7 Downsizing Options to Consider That Will Help Your Business Survive these Tough Times

Mukonki Mukonkela

Mukonki Mukonkela

Host of the Ndalama Insights Business Show.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

7 Downsizing Options to Consider That Will Help Your Business Survive these Tough Times

I discuss 7 Downsizing Options to Consider That Will Help Your Business Survive these Tough Times. Running a business during times of uncertainty is never an easy thing to do, there a lot of decisions that have to be made at the right time in the right way too, for instance one may need to cut down on costs and this may include going through a downsize or having a employees laid off. So what are the options one can look at as they seek to downsize and how can they do so without conflicting with the contractual relationships they have with employees?
7 Downsizing Options to Consider That Will Help Your Business Survive these Tough Times
Chipangano Malowa

Whose Today’s Guest?

 

Chipangano Malowa is a seasoned Human Resource practitioner for more than 12 years specifically focusing on consultancy in relation to HR and Management. He is the Director/Consultant Synergia Human Resource Consult LTD.

https://www.linkedin.com/in/chipangano-malowa-llb-dip-hrm-63a45331/

7 Downsizing Options to Consider That Will Help Your Business Survive these Tough Times

 

Measures Employers Are Looking at

The Covid-19 period is a very challenging time. For most employers, this period has lead them to look for various avenues to ensure that their businesses survive this period. Most will resort to layoff and terminations of contracts but it is important to note that the employer employee relationship is contractual and because of this it is governed by rules and regulations such as:

  • The Act of parliament known as the Employment act.
  • General contractual rules which operate within the employer employee agreement.

With this in mind, employers cannot unilaterally decide what happens to a contract. Whatever is to be decided concerning a contract agreement should be in line with what is provided for by the law and what the contract provides for.

  • Unpaid Leave

This is a measure that can be implemented when an employee does not have leave days accorded to them in the contract  but they need to go on leave, in most cases it is used when an employee needs to further studies or for one that is about to deliver soon.

From the name one can tell what this measure means, the employee goes on leave without getting paid for that duration, they remain members of that organization despite not receiving pay for the duration that they are on leave. 

In times of uncertainty, employees can negotiate with employees to go on unpaid leave until the period is over or things stabilize. It is an offense to keep employee without the expectation of raising money to pay the salaries of the employee.

This is in accordance to the Employment code Act section 79, it explains that such an action is an offense and is punishable by 2 years imprisonment.

  • Forced Leave

To carry out this option there is need for the circumstance of this leave to be in line with the statutory requirements stated by the Minister of Labor. The circumstance needs to be one that clearly shows that one’s business is not capable of paying employees and it won’t be able to continue its operations on account of the crisis on hand.

An employer will need to write to the minister explaining his/her circumstance stating why they want to take the employees of forced leave, once approved they can execute this measure.

  • Salary Deductions and Reductions

Salaries deductions cannot be done at will of the employer, the only deductions that can be done should be in the confines of the law. Deductions cannot be done if the employee is working properly, the law is against that.

Salary reductions on the other hand are possible. An employer can have negotiations with employees to reduce on their salaries. We must remember that the employer employee relationship is guided for by the law hence as an employer you cannot unilaterally make the call do reduce the salaries of your employees.

The moment an employer does that the employee is considered redundant and the necessary payment for redundancy is activated in accordance to section 55 of the Employment Code Act. Hence to agree on a salary redaction, employers will have to sit down with employee representatives or the employees themselves.

They will need to agree that the business is going through a turbulent period and that there is need to reduce on employee salaries for a certain period. Employees should consent to this and only then can the reductions take place.

  • Redundancy

This happens when a business seizes business or there is a shrinkage inn a business, shrinkage of revenues which may lead an employer a point of failure to maintain the salaries of the employees as a result of the shrinkage being experienced. In such an event a business owner can declare his/her employees redundant, give them their redundancy packages and let them go.

  • Termination of Employment

This area should be looked at critically, a termination of contract should be dealt with in the confines of the law and in line with redundancy.

Is Working from Home Required For by the Law?

There is no particular law that stops employees from working from home, the place of work though is as prescribed by the employer and remote working can be agreed on by the employer and the employee.

Managing to Pay Employees

In order to achieve this, there is need to have proper strategies in place to this effect. If you have an accountant let them be the one to chair meetings regarding finances in your business as they are the ones that are capable to tell you whether you have the money or not and in the event that you have employees and there is no money the obvious course of action will be to pay them from your reserves.

  • Be Innovative

In order to keep funds flowing and manage to pay salaries, business owners will need o be innovative about their approach, especially in a time like we are in where they are several restrictions in place. One should begin to think and implement other ways of generating income.

  • Access Relief Funds

The Zambian government has provided a relief fund for businesses in distress during this Covid-19 period, as a business owner one should be knowledgeable about the right channels to use to access these funds.

  • Reduce Your Staff

Consider reducing your staff, a few members of staff is easy to sustain and maintain the business even during times of uncertainty.

Role of the Employees in Such a Time

Employees should be considerate and look at the long term effects and sustainability of their companies. If they want their companies to survive and for them to have a job at the end of the day, they should accept these salary reductions when they are discussed knowing that these reductions are only for a certain period and that everything will get back to normal.

Key Insights:

  • The Employer, Employee relationship is contractual relationship and all actions that concern the contract should be done in the confines of the law.
  • Salary deductions cannot be done by an employer unless under the confines fines of the law but salary reductions can be agreed upon in the event of a clear prevailing situation and consent from the employee.
  • It is an offense punishable by law for an employer to keep employees with no expectation of raising money to pay them.

“The Employer and Employee relationship is a contractual relationship”                      

We would love to hear from you. You can participate in this conversation on social media and in our comments section below. Your input is valuable to other.  

Explore these Resources

In this episode we mentioned the following resources: Employment Act, Ministry of Labor and Social Securities & Bank of Zambia.

Follow our Podcast

Mukonki MUkonkela

Mukonki MUkonkela

Mukonki was inspired to start the Ndalama Insights business show in 2016 to share knowledge with business owners who are just starting or growing their business and are struggling to get answers to challenges they may be facing in their business.She believes with the right insights and skills you can overcame any obstacle on your way. And so the Ndalama insights business show was inspired from this belief.

Leave a Comment

Join our network

Stay updated with all the latest episodes, upcoming events & much more.
Facebook
LinkedIn
YouTube