What is Retrenchment, Voluntary Separation Scheme (VSS) and Mutual Separation Scheme (MSS)

Aaron Mathews Advocates & SolicitorsAaron Mathews Advocates & Solicitors

What is Retrenchment, Voluntary Separation Scheme (VSS) and Mutual Separation Scheme (MSS)

adminmathews November 12, 2020 Public Interest Disputes 0

In this article, we will briefly discuss the ways in which an employee can be laid off, namely, retrenchment, voluntary separation scheme (VSS), and mutual separation scheme (mss).

Retrenchment

Retrenchment occurs when a company discharges surplus labour or staff . It can be done in six situations (as shown in section 12(3) of the Employment Act) , namely when:

  1. The employer ceases/ intend to cease his business which the employed was employed;
  2. The employer ceases/ intend to cease his business at the place which the employee is situated;
  3. The need for the work done by the employee ceases/ expected to cease or diminished;
  4. The need for the work done at the place which the employee is employed ceases/ expected to cease or diminished;
  5. The employee refuses to other places of employment unless his contract requires him to accept the transfer; or
  6. There is a change in the ownership of business.

Voluntary Separation Scheme

A voluntary separation scheme (‘VSS’) is a scheme/ offer where an employer invites and offers the employee to resign voluntarily without the implications of a retrenchment while still receiving fair compensation from it.

Mutual Separation Scheme

A mutual separation scheme (‘MSS’) is a scheme/ offer where both the employer and employee comes to an agreement to mutually override and terminate the employee’s current contract, whereby both parties come together to negotiate the benefits and compensation for accepting the scheme.

What is the differences between retrenchment, VSS and MSS

Retrenchment

VSS

MSS

Voluntariness

Consideration on who to dismiss

Justification

Can claim for unfair dismissal?

What are the remedies for unfair dismissal

The employee can file a complaint with the Director-General of Industrial Relation within 60 days of their dismissal .

The department will then attempt to settle the matter between the employer and employee . If it fails, the department will then notify the Minister in charge of human resources and the Minister may refer the matter to the industrial court . If the court favours the employee’s case, the court can either order that the employee be reinstated or be compensated, based on the factors laid down in the act . Either party can still appeal to the high court if they are not satisfied with the outcome.


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