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Thu, April 25, 2024

NAVIGATING LAYOFFS DURING FINANCIAL DOWNTURN

B360
B360 January 30, 2024, 1:55 pm
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Understanding the importance of striking a balance between fiscal responsibility and ethical treatment of workforce.

The economic slowdown and resultant financial crises in Nepal has cast a long shadow over businesses and their workforces alike. Many companies being unable to pay salaries on time or at all have resorted to laying off their staff. This is not an easy decision to make and comes after huge human and business ethics consideration. Business owners are caught between a delicate balance of economic prudence and ethical considerations. 

Understanding the dynamics involved, exploring avenues to mitigate the impact, and safeguarding the interests of both employers and employees is crucial for sustainable recovery. When financial crises hit, businesses in Nepal often find themselves compelled to streamline operations, leading to the difficult decision of layoffs. It is a complex process involving various stages and considerations. 

Employers face the daunting task of assessing the most critical areas for cost-cutting while preserving the core competencies necessary for the company’s survival. Communication becomes paramount to ensure transparency and alleviate the uncertainty surrounding job security. From the perspective of staff members, the announcement of layoffs during a financial crisis can evoke a range of emotions, from anxiety to frustration and anger. Understanding the rationale behind such decisions and having open channels of communication can assist in easing the transition. 

Navigating the legal processes associated with layoffs in Nepal requires a thorough understanding of labour laws. Employers must adhere to legal guidelines regarding notice periods, severance packages and other entitlements owed to employees. Compliance with these regulations not only ensures a fair and legal process but also helps maintain the reputation of the company. Saving a company from bankruptcy during a financial crisis necessitates strategic financial management. 

Exploring avenues such as debt restructuring, seeking financial assistance, or renegotiating contracts with suppliers and creditors can provide a lifeline for businesses teetering on the edge. Engaging with financial experts and seeking professional advice becomes imperative to craft a viable survival strategy. In situations where a company is unable to distribute salaries to its employees, proactive communication becomes critical. Transparency about the financial challenges the company is facing, along with a commitment to resolving the issue, can foster a sense of shared responsibility among employees. Employers can explore alternatives such as deferred salary payments, part-time work arrangements, or temporary reductions in working hours to navigate through the crisis. 

In conclusion, handling layoffs during a financial crisis in Nepal requires a multifaceted approach that considers the perspectives of all stakeholders involved. Open communication, adherence to legal processes, and strategic financial management are indispensable elements to save a company from bankruptcy and manage the delicate balance between economic exigencies and human considerations. 

In this edition of Business 360, we spoke to leading experts of different organisations to gain their perspective on approaches, measures, legal adherence and proactive strategies to address this issue.

How can companies in Nepal adopt a strategic approach to handle layoffs during a financial crisis, ensuring the best outcome for organisation and its employees?

Ashish Agrawal: In approaching the challenging scenario of handling layoffs during a financial crisis, it’s essential to acknowledge that, personally, I am not a proponent of layoffs. However, I understand that, in certain circumstances, it might become the last resort for management, particularly during severe financial crises. In such instances, adopting a strategic approach is crucial to ensure the best possible outcome for organisation and its employees. 

The initial measures taken during turbulent times involve a multi-faceted strategy. Firstly, there is a focus on reducing top management salaries. It demonstrates a commitment from leadership to share the burden and sets an example of solidarity during challenging periods. It also aligns with a cost minimisation strategy, another vital component of the approach. This strategy encompasses a thorough examination of all operational costs, emphasising efficiency and minimising unnecessary expenses.

Transparent communication becomes a pivotal aspect of the strategic approach. Speaking to the entire team regarding potential delay in salaries or partial salary payments provides clarity and manages expectations. Honest and open communication is crucial in maintaining trust and keeping the workforce informed about the challenges the organisation is facing. Another component involves briefing the team about impending layoffs in certain departments and providing exact reasons for those decisions. This level of transparency is challenging but necessary to build understanding among employees. Clearly articulating the rationale behind the layoffs helps in fostering an environment where employees perceive the decisions as essential for the organisation’s survival.

