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Legal briefing notes

Implementation of changes in the organization: staff reduction, terms of the labor contract

Change happens in every company. Employers rarely think about consulting a lawyer on labor law when conducting them. And it's too bad. Organizational changes in the enterprise are foremost, changes in the work of staff. Employees are not always happy about changes in the company, and some even try to challenge them.

There are some typical procedures of changes in the enterprise: For example, the procedure of staff reduction of employees that includes several stages:

  • issuance of an order on staff reduction;
  • notification of employees that is no later than two months before dismissal;
  • notification of the trade union (if there is any) about the start of the staff reduction procedure;
  • determination of the right of preference for job retention;
  • the offer of available vacancies during the entire period of the staff reduction;
  • dismissal of laid-off employees and payment of wages, severance pay and other payments that should be paid to the employee upon dismissal.

An error at any stage may cause a serious labor dispute for the employer with the employee, and in the future as the result it can lead to the restoration of a worker. Employers often make mistakes in offering vacancies to an employee. So, the company will not achieve the economy of funds, which is usually a goal of staff reduction, but also it may have losses. There is another option of organizational changes that is significant changes in the terms of the labor contract.

This type of change also involves a procedure for notifying the employee in advance, the notification should be no later than two months before the proposed changes. It is possible to change the essential terms of the employment contract by mutual consent, even before the expiration of the two-month period. This requires an additional agreement to the labor contract, indicating the new working conditions, which must be signed by both the employee and the employer. However, if the employee does not agree to changes in the terms of the contract, then he must be offered other vacancies that are available at the enterprise. And in case of refusal to transfer to another position, the employer will be forced to dismiss such an employee for refusing to continue working under the new conditions. It should be after two months from the date of notification. But, if the employee considers that his dismissal is illegal and applies to court, then the employer will need to prove the need for organizational changes in his company. There is also another way of changes, it is dismissal due to liquidation of a company.

The procedure is similar to staff reduction. But few people know that the dismissal of an employee that is because of the liquidation of an individual entrepreneur is different from the procedure of dismissal during the liquidation of an organization. So, for example, an individual entrepreneur does not need to notify the employees in two months in advance of the upcoming dismissal due to liquidation. An individual entrepreneur does not pay a severance pay to an employee, unless otherwise it is provided by the terms of the labor contract. The company may be reorganized during its existence. At the same time, there are important rights of workers that should not be forgotten:

  • all employees should be notified about the reorganization,
  • prepare a new staff schedule;
  • conclude with employees who would like to continue working in a new company, an additional agreement to the labor contract on changing working conditions and information about the employer;
  • make changes to the employment records of employees;
  • dismiss employees who refuse to continue their labor relationship;

Thus, despite the clarity of the changes that have being made at the enterprise, without the help of a lawyer, the employer has risks that he does not get what he wanted, and in addition, he will be involved in litigation that can lead to the reinstatement of the employee at work, and he will have to pay for the period of enforced absenteeism, non-pecuniary damage, as well as reimbursement of the employee's expenses for lawyers. Lawyers of the Tsentralny Okrug Law Firm can help you to conduct organizational changes in your company without risks and according to the labor legislation. It can help to avoid the violations of the rights of employees, and, of course, it saves your money and time.

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Author is Irina Volodina

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