Page 119 - Cambridge IGCSE Business Studies

8: Recruitment, selection and training of workers

Reasons for
terminating
employment

Resignation by Retirement of Redundancy Dismissal
the worker the worker

Figure 8.6 Reasons for terminating employment

Resignation
Resignation means that a worker may decide to leave their job voluntarily; for

example they leave to go and work for another employer. There may be several
reasons for this such as promotion, better pay, shorter working hours or the new
workplace is closer to home so easier to get to.

KEY TERMS Retirement
In some countries, workers must leave their job when they reach retirement age.
Resignation: termination of
Other countries do not have a compulsory retirement age. In these countries
employment by the worker,
perhaps because they have found workers can work to any age.
a job with a diff erent employer.
Redundancy
Retirement: termination of
employment due to the worker Sometimes a business closes down because the owners no longer want to run the

reaching an age beyond which business, or it has failed because it is no longer profitable. Sometimes businesses
they do not need to work. decide to relocate far away from their current location, perhaps even relocating to
Redundancy: termination of another country. Manufacturing businesses may introduce new technology into the
employment by the employer workplace which can perform the work of several workers. In all of these situations a 117
because the job is no longer
worker’s employment can be terminated because their job is redundant. Redundancy
needed.
describes a situation where the job that a worker does is no longer needed.
Dismissal: termination by the
employer because the worker has Dismissal
broken company rules or is not
performing work to the required An employer may dismiss a worker from their job for one of two reasons:
standard.
1 Incompetence – the worker does not perform their task to the required standard.

2 Poor conduct – the worker breaks the rules; for example they are often late for work, or
put themselves and other workers in danger by ignoring health and safety procedures.
Redundancy and dismissal are both decisions that are made by the employer. Th ey
both result in a worker no longer having a job. However, with redundancy the job
loss is not the worker’s fault, but if they are dismissed then it is their fault.

Reasons for downsizing the workforce
A business may need to reduce the size of its workforce for any of the following reasons:

■ There may be a fall in demand for the product the worker produces. If demand does
not increase, the business may need to reduce the size of its workforce because it is
costly to employ workers who have nothing to do for any length of time.
■ The business may introduce new technology which automates tasks that workers
currently do. The business may no longer need these workers.
Location decisions: see ■ The business may relocate some distance from its current site, perhaps to another
Chapter 18, page 235. country. It may not be possible for workers to move or travel to the new location,
and they will have to leave their jobs.

In all these cases, the business will make employees redundant.