Furthermore, considering voluntary separation programmes and temporary furloughs is a compassionate and proactive measure. Offering employees, the option to voluntarily separate or take temporary furloughs allows them some degree of control in a difficult situation. It also aligns with a more humane approach to downsizing, recognising the individual circumstances of each employee. In conclusion, adopting a strategic approach to handle layoffs during a financial crisis involves a combination of measures, including top management salary reductions, cost minimisation strategies, transparent communication about salary issues and impending layoffs, and exploring options like voluntary separation programmes and temporary furloughs. While recognising the sensitivity of these decisions, the aim is to navigate the crisis with transparency, fairness, and a focus on the well-being of the organisation and its employees.

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Handling layoffs during a financial crisis is challenging for both employers and employees, and it necessitates a strategic and thoughtful process to navigate the complexities. One of the foremost measures that businesses should prioritise is transparent communication. It is imperative to clearly articulate why the company is undergoing layoffs and the anticipated impact on the organisation.

Ashish Agrawal
Director, Taurus Pharma and Sympho Tech

Dharmadhir Acharya: In addressing the challenge of managing layoffs during a financial crisis in Nepal, companies can navigate the legal landscape using provisions outlined in the Labour Act 2017 (2074). This legislation furnishes employers with two key avenues: Section 145, which governs permanent retrenchment/layoff, and Section 15, which allows for temporary reserve.

Reserve (temporary Lay-off) under Section 15: Pursuant to Section 15 of the Labour Act, employers are empowered to place employees on reserve status for a maximum of 15 days without requiring consultation. The grounds for such reserves include financial difficulty or obstacles in employee movement, such as restrictions for operation due to situation beyond control. However, if the reserve period requires extending beyond 15 days, the employer must engage in consultation with the trade union or labour relation committee. During this period, employers are obligated paying half of the employees’ remuneration. It’s crucial to note that this temporary solution might not offer relief in cases of prolonged financial difficulty.
Permanent Layoffs under Section 145: On the other hand, Section 145 of the Labour Act governs the processes of permanent layoff, signalling the termination of the employment agreement. Statutory grounds for permanent layoff include financial difficulties and any reasons necessitating full or partial closure of the entity.

In the intricate process of navigating the available options, employers find themselves at a crucial juncture where a meticulous evaluation is imperative. It involves a comprehensive assessment of the duration and severity of the financial crisis, prompting a critical decision-making process regarding whether temporary or permanent lay-offs are the most fitting course of action. Within this assessment, due attention must be directed towards the legitimacy of the grounds justifying such actions. The reasons for initiating lay-offs, whether temporary or permanent, should align with the parameters defined by the Labour Act, ensuring a solid legal foundation for the employer’s actions. Moreover, procedural compliance emerges as a cornerstone in this endeavour, demanding an unwavering commitment to adherence to lay-off guidelines. This commitment is crucial for maintaining fairness and transparency throughout the process, mitigating potential conflicts and fostering a sense of integrity in employment practices.

A critical aspect of this process is the issuance of adequate notice to affected employees, a legal requirement that underscores the importance of communication and respect for the rights of the workforce. The modes of communication, as defined by the Labour Act, become a pivotal element in providing employees with the time and information necessary for an orderly transition. Compensation structures during lay-offs represent a complex facet that requires a delicate balance. Companies, while navigating financial constraints, are obligated to fulfil compensation obligations. It involves careful consideration of the financial well-being of affected employees, aiming to mitigate the impact of the lay-offs on their livelihoods.

Equally significant is the imperative to secure regulatory approvals, as mandated by the legal framework. Seeking and obtaining necessary approvals from regulatory authorities adds a layer of assurance to the entire process, validating the legitimacy of the employer’s actions and ensuring compliance with broader legal standards. In essence, strategic approach to handling layoffs during a financial crisis transcends the immediate challenges and necessitates a profound understanding of the legal frameworks in place. Meticulous planning becomes the bedrock of such an approach, entailing a comprehensive consideration of various factors, from legal compliance and procedural intricacies to the ethical dimensions of fair and transparent practices. By aligning actions with the provisions of the Labour Act, companies not only navigate the complexities inherent in such situations but also uphold the interests of both the organisation and its employees in a responsible and ethical manner.

Sameer Ghorsane: When confronting the challenging task in handling layoffs during a financial crisis in Nepal, adopting a strategic approach is essential to navigate the complexities and ensure the best outcomes for both the organisation and its employees. The first critical step involves meticulous assessment of the company’s finances and future projections. Understanding the financial landscape is paramount in making informed decisions about the necessity and scale of layoffs. This analysis provides a foundation for developing a comprehensive strategy that aligns with the company’s long-term viability. Identification and streamlining of non-essential areas or functions come next. This process involves a careful examination of the various components of the organisation to identify areas that may be redundant or less critical to the core functions. Streamlining these non-essential aspects helps optimising resources and minimising the impact on crucial operational areas.

