Crisis Management

How to pay staff during a crisis. Crisis Management Recommendations

Crises in the economy are a regular and even natural phenomenon. But we have not yet had a crisis for “medical reasons”. Entrepreneurs are shocked: we don’t work, but we pay! How is this possible ?! Finding themselves in a situation where enterprises and companies are unable to work, but are obliged to pay employees, managers are looking for solutions to reduce the payroll, correctly draw up documents, and avoid legal risks.

Unpaid leave

Some employees can be sent on vacation at their own expense, but not a whole unit, but 20-30% of the total number of employees. From the employee, you must receive a vacation application and, in addition to it, an explanatory note with the reason for going on vacation. These may be family circumstances: the need to sit with a child, caring for a sick relative, leaving for treatment. 

It’s good if there are supporting documents: medical certificates, extracts, copies of the operating hours of kindergartens, schools. Important: the statements of employees should not be written “like a carbon copy” with the same dates and reasons, they should not feel pressure “from above”. After preparing the statements of employees, it is necessary to issue the corresponding orders. Pay attention to dates.

Risks: inspection of the GIT can be carried out on the basis of a complaint or an employee’s statement. If the labor inspector notices that all applications are completed after March 25, he can accuse the company of violating payment obligations.

Forced downtime

The company may declare a downtime due to the fault of the employer, if for technical or economic reasons all or part of the employees is temporarily unable to work. The necessary documents justifying the introduction of this model: an order for the company, a timesheet, a letter from suppliers of components, a memo from the head of the sales department, or the head of the production.

When switching to the forced downtime mode, it is necessary to thoroughly study the justification. Possible motivation options: falling sales figures over the last 2-3 months in relation to the plan, the slowdown in production rates, low utilization of production capacities, lack of imported components, delays in deliveries from contractors, equipment breakdown, insufficient inventory of finished products in the warehouse.

Crisis Management Recommendations

The order must indicate the reason for the downtime, a list of employees that the organization sent to downtime, and the start and end date of this mode. Also, the order must indicate the amount of payment for downtime. Usually, it is 2/3 of the employee’s average income.

The report card must indicate a code indicating the fault of the employer or reasons beyond the control of the employer or employee: RP or NP. The organization’s accounting department calculates employee salaries based on this information.

Risks: The inspection of the GIT can begin at the request or complaint of one or more employees. If the idle regime was introduced before 03/25/2020 and there is not a sufficient number of documents justifying the introduction of such a regime, the GIT may accuse the organization of violations of the Labor Code.

Part-time work

On its own initiative, the company can transfer employees to part-time work in at least two months. This can be justified by changes in the organization’s business processes, reforming the sales system, reconstruction of production, and switching to another technology.

The part-time transfer is a retention tool to avoid mass layoffs. Only in this case, the company’s management has the right to introduce part-time work for a period of not more than six months, with the obligatory notification of the employment service and trade unions.

Without prior notification to employees and other authorities, part-time work can only be introduced with the consent of employees. And this must be documented: to obtain the written consent of each employee to work on the new reduced/flexible schedule, the consent must be recorded to work for a certain number of working hours per day/week/month. After that, an order is drawn up on the transition of the organization to a part-time model, indicating the start and end dates of this mode, the payroll of employees, the number of working hours.

Risks: if one or more employees complain to the State Inspection Service that they worked as usual, but received less, an audit will begin. If the company does not have a complete set of handwritten applications for the voluntary transition to part-time mode, with personal signatures and dates, the company will face fines.

Remote work.

Currently, there are no rules and regulations in the TC according to which employees can work remotely. To formalize this type of employment, organizations can use the norms of the legislation on remote work. If the company wants to legally reduce the salary of an employee working remotely, it is necessary to sign an additional agreement on changing working conditions, the nature of work, and most importantly, changing and reducing job responsibilities. 

Also, a new job description must be drawn up, agreed, and signed from two sides: from the employer and from the employee. A supplementary agreement and job description should detail a significant reduction in the number of employee’s functional responsibilities, a reduction in his working time and fix new wage conditions. For example, the doctor can only conduct online consultations with patients, but cannot visit them at home; the sales manager conducts only telephone or skype negotiations but does not visit clients’ offices, their warehouses, or retail outlets.

Additional confirmation of exactly how the employee worked during the period of remote work, what tasks he performed and how his work schedule and functionality changed, maybe written assignments from the manager and reports from the employee himself.

Risks: if an employee complains to the GIT that only the physical workplace has changed, and the volume of work remains the same, but the salary has decreased, an audit will begin. If the checking inspector finds out that there are no documents confirming the opposite, the company will be issued a fine.