Firms opt for less contentious early retirement plans
3 months ago, 7 Mar 16:27
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 #ticker:BRIT, National Bank of Kenya #ticker:NBK, KCB Group #ticker:KCB and Standard Group #ticker:SGL 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 #ticker:SCBK. 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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