According to current labor regulations, enterprises can implement labour cuts in the following cases:
1. Change in structure and technology, which impacts jobs or leads to the risk of two or more employees losing their jobs. The enterprise is entitled to retrench the employees - in other words, to lay them off - provided it is still unable to find new positions for them after formulating and implementing employment plans.
Change in structure and technology includes change in organisational structure, change in products or product structure and change in processes, technology, machinery, manufacturing equipment and trading.
2. Due to economic reasons, many employees are at risk of losing their jobs and are forced to resign. Enterprises must develop and implement plans in accordance with the provisions of the law. “Economic reasons” are defined as a crisis or recession, implementation of State policy in restructuring the economy or implementation of international commitments.
Obligations of enterprises
Enterprises must prepare employment plans that include the following:
o List and number of the employees who will remain employed and those to be retrained in order to keep their jobs.
o List and number of employees to be retired.
o List and number of employees to be transferred to part-time work and of those to be dismissed.
o Calculation of financial resources to ensure implementation of the plan.
Preparation of the employment plan requires the participation of organisations representing local labor unions.
Employment plans, prepared in strict accordance with legal procedures, will play a very important role in resolving disputes between the employees and the employers. Courts will base their decisions on the employment plans to identify violations of labour regulations by enterprises implementing labour cuts.
Employees who have lost their jobs after one year’s consecutive work or longer, must be given severance pay.
Enterprises can only cut the number of employees by two or more after discussing it with the representatives of the local labor union and filing a written notice with provincial labour authorities 30 days prior to the termination.
The written notice to the provincial labour authority should include the following:
o Name and address of the enterprise and legal representatives of the enterprise;
o Total number of employees and number to be retrenched;
o Reasons and date of retrenchment;
o Expected expenses to pay for the severance allowance.
Within seven working days of the labor contract termination, both parties must pay the full amounts owed. Under special circumstances, the term may be extended for up to 30 days. Enterprises should implement the procedure of social insurance reductions and completing the social insurance books for the employees. — PLF LAW FIRM