Post by shukla on Oct 28, 2024 22:52:02 GMT -5
In the movie "Up in the Air," George Clooney's character flies business class across the country and seemingly easily tells employees bad news about layoffs at the company. Is it really that easy, and what preliminary preparation is carried out before this conversation according to Russian law - we will figure it out in the article.
When should a business consider laying off staff?
Laying off staff is one way to reduce a company's expenses or avoid bankruptcy in difficult economic conditions. Read about other options for reducing business costs in our blog . The results of a survey conducted by HeadHunter showed that in 2022, every fourth company (27% of respondents) carried out staff layoffs. Moreover, in 4% of cases, employers noted mass layoffs - that is, affecting more than a third of employees.
However, sometimes it makes sense to consider a layoff scenario without waiting for a crisis. Andriana Mihalcic , a lawyer specializing in labor law, notes that the need for layoffs is most often caused by a reduction in the volume of work or a transition to a new activity:
“Here are some examples of when a company may need to reduce its workforce:
•
The company's technological working conditions have changed. For website development service example, they automated a process, and this allowed them to reduce personnel costs.
•
The company has outsourced certain types of work and now does not need full-time employees to perform them.”
Roman Sarkisov , CEO of StepUp, is also sure that it is useful to think about layoffs not only when the situation in the company is already catastrophic.
"There are two cases when it is necessary to lay off people. The first is a planned layoff once a year. Periodically, even if it seems that everything is fine, it is necessary to review the personnel - some employees start to get lazy, and their efficiency falls. The second case when it is worth talking about dismissal is if there are already conflicts in the team that cannot be resolved peacefully. All these are reasons to sort out the situation, study the performance indicators and, if there is no other way out, clean up the personnel"
How to Prevent Downsizing
Laying off staff is a radical measure. It is always better to build a personnel policy in advance to avoid mass layoffs. Here is what you can do:
•
Be more careful when selecting employees. When hiring a person, evaluate whether you are sure that he or she will do the job well?
•
Regularly optimize personnel . This is not about layoffs, but about training, motivation, and redistribution of responsibilities between employees.
•
Automate some of the functions , and to do this, delegate some of the manual work to programs (this especially concerns accounting functions and financial accounting ).
•
Outsource some tasks . You can save a lot by outsourcing non-core functions to contractors - for example, accounting, personnel records, legal support (it is unlikely that micro and small businesses really need their own lawyer on staff).
What are the alternatives to layoffs?
There are disadvantages to layoffs - it is not an easy decision to make, and it is unlikely to improve the atmosphere in the team. In addition, it is not free - mandatory payments to employees are provided for during layoffs. Therefore, if the employer still hopes that the crisis in the company will end sooner or later, it makes sense to try to reduce labor costs in another way and consider the following options:
•
the most common is a reduction in the size of bonuses. Suitable for companies where the salary consists of a fixed salary and a monthly or quarterly bonus;
•
transition to part-time work;
•
registration of downtime, when employees are paid ⅔ of their salary;
•
registration of unpaid leaves.
Alena Talash , founder and managing partner of RosCo Group, highlights another one:
"As an unpopular measure, the company may resort to reducing the employee's salary. The employer may reduce the salary of the staff unilaterally (Article 74 of the Labor Code of the Russian Federation). But in this situation, there must be truly objective reasons for reducing the salary, related to a change in the organizational or technological conditions of work. If it comes to litigation, it is the employer who must prove to the court what caused these changes. And no arguments of the company related to increased motivation of the staff will help here (decision of the Isakogorsky District Court of Arkhangelsk dated 06.05.2014 No. 2-239/2014). But the introduction of new forms of labor organization may be the reason for a legal reduction in salary"
Most of these measures will cause discontent among the team, but will allow employees to keep their jobs.
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What mistakes can be made when laying off an employee
Layoffs are a much more complicated process than the usual voluntary dismissal. The main risk for the employer is that the employee may challenge their layoffs if they prove that not all the nuances of the procedure were observed. And this will result in additional expenses for the company.
Together with experts, we reviewed the main stages of the layoff procedure and identified typical employer mistakes.
Lay off an employee with immunity
It is impossible to form a list of employees to be laid off by name without checking them for so-called immunity.
Alena Talash:
"Before launching the layoff procedure, the company must draw up a list of "untouchable" employees. Regardless of their qualifications, the following cannot be laid off:
— pregnant women;
— single mothers and persons raising a child under 14 years of age;
— parents of a disabled child under 18 years of age;
— women with a child under three years of age.
There are frequent situations when, during the process of layoffs, the employee did not yet know about her pregnancy. But if it later turns out that she was pregnant on the date of dismissal, the court will reinstate her at work with all due payments for the period of forced rest"
If an employee is on vacation or sick leave on the day of dismissal, he cannot be laid off; first, it is necessary to wait until he returns to work.
Ignore the employee's preferential right to remain at work
According to the Labor Code, more productive and qualified workers have this right. Alena Talash on how to understand who is more productive:
"Many conflicts arise due to non-observance of the preferential right to keep an employee at work. How to determine and compare the qualifications of two employees? An employee with a higher specialized education has a higher qualification than an employee who does not have an education or has one in a different specialty (decision of the Voronezh District Court dated 12.03.2014 No. M-351/20142-685/14). Often, the employer himself does not take into account the provisions of the company's collective agreement, which sets out the conditions for observing the preferential right of employees"
And only if it is established that two workers have the same qualifications, can social criteria be included - then the only breadwinners in the family, families with at least two dependents, those who have contracted occupational diseases during work, and some other categories of employees will remain working.
