1. Retrenchment
This is dismissal of employees who are regarded as surplus to requirements. The company or department itself is not being closed, but rather a select group of employees are retrenched. Not all employees are retrenched.
Companies in carrying out retrenchment are required to abide the legal provisions of the Employment Act 1955 and the general rule of LIFO (Last In First Out).
2. VSS
Voluntary Separation Scheme. This arises when a company that is not officially retrenching but nonetheless wishes to get rid of employees.
In this scenario, the company will make an announcement that is addressed to the employees along the lines of:-
1) Profit hasn’t been good
2) We have been making losses
3) The company is not dismissing anyone, but will welcome application from employees to be considered for VSS
It is like an invitation by the company for application by the employees, to be considered for VSS.
Usually the company will also talk about the terms and conditions of the VSS (compensation terms, qualifications, requirements etc). Due to the nature of VSS, it is usually more difficult for employees who have left the company on VSS to challenge this in the Malaysian courts.
3. MSS
Mutual Separation Scheme. This arises when both parties agree to terminate the employment relationship. The keyword is “mutual”, i.e. both parties agree to a settlement that is a win-win scenario for them.
4. Section 20 of Industrial Relations Act 1967
All cases of dismissals of employees, the employer has the burden of proving just cause or excuse in dismissing the employee(s).
If it is a retrenchment and the purported reason is eg, losses for the preceding xx number of years, then the employer must be able to show the losses by way of the profit and loss account, etc.
A VSS is more difficult for the employee to argue unless it can be shown that the employee was coerced into it, or there existed the usual elements that may render the VSS void or voidable.
Edited by: 浪子
Bibliography
MyIndustrial3Employment. (2017). Difference Between Retrenchment, VSS & MSS. Retrieved from https://myindustrial3employment.wordpress.com/2017/05/22/difference-between-retrenchment-vss-mss/
Difference Between Retrenchment, VSS & MSS
Reviewed by 浪子
on
July 22, 2018
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Reviewed by 浪子
on
July 22, 2018
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