Term Limits for Employees

A new casino opening soon in Atlantic City, N.J. has announced a controversial way of hiring employees. The policy will provide a limited amount of job security by providing new hires with a specific terms of employment ranging from four to six years. The company thinks it will set the stage for a highly competitive work environment that will attract the most highly professional people.” But many in the HR world think otherwise and have defined a few of the issues:

  1. It is a legal nightmare: There are several legal traps the company could face, according to Susan Stahlfeld, a partner and leader of the employment law and labor relations team at Miller Nash. There could be an argument that the ‘term limits’ are mutual (i.e. the employees can’t be fired during the term limits, no matter what their performance or conduct is like.); there is a risk of discrimination and retaliation lawsuits; uncertainty over job security could lead to unionizing; as well as issues regarding seniority and benefits when an employee is terminated and then rehired.
  2. Practical Employee Relations Issues: Lack of job security is one of the biggest reasons why an individual would turn down a job. It removes any incentive people might have to view the employer-employee relationship in a positive light. Not only that, but it hurts the customer experience, according to Jon Picoult, founder and principal of Watermark Consulting. “Long-tenured employees know your company’s products and services like the back of their hand and it often shows in the quality of the experience they deliver to your patrons. By practically encouraging turnover with this policy, the company may keep its front-line ranks fresh, but it will spoil the service they deliver.”
  3. It would lead to a lack of training: This type of management could lead to a means of eliminating those whom they may ‘feel’ aren’t doing as well as they could be without having to communicate it to them. “If there was more emphasis on addressing performance issues and working with their employees to correct them, there would be no need for term limits,” says Stahlfeld.

Clearly there is some risk involved in choosing a system like this. Read the whole story with more input at HRE Online: http://www.hreonline.com/HRE/story.jsp?storyId=533345773