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Solutions for human resource policy amidst the epidemic

Solutions for human resource policy amidst the epidemic

Friday 13, 03 2020
This plan will help businesses maintain labor relations with employees but can release the obligation to pay wages, benefits, insurance, and personal income tax

The Covid-19 epidemic is currently severely affecting the world economy, with most governments having to publish corporate tax, interest, and other technical assistance packages.

In Vietnam, many businesses have a serious shortage of raw materials affecting production. A number of businesses operating in the service sector such as transportation, tourism, and catering industry have experienced a sharp decline in revenue compared to the same period last year.

Enterprises are in a difficult situation because revenue is not available but they still have to pay factory rent, business premises, interest on bank loans, personnel costs, etc. Since we cannot predict when the epidemic situation will end, many businesses have come up with cost reduction options, in which personnel costs are causing the most headache for businesses, because if they fire their workers, they might face legal risks and a shortage of personnel after the disease has passed, as well as affecting the reputation of employers in the labor market.

At this point, business owners need to find an integral solution to both survive in difficult times and retain resources.

Difficulties sharing negotiation

Sitting down to discuss frankly is the solution of choice rather than unilateral behavior from one side. In the context of the epidemic, business activities are seriously affected, and workers also understand the difficult situation of business owners.

The options below are arranged in increasing order of impact on employees for business owners to choose from. Plan for agreement on termination of labor contract: On a voluntary basis, the company may negotiate with employees to provide financial support in its capacity for the employee to agree to end the employment relationship and seek new opportunities This option is suitable in case the business owner considers to suspend or dissolve the business, or to go bankrupt because he cannot revive the enterprise or needs to reduce part of its human resources.

Article 36.3 of the 2012 Labor Code allows parties to freely agree to terminate a labor contract with or without a financial contribution. Plan to temporarily suspend the performance of labor contracts for a term: In this case, the company negotiates with the employee to pay a sum or not to pay if the worker agrees.

This plan will help businesses maintain labor relations with employees but can release the obligation to pay wages, benefits, insurance, and personal income tax. It also helps businesses do not have to re-recruit workers while helping workers have a future job opportunity at the time of commencement of labor contracts. The legal basis for this option is Article 32 of the 2012 Labor Code.

Solutions for human resource policy amidst the epidemic

Plan for agreement on payment of severance pay: According to Article 98.3 of the 2012 Labor Code, a company is entitled to negotiate with workers to pay severance pay. Accordingly, the severance pay may be agreed but not lower than the regional minimum wage in 2020 according to Decree 90/2019 / ND-CP (Region I: VND 4,420,000 / month; Region II: VND 3,920,000 VND / month; Region III: VND 3,430,000 / month; Region IV: VND 3,070,000 / month).

Plan for agreement on the reduction of working hours and reduced wages: This plan balances the interests of workers and the company according to the evolution of the disease and the production and business capacity of the company.

To implement this option, the company can base on Article 35 of the 2012 Labor Code to request amendments and supplements to a labor contract or sign an appendix of the contract to change working hours and wages over a period of time appropriate to the situation of the disease outbreak and the business plan of the company.

​The right to reduce personnel to survive

According to Article 38.1. (C) Labor Code 2012, an employer is entitled to unilaterally terminate a labor contract “due to a natural disaster, fire or other force majeure reason in accordance with the law, given that employers have sought all remedies but are still forced to narrow production and reduce workplaces”.

This regulation is guided in Article 12.2 of Decree 05/2015 / ND-CP; accordingly, the phrase "other force majeure reason" falls into one of the following cases: (i) a situation caused by enemy sabotage or epidemic; (ii) relocating or narrowing production and business locations at the request of competent authorities.

With the Ministry of Health issuing Decision No. 219 / QD-BYT on January 29, 2020, adding acute respiratory infections caused by new strains of coronavirus (called Covid-19) to the list of Group A infectious diseases (particularly dangerous infectious diseases that are capable of very rapid transmission, high mortality or unknown causative agents) and the Prime Minister issuing the Decision No. 173 / QD-TTg dated 1-2-2020 about the announcement of an acute respiratory infection caused by a new strain of coronavirus, companies have a legal basis to determine that the case of Covid-19 is a case of force majeure under the provisions of the current Labor Code (which is the necessary conditions).

According to the above regulations, the company also needs to prove that it has sought all remedies but still forced to reduce production and reduce workplaces. This is a subjective and internal factor of the business, so the enterprise needs to explain to the state agency or court in case the employee disagrees with the unilateral decision of the company.

This condition will be able to convince the agency to make a judgment if there is evidence such as a decline in revenue, or the company's cash resources being insufficient to pay wages if it continues to employ employees.

There are also external factors such as the company's inability to buy input materials, the shrinking output market, the implementation of measures to restrict the business development area under administrative decisions of the state, such as not entering the epidemic area, etc. When meeting the above-mentioned conditions, the enterprise has the full legal basis to exercise the right to reduce personnel to reduce the cost of human resources in difficult times caused by epidemics.

Entrepreneurship and business ethics It is undeniable that the time of epidemic disease is the time when hundreds of thousands of businesses are worried about falling revenues, and many financial burdens are besetting entrepreneurs.

If the business owner can find a solution to overcome difficulties at this time to keep the labor force, then everybody can ensure income, indirectly stabilizing the production force. If businesses find a good solution so that they do not have to cut human resources, they will help build employers' image in the labor market.

At the same time, keeping the human resources at this time will help build a better labor relationship and do not create the cost of recruiting and training new people when the epidemic is over. One of the ways to create value in the time of many departments and workers being idle is to perform professional training, soft skills, improve work processes, focus on new product and technology research, experiment online working or working from home, etc.

In the digital economy, the strength and most valuable asset of the business is talent, skilled human resources for teamwork. This is the time when entrepreneurship and business ethics need to be promoted and challenged most intensely. This is also the time to eliminate businesses and entrepreneurs who are not qualified to hang on to the game.

​>> Useful tips for workers to prevent Covid-19 at workplace



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