A strategic approach also entails identifying vital skills and talents within the workforce. This step is pivotal in making nuanced decisions about layoffs, ensuring that the organisation retains critical skills necessary for its continued success. By conducting a thorough assessment of the workforce, companies can prioritise retaining individuals whose skills are integral to the core functions and long-term goals of the business. Developing a comprehensive and transparent communication plan is indispensable during this process. Open and honest communication with employees about the reasons behind the layoffs, the criteria used for selection, and the company’s future plans is crucial in maintaining trust and morale among the remaining workforce. Transparency fosters a sense of understanding and solidarity even in challenging times.

Providing outplacement services or referrals for impacted employees is a tangible way to demonstrate commitment to the well-being of the workforce. It may include assistance with job searches, resume building, and other resources to support employees in their transition to new opportunities. Such measures not only contribute to the welfare of the affected employees but also enhance the company’s reputation as a responsible employer. Outsourcing non-essential (supportive) services to outsourcing agencies is another strategic move. By entrusting certain functions to external agencies, the organisation can maintain focus on its core competencies while potentially reducing costs associated with in-house operations.

Lastly, fostering an accountability culture among employees is crucial. Encouraging employees to take ownership of their processes and contribute proactively to the organisation’s goals creates a sense of responsibility and resilience. This cultural aspect can be instrumental in helping the company navigate challenging times with a united and committed workforce. In essence, a strategic approach to handling layoffs in Nepal during a financial crisis involves a comprehensive assessment of finances, streamlining non-essential functions, identifying key skills, transparent communication, provision of support services, outsourcing and cultivation of an accountability culture. By integrating these elements, companies can navigate layoffs with sensitivity and strategic foresight, aiming for the best possible outcomes for the organisation and its employees.

What measures can businesses take to consider and address the perspectives of staff during layoffs, fostering a supportive and empathetic environment?

Ashish Agrawal: Handling layoffs during a financial crisis is challenging for both employers and employees, and it necessitates a strategic and thoughtful process to navigate the complexities. One of the foremost measures that businesses should prioritise is transparent communication. It is imperative to clearly articulate why the company is undergoing layoffs and the anticipated impact on the organisation. This openness fosters an environment of trust and understanding, even in difficult circumstances, providing employees with a sense of the broader picture. Dignity in the process is equally crucial. Employers must approach the situation with sensitivity, ensuring that the sentiments of employees are not hurt, and maintaining mutual respect throughout all conversations. This involves handling the entire process with empathy, recognising the human aspect of the decisions. Preserving the dignity of the affected employees is key to nurturing a positive and supportive environment.

Introducing an Employee Assistance Programme (EAP) is another valuable measure. Initiatives such as forums or databases facilitate placements or offer support during layoffs can be instrumental. These programmes act as a bridge, helping management and employees explore new opportunities and navigate the challenging landscape of workforce transitions. Skill development emerges as a proactive strategy. Offering training to employees to acquire new skills that are relevant outside their current industry enhances their employability. This not only empowers individuals to explore diverse career paths but also aligns with a commitment to the long-term professional development of the workforce, even amid layoffs.

Having an employee representative involved in layoff decisions can contribute to a smoother transition. This representative can serve as a liaison between the employees and the management, ensuring that concerns are heard and addressed. Moreover, there should be a commitment to re-evaluate placement options for the affected employees if the situation improves or during future hiring phases. In conclusion, fostering a supportive and empathetic environment during layoffs in Nepal requires a multi-faceted approach. It includes transparent communication, preserving the dignity of employees, implementing assistance programmes, promoting skill development, involving employee representatives, and ensuring future placement possibilities. By incorporating these measures, businesses can navigate the challenges of layoffs with compassion and consideration for their workforce.

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The reasons for initiating lay-offs, whether temporary or permanent, should align with the parameters defined by the Labour Act, ensuring a solid legal foundation for the employer’s actions. Moreover, procedural compliance emerges as a cornerstone in this endeavour, demanding an unwavering commitment to adherence to lay-off guidelines. 

