Workforce Reduction - Legal Issues

Running Head: WORKFORCE REDUCTION

Legal Issues Surrounding Workforce Reduction

University of Phoenix

MBA 560

February 4, 2008

Abstract

Conducting business in the 21st century is filled with hazards. One unhappy reality of the current economic conditions in the United States is that many organizations have had to cut costs in a variety of areas, including personnel. Workforce reductions are extremely personal and emotionally charged events. Because of the personal nature of workforce reductions, such reductions often lead to legal claims, especially when former associates believe they have been treated unfairly or inequitably.

Workforce reductions are generally considered by a business seeking to save money in their operations. Many companies, having made workforce reductions, fail to realize the savings initially projected. Many businesses do not experience the anticipated benefits of personnel reductions due to the hidden costs of the reductions. “Severance packages, including severance pay, accrued vacation pay, and outplacement services play a major role in increasing the gap between actual and expected savings.” (University of Phoenix, 2002). The business manager that must develop action steps resulting in workforce reductions needs to be very conscious of the laws regarding both employee hiring and termination to reduce the exposure of the company to potential litigation and the minimization of costs. Following are five examples of personnel that have been selected for possible termination due to business conditions. The salient facts surrounding the employment of each candidate are examined and legal issues considered before making a recommendation to terminate.

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