Employers’ handling of terminations of those who have not committed a disciplinary offence can seriously affect the morale of the remaining employees. Whether a person’s skills no longer match the job requirements, whether they are not performing badly but in other ways are unacceptable or whether the company needs to reduce its staff overall for any reason, it is usually emotional for all concerned. Handled well it will increase the respect employees have for their management: handled badly and morale will take a long time to recover.

1. Employer should make every effort to ensure the viability of the business and thus provide security of employment to employees who are performing well. Good people management demands stringent manpower planning, effective hiring programmes, extremely careful scrutiny of the need to make new hires at any time and recruitment freezes or manpower reductions when times are bad.
   
2. Where manpower reductions are critical to the continued prosperity of the business, employers should consider selective voluntary programmes with suitable financial incentives before deciding on compulsory redundancies. Voluntary redundancies may avoid further redundancies but in the interests of retaining good employees, the employer should also retain the right to refuse an employee the opportunity of voluntary redundancy.
   
3. In choosing those for compulsory redundancy, management should first consider future business needs and employees’ performance. Thereafter, other circumstance being equal, factors such as age and length of service may also become relevant. A good employer will communicate the criteria to employees. The selection and termination processes should be sensitively handled as confidentially as possible to avoid unnecessary unhappiness and speculation.
   
4. Severance packages should be at least the minimum the law requires and maybe more depending on the financial health of the company. Where an individual is redundant or being dismissed for reasons other than cause, employers may find it beneficial to their image with employees to be more generous than the legal minimum. For example, employers should not offset employers’ contributions to the MPF or other retirement schemes against long service payments. Responsible employers also provide employees assistance through the Labour Department, counselling and helping employees find other jobs.