Coronavirus (COVID-19) pandemic outbreak has already disrupted the global economics and is in the verse of recession. This has largely affected almost all the countries and its impact in Nepal was first seen in travel, tourism and aviation sectors. Further, spread out and emergency locked down announced by the government, Nepal economy has started to feel the crunch and this has started affecting almost all the business sectors.

Businesses around the world that are facing significant revenue losses due to the coronavirus pandemic are considering different options such as work from home or work remotely, paid/unpaid leave, pay/benefit cuts, etc. to operate as best as possible during this crisis. Also, this may trigger redundancy or retrenchment in the entity facing financial distress.  

Hopefully the outbreak of coronavirus will come under control in the coming months and redundancy of employees can have significant implications on company morale which may cost more in the long run when business revives again. Therefore, before a company decides on cutting staffs to save costs, they need to understand the likely consequences, unintended costs and challenges relating to this approach because simply removing people to cut costs does not work. On top of severance pay, separating employees and risking a lawsuit, the morale impact may affect productivity among survivors (who retained their job after a round of forced separations suffer) and a company may be burdened with the cost of recruiting, hiring and training new employees.

Unlike redundancies, here are some alternatives:

• Cut extra cost - Halt additional hiring, bonuses, raises, travel and overtime, equipment/assets purchase including administrative cost and find cheaper alternatives.

• Backup provision - unlike redundancy, an employee can be kept at layoff (“Jageda”) period since the employer may stop the work due to any special situation beyond control which makes fund shortage or inability to make physical movement. Even though, employers can make the continuity of employment relationship with their employees required to make payment of half remuneration or as prescribed.

• Offer extra days of unpaid leave - Offer extra days of unpaid leave to employees considering the situation. Employees may find agreeable even if it’s unpaid.

• Mobilizing workforce within subsidiaries - Larger companies or groups of companies can do this within their umbrella of subsidiaries. Smaller firms can choose partner companies or vendors. This way, companies get mutually benefited from cross-pollination of skills, retention of employees and temporary wage relief.

• Reduction in working hours - Reduce the number of hours employees work and proportionately decrease pay.

• Implementation of Virtual Work - This is a modality of work-from-home or work remotely. This is one of the safest measures of prevention that have been globally implemented during the pandemic outbreak. This doesn’t only help companies in reducing overhead costs, but also helps in expanding talent pool since the company will no longer be limited by a candidate’s physical proximity to the company’s facilities. However, before allowing an employer to work from home s/he has to be guided and provided the effective tools, strategies, policies, and guidelines to make virtual work possible and uninterrupted for business continuity.

Any employer considering redundancy/retrenchment, layoff (“Jageda”) or applying any other alternatives must carefully consider the Local Labor Act, Employment Act, State/Federal laws including any relief packages, emergency declarations and laws issued under the pandemic. 

Together to fight this pandemic outbreak, many affected countries have launched their economic relief packages to provide financial assistance to the medical institutions, business enterprises, employers and workers. Also in Nepal, the affected sectors have already requested support from the government to announce a relief package to dealing with unprecedented disruption. According to some news, the government is carrying out an impact assessment of the virus on different sectors and planning to introduce relief package soon addressing the key concerns of the entire private sectors.

Irrespective of all, this is the time to withstanding together to rejuvenate everything back to normal. Employers also need to solicit their employees about how to cut costs and increase productivity, finding opportunities and continue the business. Getting employees involved can ease insecurity, promote solidarity, workforce resilience and make business continuity possible.