DharmaDhir Acharya
Associate, Pioneer Law Associates

Dharmadhir Acharya: In the context of addressing the perspectives of staff during layoffs in Nepal, it is crucial for businesses to uphold a commitment to transparency, fairness and empathy throughout the process. During layoffs in Nepal, employees are entitled to specific terminal benefits, encompassing the encashment of accrued annual and sick leave to provide a financial cushion during the transitional period. Additionally, a crucial component involves layoff payments, calculated at the rate of one-month basic salary for each year of service, acknowledging the dedication and contributions of those who have completed at least one year of employment. Furthermore, ensuring the payment of accumulated provident fund and gratuity (or Social Security Contribution Payment) recognises employees’ long-term financial planning during their tenure, contributing to a more comprehensive and supportive approach to the layoff process.

Moreover, a noteworthy aspect is that retrenched employees are preferred if rehiring is required within two years of the layoff. This policy not only demonstrates a commitment to the well-being of the workforce but also helps in maintaining a positive employer-employee relationship. To effectively implement layoffs and foster a supportive environment, businesses must engage in clear communication with employees. This involves conveying the reasons and impacts of the financial crisis that necessitates the layoffs. The overall process should exude a sense of fairness, ensuring employees understand the rationale behind such decisions.

Transparency is key throughout the layoff process. Employees must be informed about the criteria and processes involved, allowing them to comprehend the situation and make informed decisions about their future. This transparency, in turn, contributes to building trust and goodwill among the remaining staff. Furthermore, businesses can extend their support beyond the mandatory benefits by actively assisting departing employees in finding alternative employment opportunities. This not only showcases a commitment to well-being of the workforce but also reinforces a sense of solidarity within the organisation. 

In summary, addressing perspectives of staff during layoffs requires a comprehensive approach that encompasses legal entitlements, transparent communication, and ongoing support to facilitate a smooth transition for both the departing and remaining employees.

Sameer Ghorsane: In addressing perspectives of the staff during layoffs in Nepal, fostering a supportive and empathetic environment is paramount and this involves a multifaceted approach. Firstly, communication stands out as a cornerstone. It’s crucial to communicate openly and transparently with employees about the reasons behind the layoffs, the impact on the company and the considerations that led to this difficult decision. Transparent communication helps build trust and ensures employees understand the rationale behind the actions taken. Exploring alternatives to layoffs is another critical measure. It can include options like reassignment or relocation of employees to different roles or departments, or the implementation of reduced work hours. Additionally, extending outplacement support demonstrates a commitment to the well-being of the affected employees by providing assistance in finding new job opportunities or career paths. This not only helps individuals transition more smoothly but also contributes to maintaining positive relationships with the workforce.

Establishing channels for employees to provide feedback and express concerns is essential. Creating an environment where employees feel comfortable sharing their thoughts and concerns ensures that their voices are heard and considered. This feedback loop can provide valuable insights into the emotional state of the workforce and helps in tailoring support measures accordingly. Offering guidance and counselling is crucial to support individuals dealing with the emotional and financial challenges often accompanying layoffs. Providing resources such as career counselling, resume-strengthening programmes, skill development initiatives, and job-search assistance demonstrates a genuine commitment to the professional well-being of the affected employees. These resources not only aid in the immediate aftermath of layoffs but also contribute to the long-term employability of individuals.

Implementing provisions for a hassle-free exit process is equally important. This involves ensuring that the exit process is conducted with sensitivity and efficiency. Prompt issuance of relieving letters and other necessary documentation helps easing the transition for the departing employees and contribute to a more positive and respectful conclusion to their tenure with the company.

In conclusion, considering and addressing the perspectives of staff during layoffs in Nepal requires a comprehensive and empathetic approach. This includes transparent communication, exploration of alternatives, outplacement support, channels for employee feedback, guidance and counseling, provision of resources, and a streamlined exit process. By incorporating these measures, businesses can navigate layoffs with a focus on empathy, support, and respect for individuals affected.

What specific legal processes and compliance measures should companies prioritise when implementing layoffs in Nepal to ensure adherence to labour laws?

Ashish Agrawal: Ensuring that layoffs are conducted in compliance with the Labour Act of Nepal is of paramount importance to avoid legal complications and uphold adherence to labour laws. As someone deeply invested in the well-being of both employers and employees, I understand the significance of navigating these processes with precision and fairness. One crucial aspect that companies should prioritise is providing advance notice, recognising that the notice period may vary depending on the specific circumstances and the nature of the employment. The Labour Act outlines guidelines for such notices, and adhering to these provisions is essential. This advance notice not only aligns with legal requirements but also allows employees adequate time to prepare for the impending changes.

