Since the beginning of the epidemic, the problems faced by SMEs have been continuous. The government has quickly introduced a series of tax relief and other support policies which have reduced the financial pressure on enterprises to a certain extent. Despite this, the continuous spread of the virus has caused a serious reduction in business for many SMEs, and many are facing the problem when doing job transfers and salary reductions. In this regard, companies have to reduce the labor compensation of employees to ease corporate pressure.
Under a market economy, the adjustment of salary and employment adjustments are employers' right to manage. However, the pandemic is an extraordinary situation, with a long-lasting prevention and control period, most people agree that a reasonable pay cut is acceptable. Therefore, the evaluation, communication, and approval process of corporate decision are critical, and this procedure is essential. In this regard, this article will elaborate on compliance for companies who wish to cut salaries in order to survive during the pandemic.
Recently, a company in Nanjing signed a temporary collective contract to "reduce salary and protect jobs" with its employees, providing a case for everyone to learn from.
Affected by the epidemic, this hotel has no operating income, and has difficulty to maintain its operation. After a thorough analysis, the company decided to "reduce salary and protect jobs", and came up with a preliminary plan. At this time, if the company unilaterally decides to implement the plan, it would inevitably cause a conflict with the employees. Fortunately, the company communicated with its local trade union for help. The local trade union believed that the difficulties of the enterprise were a common problem at the moment and needed to be handled properly, and immediately sought help from the district instructor of the municipal level trade union on collective bargaining. After understanding the situation, the instructor confirmed that it is appropriate for the company has taken to "reduce salary and protect jobs", However, the instructor also pointed out that it is not appropriate to make unilateral decisions in the form of an administrative meeting. The instructor recommended that the company follow the "Guiding Opinions on Collective Consultation on Coping With the Impact of the Epidemic and Promoting Enterprise Development" issued by the provincial level trade union. The Guiding Opinions recommend to follow the collective negotiation process to establish a special wage collective contract, which not only achieves the goal but also makes the decision legal. The company accepted the union's opinions, communicated fully with employees through various forms, adopted some employees' suggestions, and adjusted the salary reduction classification so that every type of employee have different salary reduction standards and the minimum wage is not lower than the local standard. In the end, the "collective contract under the special circumstances of COVID-19" was signed with the employees in accordance with the procedures, and the temporary nature of the contract was clarified, along with a consensus on another negotiation after the pandemic ends.
It can be seen from the above case that this Nanjing company has several points worthy of appreciation. Firstly, the company had a preliminary plan and did not unilaterally decide to implement it. Instead, it communicated with the trade union, showing its sincerity. Secondly, the trade union affirmed the company's views after understanding the situation, and pointed out that the procedure was inappropriate and gave guidance. Thirdly, enterprises and labor unions work together to perform collective negotiation procedures and sign the collective contract. The entire decision-making process is reasonable, lawful and was accepted by both employer and employees, which is conducive to a smooth implementation. Therefore, this experience is worth learning for companies that need to perform salary cuts and layoffs.
During the epidemic, there are two options for companies to reduce wages: one is to reduce wages by individual negotiation for those involving a limited number of employees; the second is to reduce wages by collective democratic consultation for companies with a larger workforce.
