Document: Retrenchment Notice to Employee
Purpose: This is a letter sent to employees who will undergo the retrenchment exercise
RETRENCHMENT NOTICE
The current economic turmoil caused by the Covid 19 crisis has put our Company under tremendous pressure from a business perspective. During the Movement Control Order (MCO) in effect since 18 March, the Company has suffered huge financial losses, and based on current sales figures and future sales forecast, it is indicated that we will be having a huge downturn in terms of profitability in the next two years.
These events were unforeseen one of the key measures undertaken to overcome this crisis situation is to reduce costs by way of reducing redundant manpower through a retrenchment exercise.
Your position as Technician is surplus to the Company’s requirement and as such the Company has no choice but to retrench you. The effective date of the retrenchment exercise is today, 12 June 2020.
You shall be paid the following benefits in this Retrenchment Exercise:
a) One (1) month’s salary for every year of service.
b) Balance annual leave to be converted to cash.
c) One month’s salary in lieu of notice period.
Take note that details of the above payments are in the attachment i.e. Annex A
Please take note that the cheque for your payments will only be released once you have surrendered all Company issued items to your HOD. If you have any queries, please do contact the HR Dept.
We would like to thank you for all your past services to the Company and take this opportunity to wish you all the very best in your future career.
Annex A
RETRENCHMENT BENEFIT DETAILS
Please take note that in relation to the retrenchment exercise, the following payments will be made to you by the Company:
- Retrenchment Benefit i.e. 1 month salary x each year of service (3,000/ x 10 years) = RM 30,000/
2. Salary in lieu of notice, 1 month’s salary = RM 3,000/
3. Leave Encashment i.e. 10 days leave balance = RM 900/
Grand Total RM 33,900/
Note 1 - For serial 1, the formula will depend on the generosity of the employer
Note 2 - All figures above are arbitrary
Note 3 – All text in bold is not part of the letter
All the above payment will be subject to the usual statutory deductions such as EPF, SOCSO and Income Tax. Deductions will also be made from the above if it is found that you owe money to the Company.
The above total amount will be credited into your bank account as soon as the necessary deductions have been made. You are required to return all Company property currently in your possession to the HR Dept. You will also be required to sign the enclosed receipt and discharge letter.
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RECEIPT AND DISCHARGE
I, _____________________________, (MyKad No.)__________________________do hereby acknowledge and agree that the full amount owed to me arising from my redundancy is RM 33,900/. I do understand that this will however be subject to statutory deductions such as EPF, SOCSO and Income Tax and any other money owed by me to the Company.
I further declare that I have no further claim against the Company and accept the aforesaid entitlement as full and complete settlement of all sums due to me. I hereby discharge the Company from all liabilities in connection with my past employment.
Name of Employee:
Signature: ___________________________ Date: _________________________
Witness Name ________________________ MyKad: ________________________
Note.
a. In an ideal situation, it would be good to give a cheque to the employee on the effective date of retrenchment with all the statutory deductions already deducted. However this is always difficult as there could be disagreement on the payment due and this will have an effect on the statutory deductions. Statutory deductions also take time.
b. In cases where there is disagreement in regards payment, then this must be resolved soonest.
c. As much as the Company would like to give at least one month notice, it must take note that retrenched employees can vent their anger by acts of sabotage during their last month in the Company. Hence most companies prefer to pay off these employees in lieu of notice period.
d. This document is available in the book as per the photo