In the current COVID-19 context, many companies are suffering huge revenue losses. They don’t know how long this situation will last and meanwhile they see themselves forced to take appropriate measures to reduce costs.
This blog post marks the first in a series of topics related to human resources in the context of financial crises. It’s our aim to highlight feasible human resources measures and explain their pitfalls and payroll consequences.
Personnel expenses often represent one of the major cost factors for a company. For that reason, they aren’t just an issue for HR, but also for corporate management and finance departments. When defining measures and calculating their financial impact, it’s important to be aware of the consequences of each step considered.
Reducing personnel expenses
When managing personnel expenses in the face of an economic crisis, we distinguish between “soft” and “hard” measures. “Soft” measures include, for example, hiring freezes, early retirement and the reduction of external staff as well as overtime and holiday balances, flexible working time solutions and short-time work. You can read more about this last topic in our blog posts “Simplified procedure for short-time work – and its pitfalls” and “Update on short-time work compensation and continued salary payment: what employers need to know”. The aim of “soft” measures is to safeguard as many jobs as possible. “Hard” measures include dismissals.
In this series of blog posts, we focus on two topics:
- dismissals with one-off payments / continued pay
- (partial) retirement / bridging pensions
As an employer, you must comply with the applicable legal framework (employment legislation, social security, taxes etc.) and contractual conditions (employment contract, collective bargaining agreement, employee handbook etc.). It’s also crucial not to underestimate the importance of communication towards your employees. Because change leads to uncertainty – and you need to keep this phase as short as possible.
With our new series of blog posts, we aim to inform companies in financial difficulties about potential human resources measures and their consequences. We also explain how to implement these measures correctly in payroll accounting and highlight the issues that need to be kept in mind.