Considerations When Building a Labor Usage Plan for Business Reorganization

Addressing considerations when building a labor usage plan for business reorganization involves reviewing critical issues to ensure workforce stability and facilitate the enterprise’s restructuring process. A clear plan, accompanied by comprehensive dialogue and transparent information, helps maintain morale, minimize disruption, and reinforce employee trust. Proactive adherence to the correct procedural sequence allows enterprises to mitigate risks and enhance restructuring efficiency. The following content details specific steps to support enterprises during this process.

Current labor laws specify situations where enterprises must establish a labor usage plan. This protects employee rights amidst changes in organizational structure and ownership.

According to Clause 31, Article 4 of the Enterprise Law 2020, activities such as division, separation, consolidation, merger, or conversion of enterprise type constitute business reorganization. These structural changes often lead to reorganizing the apparatus, changing personnel, or adjusting operational scale.

When undertaking these forms of reorganization, the likelihood of affecting a large number of employees is high (e.g., changing job positions, transferring tasks, cutting departments, or merging functions). Therefore, pursuant to Clause 1, Article 43 of the Labor Code 2019, if the process affects the employment of many workers, the employer is responsible for building a labor usage plan.

Additionally, employers must also construct a labor usage plan in cases of structural or technological changes as prescribed in Article 42 of the Labor Code 2019.

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Core Contents of the Labor Usage Plan in accordance with considerations when building a labor usage plan for business reorganization

Based on Clause 1, Article 44 of the Labor Code 2019, the labor usage plan must include the following key contents:

• Number and list of employees to be continued in employment, employees to be retrained for continued employment, and employees to be transferred to part-time work.
• Number and list of employees to retire.
• Number and list of employees whose labor contracts must be terminated.
• Rights and obligations of the employer, employees, and relevant parties in implementing the labor usage plan.
• Measures and financial resources to ensure the implementation of the plan.

The process of building and issuing a labor usage plan during business reorganization requires strict adherence to procedures. Enterprises must pay special attention to the following issues:

Organizing Dialogue When Building the Plan

Clause 2, Article 44 of the Labor Code 2019 stipulates a prerequisite condition: exchanging opinions with the grassroots-level employee representative organization. The procedure for this dialogue is detailed in Article 41 of Decree 145/2020/ND-CP as follows:

• Step 1: The employer sends a document with the content for consultation to the employee representative members participating in the dialogue.
• Step 2: Employee representatives collect opinions from the employees they represent and synthesize them into a written document. Note: If the dialogue content relates to the rights and interests of female employees, their opinions must be ensured.
• Step 3: Based on these opinions, the employer organizes a dialogue to discuss, consult, and share information. The quantity, composition, time, and location are determined by both parties according to grassroots democracy regulations. The dialogue proceedings must be recorded in minutes signed by representatives of all parties.
• Step 4: Within 03 working days after the dialogue concludes, the employer must publicly announce the main contents at the workplace.

Notification of the plan for employee utilization when reorganizing the enterprise.

After the dialogue is completed and the content is finalized, the labor utilization plan must be notified in accordance with regulations. Clause 2 of Article 44 of the 2019 Labor Code requires that the plan be publicly announced to employees within 15 days from the date of its approval.

The law does not specify a rigid format for notification, but clients should use methods that are traceable and reach all personnel. Common methods include posting notices on bulletin boards, sending internal emails, publishing on the intranet, or holding a press conference. The posting process should be documented to serve as proof that the notification obligation has been fulfilled.

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Handling violations during the construction and implementation of labor utilization plans when reorganizing enterprises.

Failure to comply with the process of building a labor usage plan leads to severe consequences. According to Point b, Clause 3, Article 12 of Decree 12/2022/ND-CP, employers may be fined from 5,000,000 VND to 10,000,000 VND for:

• Failing to establish a labor usage plan.
• Establishing a plan lacking key contents required by law.
• Failing to exchange opinions with the grassroots-level employee representative organization.

Moreover, non-compliance regarding dialogue or notification deadlines can render personnel decisions invalid. Termination decisions based on an improper labor usage plan will be considered “Unlawful Unilateral Termination.” Consequently, the enterprise must reinstate the employee and pay compensation for salary, social insurance, and other amounts pursuant to Article 41 of the Labor Code 2019.

Long Phan Consulting provides consulting services on key considerations when developing a workforce plan during business restructuring.

Long Phan Consulting provides comprehensive support services in developing labor utilization plans during business restructuring. With a team of experienced professionals, we offer optimal solutions, ensuring legal compliance and saving you time. Long Phan Consulting’s services in developing labor utilization plans during business restructuring include:

• Providing advice and evaluating labor utilization options during business restructuring;
• Assisting in preparing and developing a labor utilization plan when reorganizing a business;
• Monitor the process of developing a labor utilization plan during business restructuring, ensuring that the business follows the correct procedures and deadlines;
• Receive and process additional requests (if any).

With our services, your business can rest assured of the quality and effectiveness of developing a labor utilization plan during business restructuring. You can contact us directly for detailed advice and support tailored to your specific needs.

Common Inquiries Regarding Labor Usage Plans in light of considerations when building a labor usage plan for business reorganization

Below, Long Phan Consulting provides some frequently asked questions regarding considerations when developing a labor utilization plan during business restructuring. We invite interested clients to refer to this information:

Absolute Consensus Requirement

No. The law requires the employer to “exchange opinions” and “organize dialogue,” not to achieve 100% consensus. However, the enterprise must fully implement the consultation process and record opinions in the minutes before issuing the plan to ensure procedural legality.

• Legal Basis: Clause 2, Article 44, Labor Code 2019.

Consultation Without Employee Representative Organizations

If a grassroots trade union has not been established, the employer must exchange opinions with the employee dialogue representative group. This group is elected by the collective of employees to exercise democratic dialogue rights at the workplace.

Terminating Pregnant or Nursing Employees

No, unless the enterprise ceases operations. Employers cannot unilaterally terminate contracts due to marriage, pregnancy, maternity leave, or raising a child under 12 months. This group must be prioritized for continued employment or retraining.

• Legal Basis: Clause 3, Article 37, Labor Code 2019.

Definition of “Affecting Many Employees

In practice, if division or merger leads to contract termination, relocation, or transfer to part-time work for 02 or more employees, a labor usage plan should be built to ensure procedural compliance.

Changing the Plan After Announcement

Yes, but the process must be repeated. If there are changes to the plan’s content (e.g., increased number of layoffs, changed support levels), the enterprise must re-organize the exchange of opinions with employee representatives and re-issue the notification to ensure legal validity.

Conclusion

Building a labor usage plan during business reorganization is a prerequisite for successful restructuring and limiting disputes. For in-depth advice on establishing dialogue procedures, drafting documents, and handling arising personnel issues, please contact Long Phan Consulting Company via hotline 1900.63.63.89 for timely and professional legal support