being terminated.

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This is usually done only on request. (American Bar Association; Committee on Negotiated Acquisitions, 2006) In the United States, however, there is no specific legislation which deals with termination of employees. The U.S. has still maintained its "employment at-will concept" which permits the termination of employees without the necessity of providing a reason to the employees. The META or Model Employment Termination Act does protect the job security of employees to an extent but does not specify details about termination due to economic reasons. (Lee; Muller, 2007)

The recent spate of layoffs due to the economic downturn has made things difficult for both employees and employers. The at-will employment has made compensation inadequate for employees and at the same time, the economic downturn has made it difficult for employers to retain a large workforce. However, discriminatory termination procedures may bring on legal cases for the employers. Therefore, employers must ensure that they are fair to their employees as far as possible and comply with the provisions stated in the separation agreements as well as any special requirements applicable during workforce reduction. ("Reducing Staff in a Down Economy: Handling Terminations and Using Separation Agreements," 2008).....

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