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 Redundancy vs Retrenchment, Is it the same? And can co escape?

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TSredracer2004
post Jul 18 2025, 10:04 AM, updated 5 months ago

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OK, what's the main difference between redundancy and retrenchment?

And say if a company wants to close down a department for non-profit making, would there be any ways a company can escape paying the additional compensation to the laid off workers? Say a worker has been in 15 years in that dept got laid off.
WaCKy-Angel
post Jul 18 2025, 10:09 AM

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In the context of employment, redundancy refers to a situation where a job role is no longer needed by the employer, often due to factors like restructuring, automation, or business downturn. Retrenchment, on the other hand, is the process of terminating an employee's contract due to redundancy. Essentially, redundancy is the reason, and retrenchment is the action taken as a result.
Here's a more detailed breakdown:
Redundancy:
A state where a job role is eliminated or becomes unnecessary.
Can occur due to various reasons like business needs, technological advancements, or organizational changes.
The employee's role is no longer required by the employer.
Retrenchment:
The process of terminating an employee's employment contract due to redundancy.
It's the employer's action to remove the employee from the payroll.
Retrenchment is the practical step taken when a role is deemed redundant.
Example: A company might introduce new automation that eliminates the need for data entry clerks. This makes the data entry clerk roles redundant. The company would then retrench the data entry clerks, meaning they would terminate their employment contracts due to the redundancy of their positions.
Key Differences:
Redundancy is a situation; retrenchment is a process.
Redundancy is the reason for termination; retrenchment is the termination itself.
Redundancy can be a business decision, while retrenchment is the legal and practical implementation of that decision.
WaCKy-Angel
post Jul 18 2025, 10:09 AM

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https://www.linkedin.com/pulse/retrenchment...dippenaar-fdbuc
Zot
post Jul 18 2025, 10:15 AM

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https://jtksm.mohr.gov.my/en/frequently-ask...es-retrenchment

Also mentioned about redundancies.
COOLPINK
post Jul 18 2025, 10:24 AM

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Redundancy does not exempt employer from paying retrenchment benefits, it only can be used as a reason to retrench the employee.
matkewl
post Jul 18 2025, 10:45 AM

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QUOTE(WaCKy-Angel @ Jul 18 2025, 10:09 AM)
In the context of employment, redundancy refers to a situation where a job role is no longer needed by the employer, often due to factors like restructuring, automation, or business downturn. Retrenchment, on the other hand, is the process of terminating an employee's contract due to redundancy. Essentially, redundancy is the reason, and retrenchment is the action taken as a result.
Here's a more detailed breakdown:
Redundancy:
A state where a job role is eliminated or becomes unnecessary.
Can occur due to various reasons like business needs, technological advancements, or organizational changes.
The employee's role is no longer required by the employer.
Retrenchment:
The process of terminating an employee's employment contract due to redundancy.
It's the employer's action to remove the employee from the payroll.
Retrenchment is the practical step taken when a role is deemed redundant.
Example: A company might introduce new automation that eliminates the need for data entry clerks. This makes the data entry clerk roles redundant. The company would then retrench the data entry clerks, meaning they would terminate their employment contracts due to the redundancy of their positions.
Key Differences:
Redundancy is a situation; retrenchment is a process.
Redundancy is the reason for termination; retrenchment is the termination itself.
Redundancy can be a business decision, while retrenchment is the legal and practical implementation of that decision.
*
redundancy can be reduced by repurposing and reskilling where the resources are required within organization.
TSredracer2004
post Jul 18 2025, 02:55 PM

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QUOTE(COOLPINK @ Jul 18 2025, 10:24 AM)
Redundancy does not exempt employer from paying retrenchment benefits, it only can be used as a reason to retrench the employee.
*
I mean, I read through the act saying that employees can go and claim but I also heard if the employer gives enough notice (like if employees' notice period is 2 months) and they announced 2 months early, they can escape from paying any heavy damages. Is that true?
COOLPINK
post Jul 18 2025, 03:13 PM

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QUOTE(redracer2004 @ Jul 18 2025, 02:55 PM)
I mean, I read through the act saying that employees can go and claim but I also heard if the employer gives enough notice (like if employees' notice period is 2 months) and they announced 2 months early, they can escape from paying any heavy damages. Is that true?
*
And what would be the reason for giving the employee the termination notice?
Service no longer needed aka redundancy right?

If this is the case the employee can still claim retrenchment benefits.

 

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