Consultation with labour unions plays a pivotal role in the layoff process. Engaging in open and transparent discussions with the labour union regarding the entire process, the objectives behind the layoffs, and the anticipated duration is a legal requirement that fosters a collaborative approach. This consultation is not just a formality but a meaningful step toward building understanding and addressing concerns collectively. Maintaining fairness and non-discrimination throughout the layoff process is an ethical and legal imperative.

 The Labour Act explicitly emphasises that the layoff process should be conducted without bias, ensuring that employees are treated equitably irrespective of their backgrounds or affiliations. This commitment to fairness not only aligns with legal obligations but also contributes to the overall integrity of the organisational practices.

Severance packages form a critical component of the legal compliance measures. Offering fair and appropriate severance packages is not just a legal requirement but also a demonstration of the organisation’s commitment to supporting employees during challenging transitions. The Labour Act provides guidance on the calculation and provision of these packages, and meticulous adherence to these guidelines is essential. 

In conclusion, the legal processes and compliance measures during layoffs in Nepal, guided by the Labour Act, necessitate a comprehensive and meticulous approach. It includes providing advance notice, engaging in meaningful consultation with labour unions, maintaining fairness and non-discrimination, and ensuring appropriate severance packages. By prioritising these measures, companies can navigate the complex legal landscape with integrity and adherence to the principles outlined in the labour laws of Nepal.

Dharmadhir Acharya: In navigating the legal intricacies of layoffs in Nepal, companies must adhere to Section 145 (1) of the Labour Act, which delineates the grounds for layoff. These grounds encompass financial hardship for the enterprise, a merger leading to additional employees, or the partial or complete closure of the enterprise due to other reasons. The layoff process commences with a mandatory notification. The employer is obligated to provide notice, at least 30 days prior to the layoff date, detailing the grounds, probable date and the likely number of employees affected. This notice is submitted to the Labour Office and the authorised trade union of the enterprise, or alternatively, to any active trade union or Labour Relation Committee (LRC) in the absence of an authorised trade union.

Following notification, consultation with the concerned trade union or LRC is imperative. Discussions should encompass alternatives to layoff and the grounds and conditions for selection of employees for layoff. The actual order of layoff must adhere to the hierarchy stipulated by the Labour Act. This hierarchy includes foreign nationals, employees with a history of misconduct, underperforming employees and those hired last in the same category of work. Layoff compensation is a critical facet and employees are entitled to various payments upon termination due to layoff. This includes accrued Provident Fund, gratuity, accrued leave and a lump sum compensation amount at the rate of one-month basic salary for each year of service for employees who have completed at least one year of employment. 

For service less than a year, compensation is proportionately paid. Looking ahead, Section 146 of the Labour Act addresses future contingencies. Retrenched employees must be given preference if the entity needs to hire within two years of layoff. The entity is obligated to issue a notice for hiring, and if retrenched employees do not respond despite the notice, the entity may proceed to hire other individuals. This framework aims to balance the interests of the company and the retrenched employees, ensuring a fair and transparent process throughout the layoff and potential rehiring phases.

Sameer Ghorsane: Navigating the legal landscape during layoffs in Nepal demands a meticulous and strategic approach to ensure compliance with labour laws and mitigate potential legal complications. First and foremost, it is imperative for companies to have a solid understanding of Nepal’s labour laws and regulations related to layoffs. Seeking legal expertise to review and validate the layoff process is a prudent step, providing assurance that the company is in alignment with legal requirements and best practices. Adherence to the stipulated notice period and severance pay obligations is a non-negotiable aspect of the layoff process. It is crucial for companies to be well-versed in the specific legal requirements pertaining to these aspects and ensure full compliance. Moreover, adopting a compassionate approach involves extending severance benefits beyond the legal mandates. This not only emphasises the company’s commitment to employee well-being but also reinforces an empathetic stance during challenging times.

