Where an employee loses their job due to any circumstances such as the closure of the business, downsizing of output or a staff is being downsized due to conflicting job roles, this creates a situation which is known as redundancy. This usually happens when employers need to reduce their workforce.
When a person is dismissed from their service, it is not known as redundancy.
The onset of Redundancy may be voluntary or forced. However, in voluntary redundancy, the employer provides incentives, such as extra money in the severance package or extended garden leave.
Garden leave means the worker does not need to come to the workplace during the notice period, but will still receive his or her wages.
Companies, government departments, and other employers at time offer voluntary retirements ( a form of redundancy) to prevent them from having to choose who to dismiss.
What is redundancy pay?
For every employee rendered redundant, most global labor laws require the employer to pay some form of redundant pay which acts as financial support until the former employee is able to get a new job. In India, the government offers VRS.
It is usually dependent on the age and experience of a person.
Why is it in the news?
Deutsche Bank had recently laid off 18,000 officials in a bid to strengthen basic bottom lines.
Even in India, the Indian government is looking to strengthen the ailing PSUs by removing the various extra workforce which is now mostly idle or underutilized.