Main reasons which lead for separation of employees from employers are: (i) Lay Off (ii) Resignation (iii) Dismissal/Discharge (iv) Retrenchment (v) Voluntary Retirement Scheme (VRS)!

Separations are painful to both the parties and should therefore be administered carefully.

There are several reasons which lead to separation of employees from their employers.


They are discussed below:

(i) Lay Off:

It is a temporary separation of the employee from the employer at the instance of the latter without any prejudice to the former. According to Sec 2 (kkk) of the Industrial Disputes Act 1947, lay off is “the failure, refusal or inability of an employer to give employment to a worker whose name is present on the rolls but who has not been retrenched.

Reasons for lay off can be—(a) Poor work load (b) Force-measure conditions (c) Financial constraints (d) Rejections or Quality failures (e) Power or Raw material problems or (f) Pollution control Restrictions etc.

(ii) Resignation:

It is the termination of employment at the instance of the employee. An employee resigns when he/she secures a better job elsewhere or due to personal, health or other reasons. Since the employee himself is responsible for resignation, administering it is easy.

(iii) Dismissal/Discharge:


It is a drastic step where the termination of employment is initiated by the employer after giving a careful thought.

The reasons for dismissal can be:

a. Excessive absenteeism

b. Serious misconduct


c. False statement of qualification at the time of employment.

d. Theft of company’s property.

This is the last resort after all the efforts in salvaging the employee have failed.

(iv) Retrenchment:

It is the termination of the service of employees because of the replacement of labour by machines or the closure of a department due to continuing lack of demand for the product manufactured in that particular department in the organisation. Here, employees are entitled for compensation—equivalent to 15 days’ average pay for every completed year of continuous service (ID Act 1947).

(v) Voluntary Retirement Scheme (VRS):


Also known as ‘golden handshakes Plan’. This is a novel scheme under which both the public sector and private sector have been sending home surplus labour for good.

Handsome compensations are paid to those workers who opt to leave. However the experience of organisation from VRS has not been pleasant. Organisations have lost competent people while incompetent employees have not opted for this scheme.