It is the employer’s worst nightmare. What will you HR do in this case? Please share your opinions and experiences in the comments below.
From Vietnam, Hanoi
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32From Vietnam, Hanoi
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Dear Ms. Yen Tran,
Is this a real-life situation, or are you asking hypothetically? An employer not being able to pay the salary provides insufficient information for us to suggest a solution. Assuming you know the employer very well, how long has this situation been going on? What corrective actions has the employer taken? Has the employer discussed this with the employees before?
There are other crucial pieces of information that you might need to share before we can suggest a feasible solution.
Looking forward to hearing from you.
From India, Mumbai
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Is this a real-life situation, or are you asking hypothetically? An employer not being able to pay the salary provides insufficient information for us to suggest a solution. Assuming you know the employer very well, how long has this situation been going on? What corrective actions has the employer taken? Has the employer discussed this with the employees before?
There are other crucial pieces of information that you might need to share before we can suggest a feasible solution.
Looking forward to hearing from you.
From India, Mumbai
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It's the situation of a partner of my company, and the HR department asked us for help. It's a manufacturing company with about 200 blue-collar workers and 30 white-collar workers. The company is facing trouble with a large inventory stemming from a box of faulty items in a major export order.
The worst thing here is the timing; it happened at the end of the year. They have some overdue accounts receivables with this client and debts with some suppliers. The Board of Directors has announced the situation to all workers, and they have fired a production line that made the faulty goods. The employer couldn't afford to pay workers' salaries this month, and there's no year-end bonus. Workers are bewildered by this situation and are struggling to maintain normal productivity. The board of directors do not want to lay off more workers, but they cannot provide an exact timeline for recovery.
What should HR do to soothe the workers?
Thanks for your help!
From Vietnam, Hanoi
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The worst thing here is the timing; it happened at the end of the year. They have some overdue accounts receivables with this client and debts with some suppliers. The Board of Directors has announced the situation to all workers, and they have fired a production line that made the faulty goods. The employer couldn't afford to pay workers' salaries this month, and there's no year-end bonus. Workers are bewildered by this situation and are struggling to maintain normal productivity. The board of directors do not want to lay off more workers, but they cannot provide an exact timeline for recovery.
What should HR do to soothe the workers?
Thanks for your help!
From Vietnam, Hanoi
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Dear Friend,
It is perceived that the export order was executed with the production of faulty goods. This has resulted in the firing of the production line.
1) What was the quality check procedure at the company?
2) This was the failure of the quality inspection and not the production line.
3) This is an export order, and utmost care should have been taken by the manufacturer.
4) Citing these procedural failures is not a good practice for a manufacturing company.
5) There are some receivables with the client and debts with the suppliers. Thus, there is a line of function existing, and there is no standstill.
6) Approach the financial institutions with the receivables for financial ease, and the workers can be paid. Relatively, the suppliers' debts can be met out with future production.
7) There is no mention of the cancellation of future orders. Certainly, with all the help, the production line can prove their worth in making the orders fruitful. Letting down is not an option.
8) I am not touching on your laid statutory laws.
However, with the input provided, never let the workers down. The HR department, having confidence in financial and production matters, can make the situation a good deal for the company at higher levels. The Board of Directors can find a way out rather than putting off the issue. Initiation is the innovation.
Best of luck.
From India, Arcot
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It is perceived that the export order was executed with the production of faulty goods. This has resulted in the firing of the production line.
1) What was the quality check procedure at the company?
2) This was the failure of the quality inspection and not the production line.
3) This is an export order, and utmost care should have been taken by the manufacturer.
4) Citing these procedural failures is not a good practice for a manufacturing company.
5) There are some receivables with the client and debts with the suppliers. Thus, there is a line of function existing, and there is no standstill.
6) Approach the financial institutions with the receivables for financial ease, and the workers can be paid. Relatively, the suppliers' debts can be met out with future production.
7) There is no mention of the cancellation of future orders. Certainly, with all the help, the production line can prove their worth in making the orders fruitful. Letting down is not an option.
8) I am not touching on your laid statutory laws.
However, with the input provided, never let the workers down. The HR department, having confidence in financial and production matters, can make the situation a good deal for the company at higher levels. The Board of Directors can find a way out rather than putting off the issue. Initiation is the innovation.
Best of luck.
From India, Arcot
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Dear Yen Tran,
As mentioned, the organization is facing a financial crisis. This occurs in many organizations regardless of the reasons; some organizations manage to overcome the situation, while others do not.