Thorough documentation is key in navigating legal processes during layoffs. Companies should meticulously document the reasons for layoffs and the selection criteria applied. This documentation serves as a critical safeguard in the event of legal scrutiny, demonstrating that due process was followed and fair evaluations were conducted for both employee retention and layoff decisions. Conveying information about an employee’s layoff demands a delicate and counselling-oriented approach. Beyond legal requirements, extending the communication duration can be a thoughtful strategy. Allowing more time for discussions, questions or additional counselling sessions, if required, can contribute to a more compassionate and supportive environment. 

This approach not only aligns with legal compliance but also underscores the company’s commitment to treating employees with respect and dignity even in challenging circumstances. In essence, a strategic and legally compliant approach to layoffs in Nepal involves a comprehensive understanding of labour laws, legal validation of processes, adherence to notice periods and severance pay obligations, documentation of reasons and selection criteria, and a compassionate communication strategy. By prioritising these legal processes and compliance measures, companies can navigate layoffs focusing on fairness, empathy and adherence to the regulatory framework.

How can organisations effectively manage the outcome of layoffs in Nepal, preserving the company’s culture and maintaining a positive employer brand to attract talent in the future?

Ashish Agrawal: Effectively managing the aftermath of layoffs in Nepal is a delicate process that requires a strategic and compassionate approach. From my perspective, it is crucial to recognise that employees serve as the organisation’s ambassadors, and ensuring a positive aftermath is equally significant as facilitating a smooth exit process. First and foremost, valuing the contributions of each employee, irrespective of the scale, is a fundamental aspect. Recognition is a powerful tool, and acknowledging the efforts of departing employees in front of their teams can go a long way in preserving a positive organisational culture. This not only fosters a sense of appreciation but also communicates that every individual’s work is valued and recognised. Maintaining open lines of communication during the exit process is vital. Leaders and management representatives should make themselves more available when exiting employees reach out to them. This accessibility contributes to a supportive environment, providing departing employees with the assurance that their concerns are heard and addressed. It also reflects a commitment to the well-being of the workforce, even during challenging transitions.

The role of management in facilitating referrals and recommendations is crucial for the faster placement of exiting employees. Providing referrals can significantly impact the employability of these individuals, making their job search more effective. Along with helping departing employees, this proactive approach also contributes to maintain a positive employer brand. In the aftermath of layoffs, it is equally important to focus on the morale and motivation of the existing and retained employees. Job insecurity can create a sense of unease, potentially leading to decreased productivity and morale. As a response, motivating and encouraging the retained workforce becomes paramount. This can be achieved through various means such as team-building activities, recognition programmes and open communication about the organisation’s future plans.

Moreover, ensuring that leadership remains visible and engaged during this period is essential. Leaders should actively communicate with the remaining workforce, addressing concerns, providing updates on the company’s trajectory, and emphasising a collective commitment to moving forward. Transparent communication helps build trust and confidence, mitigating any uncertainty that may arise post-layoffs. In conclusion, managing the aftermath of layoffs in Nepal involves a holistic and people-centric approach. By valuing contributions, maintaining open communication, providing referrals, and focusing on the morale of the retained workforce, organisations can preserve their company culture and maintain a positive employer brand. These efforts not only contribute to the well-being of departing employees but also position the organisation attractively for future talent acquisition.

Dharmadhir Acharya: Effectively managing the outcome of layoffs in Nepal requires a conscientious approach to preserve the company’s culture and uphold a positive employer brand that can continue to attract talent in the future. Firstly, it’s crucial for the employer to exercise mindfulness in determining the grounds and appropriateness of the layoff decision. This involves meticulous adherence to laid-out procedures and having compelling reasons for the mitigation measures undertaken. Transparent communication stands out as a cornerstone in navigating the aftermath. The organisation should communicate openly and honestly with the remaining workforce about the reasons behind the layoffs, the impact on the company and the measures taken to stabilise the situation. This transparency not only fosters trust but also helps in maintaining a sense of unity among the retained employees.

Support for departing employees is equally vital. Providing resources and assistance, such as outplacement services, can help departing employees in their transition to new opportunities. This not only reflects a commitment to the well-being of the workforce but also contributes to a positive employer brand, showcasing the organisation’s ethical and caring approach. Emphasising retained talent becomes imperative in the post-layoff scenario. Acknowledging and appreciating the contributions of remaining employees helps boost the morale and reaffirms their value to the organisation. This positive reinforcement contributes to preserving the company’s culture and ensuring a sense of continuity amid changes.

