Because of the Covid-19 epidemic impacts in Vietnam, many corporations find it hard to maintain a balance of finance, facilities, …. Therefore, although it still wants to keep its employees, the company still needs to cut as much as possible to maintain operations. At this time, the company was forced to cut staff.
One of the simplest methods to cut staff in Vietnam is Termination of the contract according to the agreement of the two parties. Such method is advantageous since there is no complexity and little to no conflict; after all, this can only come through after the agreements from the two parties. Due to that very exact reason, the termination shall end in a quick, peaceful way, saving both parties time and effort.
Yet, not all employee is willing to agree with the termination from employer, which leads to conflicts. Thus, it consumes precious time of both parties. Is there any other method?
Solution 1: Contract termination due to changes in structure and technology
Company can cut personnel if the company has changes in the company’s operating structure such as the company will change the production line with machines. According to the provisions of law, the change of structure and technology includes the following cases:
- Change in organizational structure (for example, new establishment, merger or dissolution of one or more parts of the enterprise, …)
- Labor reorganization (for example, rearranging labor to increase efficiency, productivity, …)
- Changing products, product structure (converting items, finished products, …)
- Changing production and business processes, technologies, machines and equipment associated with the employer’s production and business lines.
As for advantages, it is not difficult for enterprises to prove that they are cutting personnel due to changes in structure and technology. Even if businesses only need to prove that they restructure their businesses because they have not yet operated effectively without incurring losses, they can easily apply this method.
Furthermore, when the employer can prove that he or she has let the employee leave for this reason, the employer does not need to compensate the employee but only has to pay the unemployment allowance to the employee and in fact this amount is not much (only 1 month salary per year of work and the minimum allowance is 2 months salary).
However, in case the employer wants to cut a lot of employees for this reason, the employer has to carry out many procedures and it takes a lot of time.
- Employers must develop a labour use plan in accordance with the law.
- Employers must communicate the grassroots-level employees’ representative organization
- Notify 30 days in advance to the provincial-level People’s Committee and the employees.
In fact, in many cases, the employer did not notify the competent state agency in advance and the court asked the enterprise to take back the employee.
Besides, before terminating the contract with the employee, the employer is responsible for training this employee to maximize the possibility of re-using this employee into a new job in the enterprise.
Solution 2: Termination of the case contract according to the case of the organization and the enterprise
Cases of enterprise reorganization are merger, consolidation, division or separation of enterprises. When cases of business reorganization occur, there will be a lot of workers who have to leave work. Especially if a person has many different subsidiaries, this method will be an effective choice to reduce staff in the company.
When it is not possible to use a lot of redundant workers, the business owner only needs to develop and implement the labor plan, after developing the labor plan but still cannot solve the job problems, the employer can reduce the number of employees without any cumbersome procedures as in the case of structural and technological changes.
Furthermore, employers are not responsible for retraining employees to find new jobs in the enterprise. The law does not stipulate that the employer is obliged to notify the employee in advance.
However, carrying out additional procedures (Ex: merger procedure) related to the reorganization of the company often takes a lot of time.
Besides, when reorganizing enterprises, enterprises must meet the conditions prescribed by law. For example, in the case of corporate mergers, mergers of companies in which the merged company has a market share of more than 50% is prohibited.
These are some solutions that employers can apply to cut personnel as a way to remedy difficulties during the epidemic.