Mass Layoff: CEO Fires 900 Workers in One Zoom Call

Retrenchment is inevitable for businesses. But, is it possible to conduct the same mass layoffs in Malaysia? Read more to find out.

Case summary

Vishal Garg, CEO of a mortgage firm Better.com brutally fired 900 employees on a three-minute Zoom call.

“If you’re on this call, you are part of the unlucky group that is being laid off. Your employment here is terminated, effective immediately.”
Vishal Garg

The CEO also claimed that this was not his first time conducting a mass layoff firing in his career. One fired employee who was shocked by the news can be heard in the video, “This is not real. Oh my god, I can’t believe this. This is not real. Oh no, this can’t be happening.”

Footage of the call has gone viral on social media, causing outrage from people all over the world. Garg’s actions are said to be cruel, unethical and self-centred, especially when he fired his employees just before the Christmas holidays kicked off.

The CEO stated that the mass layoff is needed to avert financial crisis, productivity and performance. However, it is found that Garg wrote in a blog post accusing his employees of “stealing” from their coworkers and customers by working 2 hours a day and being “unproductive”.

He then admitted that his blog post could have been “expressed differently”. On top of that, Better.com recently has received a $750 million influx from investors, making the financial crisis excuse questionable.

As an employer in Malaysia, you have the right to conduct retrenchment. But, you cannot simply terminate your employees as you wish. You need valid reasons to do so. Retrenchment is a process of dismissing employees due to:

  • Closing down business
  • Financial difficulties
  • Rescale or reorganise your workforce to improve efficiency
  • Terminate products/services that are unprofitable
  • Extra employees performing similar tasks
  • Business merge that requires less employee

When national lockdown hit Malaysia in 2020, large companies like Media Prima had to undergo retrenchment as part of its business transformation plan. However, retrenchment should be your final card and you are advised to follow proper retrenchment procedures.

Retrenchment methods

Retrenchment can be performed in two ways:

Mandatory Severance Scheme (MSS)

Employers decide who to retrench and negotiate for a notice period and compensation

Voluntary Separation Scheme (VSS)

Employees have a choice to leave voluntarily with a termination letter and lay-off benefits

Notice period

For employees who fall under the Employment Act, the notice period depends on their employment duration:

  • Less than 2 years: At least 1 month
  • 2-5 years: At least 6 weeks
  • 5 years and above: At least 8 weeks

Compensation

Retrenchment affects your employees as much as it does to your business. Therefore, you should let them go with proper financial support. This is where compensation plays its role. For employees who fall under the EA and has worked for at least 1 year, they are entitled to receive retrenchment benefits:

  • Less than 2 years: 10 days of salary for every year of service
  • 2-5 years: 15 days of salary for every year of service
  • 5 years and above: 20 days of salary for every year of service

For employees who do not fall within the EA, their retrenchment benefit lies within your power. You get to decide how you’re going to ease their financial burden at the moment. If termination benefits are included in their employment contracts, do follow them wisely. If not, here are some benefits you may want to offer:

  • 1 to 3 months of salary
  • 25% of their salary for 3 months after retrenchment
  • Pension funds for workers above 60 years old
  • Assist terminated workers in job search
  • Write a recommendation letter

The take-home message

According to the Ministry of Human Resource, employers must take the following measures when conducting retrenchment:

  • The reason behind the retrenchment must be genuine
  • Employers have tried other alternatives to avoid retrenchment
  • Employers should retrench foreign workers first and obey to LIFO (Last In First Out) principle

In this Better.com case, it’s not the retrenchment that sparks anger among society but his execution of it. Garg’s actions have caused him to receive severe backlash on social media and news platforms.

People have decided to boycott his business after the video went viral.“Let’s cancel him out and ensure he bankrupts,” one person commented on Facebook. His mistreatment in the video has also caused existing workers to think about their exit plan.

Not to mention how future talents will refuse to work under Better.com knowing how the CEO treated his staff. Hence, it’s crucial to execute your mass layoffs responsibly and ethically.

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