In this scenario, both the management and employees play a crucial role in overcoming or shutting down. It is essential to understand that the salary is the primary source of livelihood for most employees' families. The families depend on the employee's income and have various financial obligations. If an employee does not receive their salary on time, the entire system will collapse. We need to put ourselves in their shoes to understand their challenges.
It is important to have clear and open communication with the employees regarding the current situation of the organization. This will help them stay informed about the developments. If the situation is not expected to improve in the near future, employees should be encouraged to explore other options.
If there is hope for improvement, employees should be encouraged to support the management during this challenging period. Engaged employees are likely to provide support, and together, they can overcome the difficulties.
Employees should be kept well-informed about all the activities within the organization. Trust me, if the employer has taken good care of the employees in the past, the employees will not feel neglected.
Thank you.
From India, Bhubaneswar
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As mentioned, the organization is facing a financial crisis. This occurs in many organizations regardless of the reasons; some organizations manage to overcome the situation, while others do not.
In this scenario, both the management and employees play a crucial role in overcoming or shutting down. It is essential to understand that the salary is the primary source of livelihood for most employees' families. The families depend on the employee's income and have various financial obligations. If an employee does not receive their salary on time, the entire system will collapse. We need to put ourselves in their shoes to understand their challenges.
It is important to have clear and open communication with the employees regarding the current situation of the organization. This will help them stay informed about the developments. If the situation is not expected to improve in the near future, employees should be encouraged to explore other options.
If there is hope for improvement, employees should be encouraged to support the management during this challenging period. Engaged employees are likely to provide support, and together, they can overcome the difficulties.
Employees should be kept well-informed about all the activities within the organization. Trust me, if the employer has taken good care of the employees in the past, the employees will not feel neglected.
Thank you.
From India, Bhubaneswar
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When an organization runs into a financial crisis, the top bosses need to come into action - speak with employees, address employees about the problem and measures taken to sort out the problem, and likely timelines. What effect will it have on employees? Will some employees be sent on unpaid leave?
HR plays an important role in bringing the facts and figures to stakeholders, smoothing interaction between employees and top management. Jet Airlines faced a serious crisis in 2008 where they fired 1900 employees due to poor finances and then reinstated them.
True leadership or lack of it can be seen when a crisis of this proportion arises. Open communication without barriers, a history of fair dealings with employees (all stakeholders) will help come out of crises.
This link: [XIMB-Best MBA (erstwhile PGDM) Management Institute in Bhubaneswar, India](http://ximb.ac.in) <link outdated - home link added>
From India, Pune
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HR plays an important role in bringing the facts and figures to stakeholders, smoothing interaction between employees and top management. Jet Airlines faced a serious crisis in 2008 where they fired 1900 employees due to poor finances and then reinstated them.
True leadership or lack of it can be seen when a crisis of this proportion arises. Open communication without barriers, a history of fair dealings with employees (all stakeholders) will help come out of crises.
This link: [XIMB-Best MBA (erstwhile PGDM) Management Institute in Bhubaneswar, India](http://ximb.ac.in) <link outdated - home link added>
From India, Pune
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As you have mentioned that the company is going into liquidation, there is a relevant decision by the Supreme Court [Bank of Maharashtra v. Pandurang Keshav Gorwardkar & Ors.], wherein:
The Honourable Court held that: "Where a company is in liquidation, a statutory charge is created in favour of workmen in respect of their dues over the security of every secured creditor and this charge is pari passu [at par] with that of the secured creditor. Such statutory charge is to the extent of workmen’s portion in relation to the security held by the secured creditor of the debtor company."
Full judgement can be obtained from the Judgement Information System [ The Judgment Information System ] by entering "Pandurang Keshav" in the field "Petitioner or Respondent's Name"; "From Date" : 1/1/2013; and "To Date" : 1/1/2014.
From India,
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The Honourable Court held that: "Where a company is in liquidation, a statutory charge is created in favour of workmen in respect of their dues over the security of every secured creditor and this charge is pari passu [at par] with that of the secured creditor. Such statutory charge is to the extent of workmen’s portion in relation to the security held by the secured creditor of the debtor company."
Full judgement can be obtained from the Judgement Information System [ The Judgment Information System ] by entering "Pandurang Keshav" in the field "Petitioner or Respondent's Name"; "From Date" : 1/1/2013; and "To Date" : 1/1/2014.
From India,
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1st, when you raise the above question, you should search for a job for yourself. 2nd, seniors may give various suggestions referring to the HR law book, but the simple truth is nobody works for any company without a salary, and there is zero chance of retaining these employees. My suggestion is to pack your bags and move to a new company.
From India, Mumbai
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From India, Mumbai
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