Legal Issues in Reduction of Workforce Essay

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Legal Issues in Reduction of Workforce Memorandum [pic] DATE: October 11, 2005 TO: The COO of Newco Construction Company FROM: Team B, OD Consultants. SUBJECT: Legal Issues in Reduction of workforce. We would like to thank the management for giving us the opportunity to study the organization and make recommendation about the legal issues in reduction of workforce. It is usually seen that the order of layoff is based on the criteria of "length of service." The employee who has the shortest length of service is laid off first. As one know layoffs are normally considered terminations based on lack of work or capital, rather than on poor employee performance. When all workers are laid-off at the same time, there is little need to discuss seniority and merit considerations. But when partial or gradual layoffs take place, difficult decisions have to be made. Certain companies may opt for a mix between seniority and merit considerations in laying off employees. In considering such a mix, greater weight is probably given to seniority considerations in layoff than in promotion decisions. Arguments that favor making layoffs in reverse order of seniority are as follows: (1) The longer the employees have worked for an organization, the more loyalty he or she has. (2) Senior employees who lose their jobs may have greater difficulty finding another job at the equivalent pay and benefit level than younger workers. (3) Layoffs by merit may lead to age discrimination law suits if older workers, minorities, women, and “protected class” are disproportionately terminated. The main argument favoring merit to determine layoff decisions is: (1) Management should retain the best people to do the job, especially when functioning with fewer employees. Employers sometimes offer special retirement

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