When should a business consider laying off staff?
Laying off staff is one way to reduce a company's expenses or avoid bankruptcy in difficult economic conditions. Read about other options for reducing business costs in our blog . The results of a survey conducted by HeadHunter showed that in 2022, every fourth company (27% of respondents) carried out staff layoffs. Moreover, in 4% of cases, employers noted mass layoffs - that is, affecting more than a third of employees.
However, sometimes it makes sense to consider a layoff scenario without waiting for a crisis. Andriana Mihalcic , a lawyer specializing in labor law, notes that the need for layoffs is most often caused by a reduction in the volume of work or a transition to a new activity:
“Here are some examples of when a company may need to reduce its workforce:
•
The company's technological working conditions have changed. For website development service example, they automated a process, and this allowed them to reduce personnel costs.
•
The company has outsourced certain types of work and now does not need full-time employees to perform them.”
Roman Sarkisov , CEO of StepUp, is also sure that it is useful to think about layoffs not only when the situation in the company is already catastrophic.
"There are two cases when it is necessary to lay off people. The first is a planned layoff once a year. Periodically, even if it seems that everything is fine, it is necessary to review the personnel - some employees start to get lazy, and their efficiency falls. The second case when it is worth talking about dismissal is if there are already conflicts in the team that cannot be resolved peacefully. All these are reasons to sort out the situation, study the performance indicators and, if there is no other way out, clean up the personnel"
How to Prevent Downsizing
Laying off staff is a radical measure. It is always better to build a personnel policy in advance to avoid mass layoffs. Here is what you can do:
•
Be more careful when selecting employees. When hiring a person, evaluate whether you are sure that he or she will do the job well?
•
Regularly optimize personnel . This is not about layoffs, but about training, motivation, and redistribution of responsibilities between employees.
•
Automate some of the functions , and to do this, delegate some of the manual work to programs (this especially concerns accounting functions and financial accounting ).
•
Outsource some tasks . You can save a lot by outsourcing non-core functions to contractors - for example, accounting, personnel records, legal support (it is unlikely that micro and small businesses really need their own lawyer on staff).
What are the alternatives to layoffs?
There are disadvantages to layoffs - it is not an easy decision to make, and it is unlikely to improve the atmosphere in the team. In addition, it is not free - mandatory payments to employees are provided for during layoffs. Therefore, if the employer still hopes that the crisis in the company will end sooner or later, it makes sense to try to reduce labor costs in another way and consider the following options:
•
the most common is a reduction in the size of bonuses. Suitable for companies where the salary consists of a fixed salary and a monthly or quarterly bonus;
•
transition to part-time work;
•
registration of downtime, when employees are paid ⅔ of their salary;
•
registration of unpaid leaves.
Alena Talash , founder and managing partner of RosCo Group, highlights another one:
"As an unpopular measure, the company may resort to reducing the employee's salary. The employer may reduce the salary of the staff unilaterally (Article 74 of the Labor Code of the Russian Federation). But in this situation, there must be truly objective reasons for reducing the salary, related to a change in the organizational or technological conditions of work. If it comes to litigation, it is the employer who must prove to the court what caused these changes. And no arguments of the company related to increased motivation of the staff will help here (decision of the Isakogorsky District Court of Arkhangelsk dated 06.05.2014 No. 2-239/2014). But the introduction of new forms of labor organization may be the reason for a legal reduction in salary"
Most of these measures will cause discontent among the team, but will allow employees to keep their jobs.
Free tools for entrepreneurs
Download free financial report templates, discount calculators, step-by-step instructions and guidelines from PlanFact experts and earn more.
Get
Downloaded
>15,000 times
What mistakes can be made when laying off an employee
Layoffs are a much more complicated process than the usual voluntary dismissal. The main risk for the employer is that the employee may challenge their layoffs if they prove that not all the nuances of the procedure were observed. And this will result in additional expenses for the company.
Together with experts, we reviewed the main stages of the layoff procedure and identified typical employer mistakes.
Lay off an employee with immunity
It is impossible to form a list of employees to be laid off by name without checking them for so-called immunity.
Alena Talash:
"Before launching the layoff procedure, the company must draw up a list of "untouchable" employees. Regardless of their qualifications, the following cannot be laid off:
— pregnant women;
— single mothers and persons raising a child under 14 years of age;
— parents of a disabled child under 18 years of age;
— women with a child under three years of age.
There are frequent situations when, during the process of layoffs, the employee did not yet know about her pregnancy. But if it later turns out that she was pregnant on the date of dismissal, the court will reinstate her at work with all due payments for the period of forced rest"
If an employee is on vacation or sick leave on the day of dismissal, he cannot be laid off; first, it is necessary to wait until he returns to work.
Ignore the employee's preferential right to remain at work
According to the Labor Code, more productive and qualified workers have this right. Alena Talash on how to understand who is more productive:
"Many conflicts arise due to non-observance of the preferential right to keep an employee at work. How to determine and compare the qualifications of two employees? An employee with a higher specialized education has a higher qualification than an employee who does not have an education or has one in a different specialty (decision of the Voronezh District Court dated 12.03.2014 No. M-351/20142-685/14). Often, the employer himself does not take into account the provisions of the company's collective agreement, which sets out the conditions for observing the preferential right of employees"
And only if it is established that two workers have the same qualifications, can social criteria be included - then the only breadwinners in the family, families with at least two dependents, those who have contracted occupational diseases during work, and some other categories of employees will remain working.