3.1 Individual wage reduction
During the epidemic, the best way for enterprises to reduce wages and effectively avoid legal risks is to negotiate with its employees to change the salary terms in accordance with Article 35 of the Labor Contract Law. The basic process is as follows:
Communicate frankly. The enterprise truthfully explains the status quo of production and operation and encourages employees to share the difficulties with the enterprise.The company proposes that employees can work at home through flexible methods such as using the telephone and internet, or shorten working hours or work shifts rearrangement to reduce workload, and negotiate with employees regarding salary reduction.The company negotiates with its employees to suspend the payment of benefits, subsidies and other benefits, as well as performance wages, bonuses and other wages not included in the base wage.After the enterprise and the employees have negotiated on an equal footing and reached an agreement on the salary reduction, a labor contract modification agreement is made, which clearly stipulates the salary adjustment items, scope, salary structure, and implementation period, etc.After the employee confirm that they have fully understood and agreed to the labor contract modification clauses, he signs a labor contract modification agreement with the company.After the signing of the labor contract modification agreement, the company and the employee each hold one copy.Implement the labor contract modification agreement and reduce employee salaries as agreed.3.2 Collective salary reduction
Compared with the individual approach, companies adopting the collective salary reduction should pay special attention to the reasons, legitimacy and rationality of the salary reduction plan. The enterprise must ensure that the procedures and content of the collective democratic consultation are in compliance with the law and avoid causing collective labor dispute. The basic process is as follows:
Formulate a salary reduction plan, including the purpose, principles, scope, implementation period, method of salary reduction, etc.Select negotiation representatives. Both parties shall have the same number of negotiation representatives as to negotiate on equal footing. Each party shall have three to ten negotiation representatives, and each shall determine their chief negotiation representative. The company's representative shall be the legal representative or the main person in charge.Consultation representatives of the employee can be selected by:● Elected by the employee representative assembly (Workers Congress) of the unit. According to Article 5 of the Regulation on Democratic Management of Enterprises of Jiangsu Province, an enterprise with less than 100 employees may convene an all employees' assembly to exercise the functions and powers of the Workers' Congress listed in the regulations. An enterprise with more than 100 employees shall hold an employee representative assembly;● Elected and made public by the labor union of the unit, and the chief consultation representative shall be the main person in charge of the labor union;● If a labor union has not been established, the employee consultation representatives and the chief negotiating representative are democratically recommended by the local labor union or industrial association and elected with approval of more than half of the employees.In addition, it should be noted that if there are many female workers, there should be a female representative among the workers' negotiation representatives, and the head of the female workers' committee of the trade union should be a negotiation representative. Additionally, employers and workers can hire external professional counsel to participate in the negotiation as negotiation representatives of the party, but the number shall not exceed one third of the negotiation representative of the party.During the negotiation process, the negotiation representative shall perform his duties, truly reflect the wishes of its party, safeguard the legitimate rights and interests of its party, and accept inquiries and supervision by its party. The equal negotiation mainly takes the form of the chief negotiating representatives of both parties convening and presiding the negotiation meeting in turn. The record of the meeting is signed and confirmed by the representatives of both parties. The employer and the employees should provide the other party with the information and materials needed for the consultation five days before the meeting.When the draft of the collective contract that has reached a consensus through negotiation, it shall be submitted to the Workers' Congress (employee assembly) for discussion and approval. The draft can be approved with the consent of more than half of all employee representatives (employees); the employer can also submit the draft to the higher-level trade union for comments before passing it to the Worker's Congress.When the company negotiates with the employees to change the salary content of the labor contract, two situations may occur: Firstly, the employees agree to sign the collective contract, and the employer should submit the collective contract text and related materials to the local labor security administrative department within ten days of the signature. The labor security administrative department shall review the legality of the collective contract and deliver the "Review Opinion" to the employer within 15 days from the reception date of the text. If no written objection is raised, the collective contract shall take effect immediately. Secondly, for employees who refuse to sign the collective contract, in accordance with Article 40.3 of the Labor Contract Law, "…, the employer may dissolve the labor contract if (…) The objective situation, on which the conclusion of the labor contract is based, has changed considerably, the labor contract is unable to be performed and no agreement on changing the contents of the labor contract is reached after negotiations between the employer and the employee."Salary reductions for all employees should not be carried out through unilateral decision from the employer. When negotiating wage reduction with labor unions or employee representatives, enterprises should ensure a symmetry of information, adequate communication, repeated negotiations, and finally reach a plan through joint decision-making and consensus.
Summary
COVID-19 has a huge impact on business operations and employee income. In the process of salary and staff reductions, corporate decisions should be humane. Companies should fully listen to employees' opinions, ensure unobstructed communication channels, pay attention to calming employees' emotions, make emergency plans, avoid collective unrest, and maintain social stability. Companies should fully understand relevant laws and policies, pay attention to legal procedures, and protect themselves to ensure a long-term development. We must also pay attention to the legitimate rights and interests of employees and find a balance between the interests of both parties.
Every cloud has a silver lining, the challenge strengthens the confidence and courage of employees; motivating them to fully contribute to the development of the company.
「未經授權，不得轉載。如需轉載，請聯繫原作者或勞動法苑公眾號。」文稿：史明慧、NormandGauthier，蘇伊偉