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Last in, first out

in your interest


In the employment sector, the terms “last in, first out” (LIFO) and “first in, first out” (FIFO) are known to exist, with LIFO the more commonly known and practised of the two. This principle has been adopted around the world in the retrenchment of workers by employers. It is used both in the private and public sector; but its application is more often evident within the private sector.

It is viewed as a way of employers demonstrating some level of commitment to long-standing employees, when they embark on a retrenchment or layoff programme. If this is so, it begs the question why it is so, and whether it is the fairest method to be engaged in the circumstances.

It can hardly be argued that it is a reward to a long-standing employee, given that the employer could subsequently move to further reduce the staff complement by abolishing an existing position, thus making the employee redundant. Where the LIFO principle is applied, the employer would tend to advance the point of view that the process allows for the retention of the more experienced workers, who supposedly know the culture of the organization and have a lasting institutional memory.

In the case of retrenchment or redundancy, the employer is required to meet all outstanding obligations to the employee. This starts with that of severance payment, as is applicable. There is the standing argument that employers resort to the principle of LIFO as a means of reducing the expenditure to be incurred, as it relates to severance payment and other entitlements of the employee.

The benefit to the employer in this exercise rests with the fact that those at the bottom of the salary scale are the ones who are more likely to be affected. In this way, it would appear that the emphasis is not on the retention of the more productive, efficient and quality workers, but on ensuring that the enterprise remains financially stable
to support its operations.

Accepting that this is the intention, there is the counter that the premise on which it is founded is false. It is quite possible that in exercising this process, employers may be accused of throwing out the baby with the bath water. There is every likelihood that the employer could be dispensing with the services of an employee, despite the individual’s good performance record. It makes more sense if in this process, consideration is given to performance, knowledge, skill, expertise and suitability.

While there is room for experience to be included in the mix, wouldn’t it be best to place the emphasis on the employee’s ability to get the job done? Is it fair to retain an employee with a poor work ethic, bad work attitude, questionable deportment and low productivity at the expense of another on the premise that the employee is long-standing and has experience?

The soundness of this reasoning is to be questioned, as it would appear that the practice is counterproductive to the growth and development
of an enterprise.
(Dennis De Peiza, labour management consultant to Regional Management Services Inc. Visit website HYPERLINK Send your comments to

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