Introducing employee assistance programmes (EAPs) is another proactive step. EAPs can offer counselling services, mental health support and other resources to help employees cope with the emotional impact of layoffs. Fostering a supportive environment contributes to maintaining the well-being of the workforce, even in challenging times. Training and development opportunities for the retained employees play a dual role. Not only do they enhance the skills and capabilities of the existing workforce, ensuring the organisation remains competitive, but they also send a positive message about the company’s commitment to investing in its people, even during challenging periods. Lastly, reevaluating workload distribution is essential to prevent burnout among the remaining staff. Redistributing responsibilities and ensuring a balanced workload helps in maintaining productivity and preventing resentment among employees.

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Seeking legal expertise to review and validate the layoff process is a prudent step, providing assurance that the company is in alignment with legal requirements and best practices. Adherence to the stipulated notice period and severance pay obligations is a non-negotiable aspect of the layoff process. It is crucial for companies to be well-versed in the specific legal requirements pertaining to these aspects and ensure full compliance. 

Sameer Ghorsane
Head - Business Intelligence and Growth, merojob.com

Sameer Ghorsane: Effectively managing the impact of layoffs in Nepal requires a nuanced approach that prioritises the well-being of the remaining employees, preserves the company’s culture, and maintains a positive employer brand for future talent attraction. The first crucial step is to thoroughly assess the impact of layoffs on morale and the overall company culture. This involves understanding how the workforce perceives the changes and identifying potential areas of concern or discontent. To support the remaining employees, providing resources and assistance becomes paramount. It can include counselling services, mentorship programmes, and avenues for professional development. By demonstrating a commitment to the well-being and growth of the retained staff, the organisation reinforces its dedication to creating a supportive and positive workplace environment.

Leveraging the expertise of human resource consulting organisations, such as merojob.com, can be instrumental in navigating the post-layoff landscape. These services can assist in reforming company culture and values, aligning them with the goals of creating a positive employer brand. Professional development and training opportunities can be integrated to enhance the skills of the existing workforce, contributing to both individual and organisational growth. Adopting a strategic hiring approach is also key. Ensuring the right talent is placed in the right roles at the right time involves a ‘hire slow and fire fast’ philosophy. This emphasises a careful and thorough hiring process to ensure a cultural fit for the company, coupled with a prompt response if an employee is not meeting expectations. This approach not only contributes to a positive employer brand but also ensures that the organisation remains agile in its workforce management.

Supporting career growth through individual development plans is a proactive measure. By collaborating with employees to identify and plan their professional development goals, organisations foster a culture of continuous learning and improvement. This not only enhances employee satisfaction but also contributes to the overall positive image of the company. Actively seeking employee feedback is an essential practice. This involves creating channels for employees to voice their opinions, concerns and suggestions. Employee feedback becomes a valuable tool for identifying areas of improvement, allowing the organisation to address concern promptly and tailor its strategies for a more positive and engaged workforce. Simplifying and streamlining key result areas and key performance indicators is a final but crucial step. This process is integral to cultural transformations, ensuring a more efficient and focused approach towards organisational goals and objectives. 

By clarifying expectations and aligning individual and team objectives with the broader organisational vision, the company can foster a sense of purpose and direction among its workforce. 

What innovative steps can be taken to manage situations where companies are unable to distribute salaries to employees?

Ashish Agrawal: In situations where companies find themselves unable to distribute salaries in Nepal, I believe the key lies in open and transparent communication. One common mistake I have observed in management is attempting to conceal bad news. However, in my view, disappointment is far more preferable than disagreements. Employees are not only integral parts of the organisation but are also active contributors to the economy and industry. They are well aware of the prevailing conditions in their sector and if the industry is facing challenges, they will likely understand. It’s crucial to be honest about the company’s performance and the broader industry landscape. Recognising that employees have households to support is essential for empathetic management. During tough times, leaders should not shy away or hide from their employees. Transparent communication, even when the news is not positive, instills hope in the workforce, assuring them that the leadership is committed to navigating the challenges and ensuring the sustainability of the business.

Implementing partial salary payments is an innovative step that can help alleviate some of the financial burden on employees. This demonstrates a commitment to supporting the staff even when full salaries may not be feasible at the moment. Additionally, providing advances for medical emergencies, educational fees, or rent is a considerate measure that addresses immediate financial needs and fosters a sense of support. To manage cash flows effectively, a strategic approach involves planning level or grade-wise payments. Starting with the bottom of the organisational pyramid and progressing in five-day intervals can help distribute financial resources more evenly. This approach acknowledges the financial hierarchy within the organisation while ensuring that employees at all levels receive timely and meaningful support.

