Manisan Sdn Bhd is a company that manufactures chocolates and sugar confectionery products. The company currently employs 90 employees. It has been in operation for the last 12 years but lately the company is not doing so well financially. As part of the company's effort to restructure and cut cost, the company intends to retrench some of its employees. Last week the company send out notice of retrenchment to 20 of its current employees on ground of financial difficulties and redundancy. Among those involved are Anthony, Jamal, Hock Tai and Nora. Anthony, Jamal and Nora are production operators in the company while Hock Tai is a marketing executive. All of them are quite upset with the decision as they have been serving the company loyally for the many years.

They questioned the company's decision to retrench them because just last week they hear that the company has hired one new technician for the Production Department and a manager for the R&D Department. To add insult to injury, they found out that the company has decided to maintain the service of 5 Indonesian workers because the cost of paying their salaries is cheaper compared to paying the locals.

These aggrieved employees have now come and see you, an HR consultant to seek your advice on the following matters:

1.Do companies have the right to retrench employee when they face financial difficulties or when they do a restructuring? What should be the correct procedure to be followed by the company? Explain.