HUMAN RESOURCES RESTRUCTURING

Business consulting

Human Resources is one of the valuable assets and represents the unique identity of each enterprise. It is a key element contributing to the success or failure of each enterprise. When Human Resource Management system is turbulent and needs to be consolidated to have human resources to help enterprises develop sustainably, enterprises should conduct restructuring. Human Resources Restructuring is not only about reducing, adding, maneuvering, assigning human resources but also about the changing of human resources' quality and Human Resource Management methods.

Phong & Partners Law Firm will introduce some Human Resources Restructuring issues to answer your concerns in this matter.

1. What is Human Resources Restructuring?

Human Resources is an important factor in the enterprises' operation, Human Resources restructuring is the process of enterprises reviewing and completing functions and tasks, adjusting decentralization, establishing a system of the job description and job standards; thereby evaluating and rearranging human resources, adjusting new Human Resource Management Policies appropriately, serving as a basis for innovating Human Resource Management, allowing enterprises to improve the quality of their management systems and the quality of human resources to achieve goals in the ever-changing conditions and circumstances of enterprises.

2. Establishing restructuring plans:

After identifying the problems that enterprises are facing as well as evaluating the capacity and job suitability of employees accurately, enterprises will carry out restructuring plans. The plan may include:

Reducing the inappropriate human resources
Adding important positions
Reassigning enterprises' human resources

3. Implementation:

Step 1: The owner/ Members’ Council/ General Meeting of Shareholders of the enterprise will issue a decision to approve the restructuring.

The owner / Members’ Council / General Meeting of Shareholders of the enterprise will issue a decision to approve the restructuring. The decision's content of the owner/ Members’ Council/ General Meeting of Shareholders of the enterprise must represent all details and mention the restructuring's legal foundation clearly, approve the restructuring and terminate the labor contract with redundant employees.

Step 2: The Chairman of the Board of Management/Chairman of the Members' Council/Chairman of the enterprise (depending on the organizational structure as prescribed in the Charter of the enterprise) must convene a meeting and issue a decision or resolution on restructuring

Based on the owner's approval of the restructuring, the Chairman of the Board of Management/Chairman of the Members' Council/Chairman of the enterprise shall implement a meeting and ratify a resolution or decision so as to approve and appoint the restructuring to the enterprise's legal representative.

Step 3: The enterprise's legal representative issues a decision on the implementation of the restructuring

The General Manager or Manager (depending on the organizational structure as prescribed on the Charter of the enterprise) takes responsibility for organizing the implementation of resolution and decision of the Chairman of the Board of Management/ Chairman of Member's Council/ Chairman of the enterprise). Accordingly, based on the resolution and decision issued at Step 2, the General Manager/Manager registered in the latest Registration Certificate will issue a decision on the implementation of restructuring.

Step 4: Enterprise make a list of employees who will be retrained to continue using and conducting training (if any).

If there is any vacancy in the enterprise for any level (including management level), the enterprise must retrain all redundant employees for those positions.

The list of employees who are retrained to continue using must be signed by the Legal Representative of the enterprise and issued at the same time with the training program. Because the list is an integral part of the enterprise's Labor Utilization plan, the list must also be signed by all members of the Trade Union Executive Committee of the enterprise. In the case that the enterprise doesn't have any vacancies or intentions to retrain the redundant employees to continue using, the enterprise is not required to organize training.

Step 5: Enterprise makes a Labor Utilization plan with the participation of the Grassroots Trade Union Executive Committee

Based on the training evaluation results and after assigning the appropriate labors to the vacant positions (if any) in Step 4, the enterprise will synthesize the remaining surplus laborers and make a different list of Labor Utilization plans.

Step 6: Enterprises discuss with the Grassroots Trade Union Executive Committee about the restructuring before informing the Local Labor-management Agency

In case two or more redundant employees refuse to make an agreement with the labor contract termination and the enterprise continues to implement the restructuring, the enterprise must discuss with the Grassroots Trade Union Executive Committee through a meeting between the parties on the restructuring and the labor contract termination with the redundant employees.

Step 7: Enterprises notify the Local Labor-management Agency of the restructuring

In case the number of redundant employees who lose their jobs due to labor reorganization is 02 people or more, the enterprise must exchange opinions with the Employee Representative Organization at the place where the Representative Organization is located and has their employees as the organization's members. The enterprise must send a 30- day notice in advance of the restructuring to the Local Labor-management Agency where the enterprise is headquartered before issuing the decision to terminate the labor contract with the redundant employees.

Enterprises are allowed to take further steps after 30 days from the date receiving the notice by the Local Labor Authorities, provided that these authorities do not have any objections or doubts regarding the restructuring.

Step 8: Enterprise inform employees of restructuring before terminating the labor contract

The Legal Representative of the enterprise officially announces the restructuring in a meeting with the participation of redundant employees and sends a written notice of the labor contract termination to the redundant employees at the same time.

Step 9: Enterprise issues a decision on labor contract termination to the redundant employees

The legal representative of the enterprise would issue a decision on labor contract termination with each redundant employee. Enterprises must be responsible for the decision of dismissing redundant employees even if the local labor-management agency does not disapprove of the restructuring in Step 7.

Step 10: Enterprises complete the payment and implement other obligations to redundant labors

In case of terminating the labor contract with the redundant employees, the enterprise must fulfill the payment obligations and other obligations towards the redundant employees within 30 days from the date of labor contract termination including unpaid wages up to the date of labor contract termination, the total amount equivalent to unused annual leave (if any); unemployment allowance; and other payables (such as year-end bonuses)

4. Common contents in Human Resources restructuring

a. Basic human resource restructuring:

Building a Human Resource Planning;
Handling redundant labors;
Recreating work motivation for employees;
Surveying and evaluating the current human resource structure model (reasonable, unreasonable);
Building a job description system;
Building a recruitment process and human resource management of enterprises;
Building a training process, improving professional qualifications and working skills of officials and employees in enterprises;
Determining the responsibilities and powers of each department, job description for each individual;
Developing and supplementing the overall management system (rules, regulations, statutes, procedures, forms);
Implementing the cyclical plans for staff.

b. Intensive human resource restructuring:

In addition to tasks of basic enterprise restructuring, there are other issues such as: