Federation of Kenya Employers executive director Jacqueline Mugo. FILE PHOTO | NMG
Employers are increasingly opting for voluntary early retirement
schemes over layoffs to avoid potential costly litigations and protect
their corporate image in a slowing economy.
Voluntary
early retirement usually comes with a more attractive cash package,
benefits and dignity than dismissals, human resources experts say.
Federation
of Kenya Employers executive director Jacqueline Mugo says the
voluntary plans are less contentious and more cost-effective.
“Employers
prefer to handle separation as amicably as possible within the confines
of the law and organisational financial muscle,” Ms Mugo said. She said
the age of employee and years of service largely inform the size of
package a staff gets when exiting employment.
A number of Nairobi bourse listed firms including Britam
, National Bank of Kenya , KCB Group and Standard Group
are some of the firms that have announced voluntary retirement plans in recent years.
The
need to reduce staff and freeze in hiring has been brought about by the
sluggish economy due to poor weather and prolonged electioneering
period, which reduced last year’s forecast growth to a five- year low.
Last
year saw business output and new orders contract, forcing the firms to
shed jobs as political instability exerted a heavy toll on the economy,
said private sector activity report released in October by Stanbic Bank
.
Political uncertainty was compounded by a severe drought in the first quarter, hurting Kenya’s dominant agro sector.
The
Institute of Human Resource Management (IHRM) reckon that voluntary
plans are shifting the meaning of retirement with younger workers
exiting firms.
“When you are asking any employee who’s
willing to take early retirement and they are 24, 25, 26, 30 years old,
are we changing the definition of retirement?” Ms Wainaina posed.
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