Human solution when restructuring
During the financial difficulty time, many enterprises are seeking restructuring to reduce labour cost, financially saving at this stage. However, when restructuring, enterprises need to ensure legal compliance. Otherwise, enterprises will suffer from serious consequences.
When restructuring labour, the majority of employer will consider, cut staff in department: The remaining employee will have to directions:
– Re-training, transferring employees to another department.
– Allow employee to resign, via:
o Terminate definite labour contract no renewal.
o Discontinue employee job (as lose job category)
Relevant legal documents
Law on Labour 2019
Decision 145/2020/NĐ-CP orient Law on Labour about working condition and relationship
Tasks need to be done when restructuring:
– First enterprises need to determine the scope of restructuring; to determine how many employees will be affected.
– After determining the department, employees need to be restructured. Enterprise need to have a restructuring plan:
+ How many employees will remain at their current position (not affected). What criteria’s to choose for these employees (ability, experience, type of current labour contract, age …)
+ The affected employees and solution for them:
++ People can be re-training and transferred to other departments.
++ People will retire (can terminate labour contracts earlier?)
++ People who will not sign Labour Contract when they are expired (need to determine everyone expiring time of Labour Contract)
++ People who will have to discontinue working.
– Next is the cost for restructuring:
+ Cost for retraining labour
+ Severance allowance (for each working year without participating in Unemployment benefit equals to ½ salary month, apply for people whose contracts will not be renewed, people who is negotiated to stop working)
+ Job-loss Allowance (for each working year without participating in Unemployment benefit equals to 1 month salary, but at least 2-month salary, apply for people who lose jobs)
+ Other cost to assist labour (should any)
+ Determine the sources (capital budget, borrow, sell assets…)
– Timeline for the above tasks (time of the training, when employee can retire, resign, time for payment)
– This above information needs to be recorded in writing, called Employee Utilisation Plan. This document needs to be negotiated with the Union, as well as the agency that will communicate with the employee before the enterprise officially signs the implementation decision. The official plan also needs to be notified for employees within the timeline of 15 days counting from the date of approval and need to be informed 30 days in advance to the Provincial level of People’s Committee whose enterprise subject to.
One thing needed for consideration is that, for a discontinued case, employees need to be informed at least 30 days in advance.
Companies need to keep in record all relevant documents with plan building procedure and implement the employee utilisation plan to prove that they have executed in compliance with the regulations (minutes, pictures related to the meeting, information collection procedure, information publication, relevant invoices that are payable to employee.)
During the negotiation time, there will be conflicts for disagreement between employee and employers. Both sides should calm, not to exaggerate the situation. Union, local labour organisations can be involved to harmonise the situation. If necessary, an enterprise can request a lawyer to communicate, public, explain restructuring regulation so that employees can sympathise and collaborate with the enterprise.
Should you have any questions, please don’t hesitate to contact An Luat Vietnam for consultation, support. Our law firm with experienced lawyers, always available to support enterprises in building suitable plans, minimise the risk of conflicting with employees.
In a necessary situation, An Luat Viet Nam accompanied the enterprise to participate in a lawsuit at the courtroom regarding the labour case, to protect lawful rights and benefits of the enterprise.