배움과 공유의 시간

 Reduced staff

With the rapidly changing business environment, companies need a flexible employment system day by day, but the labor contract law imposed many legal restrictions on job cuts. Article 41 of the Labor Contract Act stipulated the process of job cuts for economic reasons, but the process, such as reporting it to the Labor Bureau, is almost difficult to make actual use of them. In the end, the government will have no choice but to phase out layoffs in a soft manner, such as the lifting of negotiations and voluntary resignation.

1. Legal process of layoff

Reasons for job cuts
The reason for restructuring is due to financial difficulties, and if there are more than 20 job cuts or less than 10 percent of all employees, they can be reduced (Article 41 of the Labor Contract Act). In this case, the number of employees can be reduced up to 30 days before an open meeting or an entire workman, after listening to the opinions of the people or workmen, and after reporting and registering the personnel reduction plan with the

Bureau of Labor.
1 When a company is regenerated in accordance with the provisions of the Corporate Bankruptcy Act;
2 In case of significant difficulties in production management
3 In case labor is still needed after changes in work contract due to the company's production conversion, significant innovation in management method, and adjustment;

There are three types of legal layoffs, but in practice the commonly used cuts are "important for production management." However, this should not be judged by the companies themselves, but by the standards of the local labor bureau. For example, the city of Beijing interprets "significant difficulties" as follows:
1 Faced with bankruptcy, the court declared that it had entered a corporate regeneration period.
2 An annual increase in the deficit for the third consecutive year will result in a debt overrun, 80 per cent of employees waiting and six consecutive months of inability to pay the minimum cost of living (Article 3 of the Corporate Economic Savings Regulations).

the process of legal curtailment
The following procedure is carried out for personnel reduction (regulation on the cause of corporate economic reduction in Beijing).
1 Up to 30 days ago, all public or employees are informed of the situation and are provided with data on the production management situation.
2 Submit a reduction plan, such as staff reduction and time to implement the reduction
3 Adjustments are made after listening to the opinions of the people or all employees regarding the reduction plan.
4 Report the opinions of employees, public institutions or all employees to the Ministry of Labor and listen to the opinions of the relevant Labor Office.
5 The medical institution formally promulgate the job reduction plan, carries out procedures for terminating work contracts with the staff who have been reduced, pays economic compensation, and issues a certificate of termination of work contracts.

the number of people who are not allowed to cut jobs.
The following numbers belong to the number of people banned from job cuts (Beijing's corporate and economic job cuts regulations).
1 In case labor capacity is lost or partially lost due to disease or non-operation injury;
2 Patient is within the medical period prescribed by disease or non-surgical injury
3 Women's 3rd term (pregnancy, childbirth, breastfeeding)
For male workers aged 50 and over and for female workers aged 45 and over,
If both are in the same company, only one can be cut.

a treasury report
Corporate job cuts should be reported to the Bureau of Labor. The Personnel and Social Security Administration, issued by the Shanghai Bureau of Labor in January 2009, sets out how to report and submit documents on corporate job cuts. According to the report, the ministry is required to submit a report on the job cuts to the labor ministry "in accordance with the opinion of its staff members or public hearings on job cuts."
Unless documents are submitted, the Labor Department's corporate job-cut report will not be repaired. In other words, Article 41 of the Labor Contract Act states that it is difficult for an entity to implement a reduction without the cooperation of employees, so only if it requires a large number of workers at a large factory at once.

2. Soft Workforce Reduction Scheme

The choice as a foreign-invested company facing management difficulties is a difficult way to make, as it takes a month to follow the court-martial notice 2 public notice and consultation 3 labor bureau approval and takes considerable time to complete the whole process. Under these circumstances, most companies are not "judicial job cuts" that cut large numbers of people in a single day in accordance with court procedures, but rather some sort of "hope."
It is taking a soft cut in the form of "retirement," i.e. "negotiation cancellation," not the "court cut" process.

Even with a soft job cut plan, if the plan is officially announced and job cuts are carried out on a daily basis, it is highly likely to worsen the atmosphere at work and trigger collective action by employees. Therefore, it is necessary to reduce manpower as much as possible in various ways over a long period of time and to divide and implement them in stages.
The problem is that employees with two or less years of service often resign voluntarily when their working conditions, such as wages, are reduced. Senior employees with more than three years of service tend to stay away from their jobs even if they are suspended because of high expectations for economic compensation.

Step-by-step soft job cuts (example)

1 Reducing wage income leads to retirement
ᄋ Reduce or suspend overtime hours to induce cuts in overtime income
ᄋ Freezing wage increases and suspending bonus payments
ᄋ Suspend the payment of unpaid allowances, subsidies, etc. in labor contracts and cut various welfare expenses
ᄋ Lower overall wage level through agreement with employees
- Wages promised in labor contracts should not be forcibly reduced, explain the management situation of the company, and suggest a plan to reduce wages from senior management positions to a certain proportion of wages by rank, and, if an agreement is reached, a new wage amount should be signed (excluding the low wage official).
ᄋ Deduction of wages by the number of days required to submit a petition
- Departmental rotation required a certain number of vacation days per month.
ᄋ Adjusting the number of working days in agreement with employees
- Convert to an agreement with employees, e.g. working three days a week, taking four days off, or two weeks a month in rotation (requires written consent).

2 De-negotiation in the form of voluntary retirement
Recruitment of voluntary retirees after setting a standard for payment of compensation, such as N+1.

3 Promoting the removal of workers' non-fault cause (a method with high legal risks)
a Promoting dismissal for "significant change in the target situation"
Under Article 40(3) of the Labor Contract Act, if a department or production line is closed entirely due to a management disturbance, the employees of the company shall negotiate job adjustment and wage reduction, and if not concluded, the labor contract shall be lifted on N+1 compensation basis.
b Under Article 40(2) of the Labor Contracts Act, the government shall negotiate with employees with poor performance or achievements, and lift the labor contract under the terms of N+1 compensation due to non-compliance of duty.

4 Operation suspension is carried out
In the event that the workers are unable to arrange normal work load, they can suspend their operations (front or part) and take standby measures. Because the work stoppage is related to the desperate interests of the workers, the explanation and opinion-taking process is necessary (no consent is required) for the employees in advance, and the permission of the Bureau of Labor is not necessary, but it is necessary to report it to the Bureau of Labor before implementation. Meanwhile, there are no separate legal regulations for the period of suspension.