Importantly, conveying to employees the importance of investing in running the business during challenging times is a crucial part of communication strategy. It aligns expectations and helps employees understand that the organisation is making strategic decisions to secure its future. This can instill a sense of shared responsibility among the workforce. In conclusion, managing situations where companies are unable to distribute salaries in Nepal requires a combination of open communication, financial support measures and strategic planning. By adopting these innovative steps, organisations will not only navigate challenging times more effectively but also foster a sense of trust and collaboration with their employees.

Dharmadhir Acharya: In situations where companies in Nepal find themselves unable to distribute salaries, it becomes imperative for employers to explore innovative measures to address the financial challenges while maintaining the well-being and motivation of their workforce. One innovative step involves the implementation of flexible compensation structures. This approach allows employees to have a say in their remuneration by providing them with options such as choosing between a traditional salary, additional time off, or alternative benefits. This flexibility not only considers the financial constraints faced by the company but also empowers employees to tailor their compensation to better suit their individual needs. Another noteworthy strategy is profit-sharing, wherein employees receive a percentage of the company’s profits during profitable periods. 

This not only fosters a sense of shared success but also provides a financial incentive for employees to actively contribute to the company’s growth and success. Profit-sharing arrangements can contribute to employee morale and motivation, even in challenging financial circumstances. Employee stock ownership plans (ESOPs) represent a creative avenue to address salary distribution challenges. By offering employees ownership stakes in the company, either directly or through stock options, companies can align the interests of employees with the long-term success of the organisation. ESOPs not only serve as a form of compensation but also instill a sense of ownership and commitment among employees, fostering a collaborative and mutually beneficial relationship. Furthermore, introduction of voluntary resignation schemes can also be considered. 

This approach allows employees to choose to resign voluntarily in exchange for an offer made by the company. While this may be a difficult decision for employees, it can provide them with a more controlled exit strategy, potentially including severance packages or other benefits. In summary, when faced with challenges in salary distribution, innovative steps can include flexible compensation structures, profit-sharing arrangements, the implementation of employee stock ownership plans, and the introduction of voluntary resignation schemes. These measures not only address immediate financial constraints but also contribute to building a resilient and motivated workforce that remains engaged even in the face of economic uncertainties.

Sameer Ghorsane: When faced with the challenging situation of being unable to distribute salaries to employees, it’s crucial to adopt innovative and compassionate measures to navigate the complexities and ensure the well-being of the workforce. Firstly, transparent communication becomes the cornerstone of this process. In accordance with labour laws, the company should openly communicate its financial challenges to employees, providing clear information about the situation, adherence to notice periods, severance pay and other relevant regulations. This not only fosters trust but also ensures compliance with legal obligations. Exploring the possibility of temporary salary reduction or deferred payment options is a strategic step. Initiating transparent conversations to formalise agreements related to payments or compensation allows for a collaborative approach. During these discussions, exploring various possibilities such as partial payments or the postponement of remuneration can provide a degree of flexibility to both the company and its employees.

Considering alternative compensation methods like equity or profit-sharing is an innovative approach. While it may not directly address the immediate salary distribution issue, it aligns the interests of employees with the company’s long-term success. This can be particularly relevant if traditional salary structures pose significant challenges during financially constrained periods. Providing resources on financial management and counselling services is a proactive measure to help employees navigate the challenges of unpaid salaries. It can include offering guidance on budgeting, financial planning and accessing external resources for additional support. By providing these resources, the company demonstrates a commitment to the well-being of its employees beyond the immediate salary concerns.

Consulting legal and financial experts is crucial in formulating a viable solution. Engaging professionals well-versed in labour laws and financial management ensures that the proposed measures align with legal requirements and are financially sustainable for the company. This comprehensive approach not only mitigates legal risks but also contributes to the development of a robust and ethical solution. In conclusion, managing situations where companies are unable to distribute salaries in Nepal requires a combination of transparent communication, innovative compensation approaches, and proactive support measures. By adopting these strategies, companies can navigate challenges while prioritising the welfare of their employees and maintaining a foundation of trust and collaboration. 

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E-Magazine
MARCH 2024

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